CME Raises Oil Margins; Obama Running For Reelection
Last night CME announced margin hikes in Oil. While oil has bounced recently, nothing frothy is in the market in our opinion.
So why do it? if you are operating on a centralized economic planning system as the Obama administration is increasingly doing you must empower yourself to achieve your goals.
1. Grant CFTC authority to unilaterally change futures margins. DONE
2. Promote good inflation, dissuade bad inflation. i.e. levitate stocks, sit on commodities
3. Raise Oil margins DONE
What would be your next move? We believe a margin hike in grains to keep the Corn speculators at bay is in order. Corn is now an Energy and food and is increasingly grabbing headlines.
In the end we believe this is another step which will disconnect paper markets slowly but inexorably away from the physical markets they represent. If the Fed will not act prior to the election for fear of political implication, what would you do if you were president and needed to keep commodities down? Therefore we believe the next margin hike will be in grains with corn as the target.