Investors least bullish in four years pulling funds

Bernanke Testimony

Federal Reserve Chairman Ben S. Bernanke said in Congressional testimony last week that monetary easing is helping to improve demand for housing and cars as he signaled that the Fed is prepared to keep buying bonds at its present pace of $85 billion a month. European Central Bank President Mario Draghi said Feb. 27 the bank is “far” from considering an exit from its stimulus measures.

American factories expanded in February at the fastest pace in almost two years, an industry group said March 1. Personal spending rose in January even as incomes dropped by the most in 20 years, a report from the Commerce Department showed the same day. Goldman Sachs Group Inc. said March 1 that the drop in copper prices was an opportunity to buy because Chinese imports will pick up in the next three to six months.

“We’re optimistic regarding the U.S. economy,” said Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co. which oversees about $130 billion of assets. “Our bet is that there will slowly be a reacceleration in global growth the second half of the year.”

Gold Prices

Bets on higher gold prices gained 28% to 54,180 contracts, the most since August, the CFTC data show. The holdings are still down 47% this year. Those for silver tumbled 31% to 11,652 contracts in the week to Feb. 26, the lowest since August, and platinum wagers dropped 18% to 33,642 contracts, the biggest drop since May.

Gold futures in New York dropped 5% in February, the fifth straight monthly loss and the longest slump since 1997. The cycle for gold prices, which climbed for 12 straight years, has probably turned, Goldman Sachs analysts wrote in a Feb. 25 report. The bank cut its three-month target to $1,615 an ounce from $1,825 and lowered the six- and 12-month forecasts.

Crude-oil wagers slid 16% to 175,211 contracts, while those on gasoline declined 2.9% to 87,914, the first loss in six weeks. Money managers are holding a copper net-short position, or bets on a decline, of 7,172 contracts. That compares with a net-long holding of 11,413 contracts a week earlier and is the most-bearish outlook since August.

Agriculture Slump

A measure of speculative positions across 11 agricultural products from wheat to coffee to cattle fell 24% to 145,564, the lowest since March 2009.

Investors decreased their net-long position in hogs by 56% to 9,688 contracts, the lowest since September. Bullish wagers on corn fell 20% to 52,075, the lowest since June. Net-long positions in soybeans fell for a third straight week.

Celeres, an Uberlandia, Brazil-based research company, said the soybean harvest in the South American nation was 28% complete as of Feb. 25. Output may reach a record 83.5 million metric tons as the country overtakes the U.S. as the world’s biggest exporter, the U.S. Department of Agriculture has said.

“The expectations for commodities had probably gotten a little bit big, and the market needed a positive catalyst to keep things going, and we haven’t gotten that,” said Anthony Valeri, a market strategist with LPL Financial Corp. in San Diego, which oversees $350 billion. “In agriculture, the bad weather that would produce supply shortages hasn’t materialized, so it’s tough to find a compelling case.”

Bloomberg News

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