Don't Let Me Down

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" Asked last year about competition from Wall Street banks that have been building commodities divisions -- chief among them London-based Barclays Plc and New York-based JPMorgan -- Goldman Chief Financial Officer David Viniar warned about the pitfalls.

``A lot of very smart people have gotten into a lot of trouble or lost a lot of money by getting into the commodities business,'' Viniar said at an investor conference in February 2007. Goldman has a ``long history of watching our competitors get into the commodities business at the top of the market.''

At New York-based Merrill Lynch, the third-biggest U.S. securities firm after Goldman and Morgan Stanley, President Gregory Fleming said the commodities boom could turn out to mirror the rise and fall of technology stocks in the late 1990s and structured-credit products between 2002 and 2007.

``I'm hearing a lot of talk about supply and demand in commodities is not necessarily what we should be looking at,'' Fleming said in an interview on May 29. ``Boy I've heard that twice before in less than a decade in two different markets.''

Look for scattered dollar-supportive verbal intervention but watch the large money flows at work in the above-mentioned markets (oil in particular). Remain mindful however, that:

"Currency forecasters are betting that the dollar rally is just getting started as the Federal Reserve's shift to fighting inflation makes it likely to raise interest rates more aggressively than the European Central Bank.

The currency will strengthen 2.5 percent to $1.50 per euro by year-end, according to the mean estimate of 39 firms surveyed by Bloomberg."

One thing you may not need to look for is a tinfoil club report on the so-called "nine o'clock dump" this morning. Explanations about the $20 pop in this morning's gold price will be as hard to come by as the evidence of the market being rigged.

Happy Trading.