As discussed in my morning report today I indicated that money continues to flow into the oil sector. To look at this comment in a bit more detail I present the following chart which compares the net long position of the non-commercial sector (longs minus shorts) for the combined Nymex oil futures markets versus the combination of the CME S&P and mini S&P. This comparison of net long positions in two of the main markets in question shows that as the net long position in the equities market (as measured by the S&P) has actually moved into a net short position the oil complex has moved clearly into a net long position mostly over the same timeframe.
It clearly indicates that the buy only investor and the longer term buy side speculative trader has moved from equities into oil as one of the many sources of money flows into oil. Although I have not looked at every possibility of where and why spec money is coming from and moving into oil however this comparison is a good indication of what has evolved over a modest period of time.
The average investor has most likely added more oil/commodity risk to their portfolios. I suspect a comparison of equities to most any other major commodity would likely show the same trend as in the following chart.
Taking the comparison one step further and looking at commodity prices/returns versus equities is shown in the following table. Looking at a comparison of some of the alternative investments available to the investing public and the spec trader in the following table shows not only oil showing strong gains year to date but mostly all of the major commodities traded on US exchanges. Interestingly both corn (driven by ethanol and floods) and cocoa are now showing larger year to date gains than oils! In general we are not only in an oil bull market but a very strong commodity bull market with money flows going into all of the commodity based investments here in the US and abroad. Conversely equities are the worse investment on the block year to date.
It should not be a surprise to anyone including the politicians as to why the general public is adding more commodity risk to their portfolios.
| | | | | |
| 2008 Performance to Date | | | ||
| | | | | |
| | 6/30/08 | 29-Dec | Change | % Change |
| | 2008 | 2007 | For YTD | YTD |
| | | | | |
| Spot WTI | $142.28 | $95.98 | $46.30 | 48.24% |
| Spot HO | $3.9652 | $2.6494 | $1.3158 | 49.66% |
| Spot RBOB | $3.5404 | $2.4908 | $1.0496 | 42.14% |
| Spot NG | $13.385 | $7.483 | $5.902 | 78.87% |
| | | | | |
| Corn | $757.25 | $456.50 | $300.75 | 65.88% |
| Wheat | $898.50 | $889.75 | $8.75 | 0.98% |
| Soybeans | $1,597.00 | $1,201.50 | $395.50 | 32.92% |
| Cotton | $73.00 | $71.21 | $1.79 | 2.51% |
| Cocoa | $3,188 | $2,035 | $1,153 | 56.66% |
| Live Cattle | 100.98 | 95.03 | 5.95 | 6.26% |
| | | | | |
| Copper | 389.10 | 302.30 | 86.80 | 28.71% |
| Gold | 933.70 | 843.20 | 90.50 | 10.73% |
| Silver | 17.63 | 14.77 | 2.86 | 19.33% |
| | | | | |
| DJI | 11291 | 13264 | (1973) | -14.88% |
| S&P | 1276 | 1494 | (218) | -14.60% |
| Nasdaq | 1848 | 2151 | (304) | -14.12% |
| | | | | |
| Euro/USD | $1.5725 | $1.4590 | $0.1135 | 7.78% |
| Yen/USD | $0.9499 | $0.9013 | $0.0486 | 5.39% |
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