Don Coxe on the true impetus behind J.P. Morgan exiting the metals warehousing business

Don Coxe, Chairman of Coxe Advisors LLP, has issued a powerful new weekly review of the global capital markets, entitled, This Time
When the BRICs Tumble The Euro is the Haven.”

In this updated conference call, Don spoke to the returning strength of commodities, the true impetus behind J.P. Morgan exiting the metals warehousing business, and what investors should be doing right now in considering commodities.

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From Tekoa Da Silva, Bull Market Thinking:

Beginning at the 13:30 mark, Don noted that:

“Commodities collectively, are a cyclical bet…the CRB bottomed out in June and is up sharply since then…gold bottomed out at that time and it’s moved up to a pretty good level…$1391 doesn’t sound as good as to compared to where it was a year ago, but once again—the trend has shifted.”

“Commodities are demonstrating that there is new strength, and then we see the tremendous change in China’s imports of commodities, a record level of import in July of iron ore. We’ve seen the leap in the price of copper, and one of the things that is helping the commodity situation…is that JP Morgan has been forced by governments, the CFTC, and by the supervisors in Washington, to get out of operating their metals warehouses. The reason they did [so] was not because of ideology, but because so many congressman were being contacted by their constituents, who said ‘We cannot get the metals from the Morgan warehouses—they own these warehouses, we can’t even get aluminum,’ which is the one that has the biggest inventories of all time, [but] they tell us nine-months delay for delivery.”

“So [what] you should be doing now…I believe that you should certainly be increasing your exposure to the good commodity stocks…if you believe in stronger economic growth, and you’re not fooled by the fact that these emerging markets right now are having trouble adjusting.”

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“China is once again coming through this pretty unscathed, and that means that you’ve got a great source of stability—and of course you’ve got a new player, which is the oldest of old players, Japan, to the plus side.” 

“So it’s a time where you can have a greater confidence level in demand for basic materials.”

Editor’s Note: Don Coxe may be launching a subscription service soon. His conference calls and market comments are currently all free, and available at the website link below. So this is a fantastic opportunity to hear and learn from Don every week—which may not be here for very long. Please take advantage of it.

To learn more about Don Coxe (and to follow his regular work) visit: CoxeAdvisors.com

Comments

  1. Coxe is explaining exactly what I noted the very day JPM issued their announcement about their warehouse business.  Unfortunately, one of the Tylers over on ZeroHedge published a story with a headline that was off-the-mark.  Almost the entire precious metals community fell off the turnip truck and it took at least a week for everyone to finally understand that JPM was just acting proactively, politically, getting out of an expendable business so as to protect their core operations. 
     
    Regarding Coxe’s other observations, he’s not giving any mention to the bounce-back in gold and silver driven by a “return to the mean” process following excessive downside manipulation.  Coxe has had a mixed history when it comes to being able to see manipulation for what it is.  Following the July, 2008 massive take-down of all commodities immediately following what Coxe called the “Sunday massacre” when the government decided to back all of Fannie Mae and Freddie Mac’s debt, he was more open about the “club” of central bankers acting to protect their collective interests.   Based on my closely following his work for 2 decades, that was as close as he has ever come to flat-out speaking truth to power regarding manipulation (and it was so obvious in that July 2008 example, he was wise to call it what it was, even though today, he’d emphasize the Fannie/Freddie actions and not the capping effort and attempt to shift overall commodities market direction — the manipulation happened BEFORE the pricing in of a deflation asset crash and in fact helped cause the asset crash of 2008! ….and Tekoa, if you read this, look at the charts and the timeline….  I’m right.

    The bounce in copper and iron is China-driven, as he notes.  I agree.  It also fits in with the view of Western economies doing better in the 3rd and especially the 4th quarter, which I don’t think will happen to the degree to which current forecasts expect, and that we’re going to start turning down by the end of Q3 in a very visible way.

    Coxe is one of the very best strategists.  I’m not knocking him.  But he does have some blindspots.
     

  2. Thanks Eric  This adds additional data points to consider while removing misinformation about JPMs motivations.

  3. >>>and of course you’ve got a new player, which is the oldest of old players, Japan, to the plus side.” Japan to the plus side? …I’m not sure about any sustainable growth in Japan for the next 2qtrs. Japan is an investing basket case. It’s pretty much the dodgyist craps table in the world casino. You certainly would only ‘invest’ short in Japan. You could probably make more and quicker playing Russian roulette upstairs in an Indonesian brothel and with less risk than touching Japan … she’s about to blow … IMO. Whenever US stocks have an arrhythmia Japan is one of the biggest shock absorbers, and I’m expecting problems in US stocks soon if the Bond market doesn’t go kablooey first.
     
    I heard that Japan has a good future in Radioactive Fugu though. TEPCO is a Market Maker!!! They should start a subsidiary called TEPCO-Fugu, JP Morgan can help them with a futures market on that one also … plenty of Muppet clients around in the US looking for somewhere to stack some endangered fiat.
    KAMIKAZEEEEEEEEEEEE!!!
     
    All the real stability is in China and some other South East Asian countries now that they have sought out and penetrated emerging markets since the Chimerica marriage was annulled around 2008. The TPP looks like it was a failure and this has pushed more countries towards China. Japan is way more sensitive to the dodgy Western markets than protectionist China and the tide has shifted towards Shanghai. Shanghai also has a good partner in Russia which is trying to woo Germany and Poland away from their traditional Anglo-American-West European sphere of enslavement with their oil/gas energy gravy train. BRICS emerging markets wedded to a new Sino-Soviet type core connection is where any real stability and growth in world trade will come from… Japan is yesterdays semi-fresh fugu.

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