Blind Squirrel Macro
Blind Squirrel Macro - The Pod
Pod: Commodities are not Sardines
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Pod: Commodities are not Sardines

Blind Squirrel Macro: The Pod. Tuesday, 20th January 2025

The Monday Note:

The Visuals and Links:

DX, Dollar Index (DXY) futures. Upper panel daily chart; middle panel COT positioning (significant length added by large (blue) and small (green) specs since mid-December.
Only a 22% chance that Trump follows through with 25% tariffs on his northern and southern neighbors? Time stamp: 11.38pm EST on Friday 17th Jan.
‘CN Oil’ is an equal weighted basket of $MEG, $SU, $BTE, $CVE and $CNQ.
Source: Saxo Bank’s Ole Hansen
Great advice, often ignored by the 🐿️😉
April 2011 (Foreign Policy Magazine): “It took the brilliant minds of Goldman Sachs to realize the simple truth that nothing is more valuable than our daily bread. And where there’s value, there’s money to be made. In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known henceforth as the Goldman Sachs Commodity Index (GSCI).” The Full article was not impressed with the implications.
If you want to punt on energy, buy oil!
Quick refresher on backwardation and contango.
This is good news for trades in backwardated contracts (like oil) which benefit from a ‘sell high, buy low’ roll yield effect when rolling…
But not great news for those futures curves that are in contango, where selling low and buying high creates the opposite effect and erodes returns.

Need more 🐿️ content

Music from Max Slorach. Find him at:
email: maxonsaxentertainment@gmail.com / web: maxonsax.com.au

Thanks for listening!

Squirrel Out!

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