Truth can be gleaned from an unlikely government source, the COT, if you do your homework.
By TLB Contributor: Ken LaRive
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” -Henry Ford
I know people suffering in this economy, and others who have found it to be a catalyst for success. I have been trying to understand this new and very convoluted market unfolding, and the pyramid of complex relationships developing. Some countries are taking drastic measures to survive, as is seen this week in Switzerland, and new alliances are being formed like with Russia and Iran, where others seem to be on the cusp to devolve, like Greece. There are mountains of financial essays out there, and most project their agenda, without regard for truth. I have to say that nothing has more immediate concern as a researcher then the concept of debenture capital, a system that seems emanate and poised to disintegrate like a house of cards… and yet, few have even heard of it…
“The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.” -George Soros
My warning to those closest to me have not gone well because of one singular thought, I can find little viable solutions… When a person, or a company, is riding high, the last thing they want is a doomsayer telling them to be careful. “I don’t know what to do about it,” I say, “What is happening is designed, and I do not have insider information, or a crystal ball. Seems that precious metals might be a key, especially if our Petro Dollar is displaced. But surely there will be ciaos around the world if that happens, at least for a time, and WW3 seems to be looming too. No it can’t be, another cold war with Russia? I know it sounds amazing, and a bit crazy to a moralist like myself, but no matter how bad it gets, some will make fortunes in the process.” and then my punch line is this, as they shake their heads: “I don’t know what form the new World War will take, or what weapons will be used, but I know that most likely WW4 will be fought with sticks and stones.”
Lets throw a few bobbles on the table, and see if we can get a better picture of this world, and the motivations that inspire profit… Lets look at what is shaking and moving our world in 2015, from what looks to be a credible source… A source designed to give viable statistics.
http://cotbase.com/ (COTbase) The Commitments of Traders (COT) reports show futures traders’ positions at the close of (usually) Tuesday’s trading session. The report is prepared by the Commodity Futures Trading Commission (CFTC), a U.S. government body with the task of overseeing futures markets. The report’s goal is to create transparency and fight market manipulation. Also, it is an excellent trading tool.
So if you want to learn about the market, to read it with more accuracy perhaps, this would be a good place to start. They have three different kinds of reports…
Legacy reports: the original COT reports, dating back for most futures contracts to the 1980’s. For trading purposes, these reports are the most useful, because of their long history and proven edge.
Disaggregated and Traders in Financial Futures (TIFF) reports: new reports introduced in 2009, with different trader categorizations. Since its history is short, meaningful statistical testing cannot yet be made to find out its usefulness.
Supplemental Commodity Index or CIT reports: has more history than the disaggregated reports, but still not enough, especially compared to the depth of the legacy reports. It was constructed to show the positions of commodity investment (commodity index tracking) funds.
Crude Oil (COT)
Nothing is more actively traded, or speculated, than the commodity is crude oil. Light Sweet Crude is delivered in Cushing, Oklahoma, which is also accessible to the international spot markets via pipelines. Because of their low sulfur content and relatively high yields of high-value products (such as heating oil, gasoline, diesel fuel and jet fuel), light, sweet crudes are preferred by refiners.
Note that the oil trying to make its way from Canada is a sub grade. Canada does not want refineries as they are dirty for the environment. They want to send it to Louisiana’s cancer alley to be refined.
RBOB Gasoline (COT)
New York Harbor RBOB Gasoline conforms to industry standards for reformulated regular gasoline blendstock for blending with 10% denatured fuel ethanol (92% purity) as listed by the Colonial Pipeline for fungible F grade for sales in New York and New Jersey. RBOB is a wholesale non-oxygenated blendstock traded -at the New York Harbor barge market that is ready for the addition of 10% ethanol at the truck rack.
Heating Oil (COT)
Heating oil (also known as No. 2 fuel oil) accounts for about ¼ of the yield of a barrel of crude, the second largest “cut” after gasoline. Many companies in the energy industry, but also companies consuming a lot of energy products can use heating oil futures to hedge their price risk.
Natural Gas (COT)
Natural gas, accounting for almost a quarter of United States energy, is the second-highest volume futures contract in the world based on a physical commodity. Natural gas price is based on delivery at the Henry Hub in Louisiana.
Cheniere Energy will be up and running to export Natural Gas by the end of this year… and will be very lucrative.
Market manipulations can take a simple path, like Saudi Opening and shutting a valve. We want energy independence, and yet our oilfields are firing hands as we speak. It is traitorous. So they want to paint Russia in a corner? We are now 18.1 trillion in debt… The last time this was attempted our National debt was 6 trillion, 1983. We could just as well take a dive as they could, and sometimes it seems that is the plan…
Treasuries and Rates (TIFF)
FED Funds (TIFF)
Fed funds rate is the interest rate at which banks lend at their FED accounts to other banks, in order to meet reserve requirements. These future contracts are used to hedge changes in these rates.
Eurodollar (U.S. dollars deposited in commercial banks located outside of the United States) deposits play a major role in the international capital market, and they have long served as a benchmark interest rate for corporate funding. The futures contracts on Eurodollar reflect the London Interbank Offered Rate (LIBOR) for a three-month, $1 million offshore deposit. Eurodollar deposits are direct obligations of the commercial banks accepting the deposits and are not guaranteed by any government. In 1981, CME launched Eurodollar futures and since then these futures have evolved into one of the world’s most innovative and popular contracts—and are now the most actively traded futures contract in the world with open interest recently surpassing the four million mark.
2-year Treasury Note (TIFF)
This product is based on the benchmark 2-year note issued by the U.S. Treasury. It provides a way to hedge interest rate risk, express a view on the direction of interest rates at the short end of the yield curve, execute yield curve trades against other Treasury futures or spread trades against other CME Interest Rate products.
5-year Treasury Note (TIFF)
This product is based on the benchmark 5-year note issued by the U.S. Treasury. It provides a way to hedge interest rate risk, express a view on the direction of interest rates at the short end of the yield curve, execute yield curve trades against other Treasury futures or spread trades against other CME Interest Rate products.
10-year Treasury Note (TIFF)
In 1975 in response to a growing need for tools that could protect against sharp and frequent swings in the cost of money, Chicago Board of Trade introduced Interest rate futures. For investors worldwide, the U.S. 10 Year Treasury Notes and Thirty-Year Treasury Bond futures have grown to become fundamental risk management tools. The Chicago Board of Trade, with the Treasury futures contracts, helps both institutional and individual investors to control the risk in holding fixed-income securities and optimize their performance.
30-year Treasury Bond (TIFF)
This product is based on the benchmark Treasury Bond, the longest maturity of any bond issued by the U.S. Treasury. Treasury Bond futures provide a way to hedge long-term interest rate risk, express a view on the direction of interest rates at the long end of the yield curve, execute yield curve trades against other Treasury futures or spread trades against other CME Interest Rate products.
“Under capitalism, man exploits man. Under communism, it’s just the opposite.” –John Kenneth Galbraith
RECOMMENDED BOOKS by COT
Briese, Stephen: The Commitments of Traders Bible
Williams, Larry: Trade Stocks and Commodities with the Insiders
Upperman, Floyd: Commitments of Traders
Sipley, Richard: Market Indicators
Saettele, Jamie: Sentiment in the Forex Market
Elder, Alexander: Complete Trading for a Living
Hadady, R. Earl: Contrary Opinion
Belveal, L. Dee: Charting Commodity Market Price Behavior
Schwager, Jack D.: A Complete Guide to the Futures Markets
USEFUL LINKS by COT
Commodity Futures Trading Commission
CFTC’s official COT glossary
CFTC’s futures glossary
CFTC’s guide on the basics of futures
CFTC’s official Disaggregated COT glossary
Australian Dollar (AD)
British Pound (BP)
Canadian Dollar (CD)
Japanese Yen (JY)
Swiss Franc (CHF)
USD Index (USD)
Mexican Peso (MXP)
Dow Jones-30 (DJ)
Author’s note: Know this, the future does not belong to the ignorant and lazy, but to the savvy player. Rules, morals and ethics, jurisprudence, philosophy, convention and honor, are not dependable sources for success, nor were they ever in this world. If you want to survive, you must have a source for truth, and it helps if you do not have a conscience. In the real world those with morals and ethics are eaten alive, or find themselves isolated in a desert without means. Those who are successful, except for a very rare few, step on the backs of these accolades, these social and business instruments taught in University as ultimate Utopian dynamics, but is soon discarded as meaningless. The real world, I’m so sorry to say, is based on lies and deceit, power and control, without stops, and all formulated by the science of Machiavelli, orchestrated and manipulated in an inner sanctum, and hidden from view behind metaphorical compartments, and invisible doors. Future actions are borne in think tanks, hatched and motivated for a black bottom line, and any means necessary for these ends considered viable options. Good people participate because the system is ingeniously compartmentalized, from mega-unions and monopolies to corporate leviathans and banking institutions too big to fail. And all of it, every nation designed by men, are dominated and controlled by debt, and America sits at the pinnacle with 18.1 trillion, with trillions unaccounted for just prior to 9-11. And the same buildings holding a record of these transactions were conveniently destroyed… at the same time insiders bet on put options, 350 times the amount just three days prior, on American and United Airlines… Think about this, and let it sink in…. they knew!
Each human being involved, every player, can only access their own department’s plan, and so the total picture can never be truly understood. In this way good and honest people can participate without guilt… and the total picture, i.e., the true ramifications of their actions in future is only accessible to those who are at the very top. From an International Banking consortium, A Federal Reserve System who manipulates markets and prints money out of thin air… it can allocate its plans by a simple wire transfer of funds… and the fate of nations, and the welfare of every person on the planet is in their hands. Military industrial complexes grow in the mainframe of every country, promoted to the populous out of fear, from cold wars to resource competition, and we try to hang on to its tail as it forages. Billions of people have died, and all of it collateral damage for banking profit margins…
Perhaps one day, as old books foretell, the meek will indeed inherit the earth. Though this may ultimately be true, it will only happen in the rubble of our burned out society, who some might say, in retrospect, that it finally floundered in self destruction because it had no moral compass… but know this as a truth, there are those who will survive… and thrive, as it is indeed designed that way by them, so long as there is something, anything at all left to steal… Even your immortal soul is up for grabs.
These survivors finance both sides to war, arm both sides, control both money and media propaganda to confuse and promote, and when the dust finally settles, and the bodies are buried, they carpet-bag what is left as their own, enslaving the survivors by a debt so big it can never be paid… and a system is put in place where both abundance and foreclosure are lucrative, two fingers of the same hand. A hand that grips us all by the throat…
“The way to make money is to buy when blood is running in the streets”. -John D. Rockefeller
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