When I started working in commodities, almost a decade ago, they were considered a dirty word and certainly not a place for the average Joe to invest. Within the last few years, thanks to investors becoming more open minded, the overall performance of commodities and other asset classes, commodity futures and options are quickly becoming a respectable asset class. Case in point, over the weekend while reading the WSJ there were 3 different scenarios and portfolio allocation suggestions, regardless of the scenario all 3 had a place for commodities. One that fears inflation should have as much as 25% allocated to commodities, one fearing deflation only a 10% allocation, with the middle of the road being 15%. While we agree with the percentages we suggest investors get more informed on trading futures and options not just commodity ETF's.

I communicate with investors daily trying to identify what their general position is for the economy. Though it differs from one to the next, an overwhelming majority are not too optimistic about the health of the economy. The overall sentiment is that few see the light at the end of the tunnel. By that I mean most investors sense we've yet to turn the corner. What I try to make them realize is that while the overall economy is yet to be back on track, there are many individual stocks, bonds, real estate transactions and commodities that offer phenomenal opportunities. Take that for what it is worth, I only trade commodities so if looking at other asset classes consult a professional. What I'm trying to relay is I see the light at the end of the tunnel for some specific commodity plays.

Speculators may be running for the exit doors on talks of more government involvement in the futures market, but I feel their exit may be premature seeing that the government is just talking at this point. Since the government has not screwed things up enough they are now discussing more stringent controls in the commodities markets. I welcome regulation when it works and the theory of instituting position limits sounds good, however the likelihood of volatility decreasing on that action is debatable. Contrary to popular opinion it is the speculator that plays a vital role in providing liquidity in the marketplace and without their involvement price distortions may in fact increase. Is it completely impracticable to think that changes in supply & demand could have a more significant impact on pricing? Perhaps the fact that commodities are becoming a more mainstream asset class, recent estimates show that $25 billion has poured into commodities in the first half of 09'.

With half of 2009 behind us investors may be wondering if they have enough exposure to commodities in their portfolios. Several commodities gained value in the first 6 months of the year on expectations for a global economic recovery and on worries of inflation. There are many uncertainties that remain unanswered, if, how strong, and the sustainability of this recovery. It may be smart to cover some of your commodity longs or scale back your exposure as it appears that in the immediate future we could see some give back. We're convinced this will not be a reversal but yet just a pause in a bull market with many more years of life.

Bond and note futures traded mixed as traders spent the day squaring positions ahead of the long holiday weekend and tomorrow's non-farm payrolls data. The report is typically released on Friday but the government has adjusted the release date in observation of the 4th of July and the fact that the U.S. markets will be closed (for the most part). I can remember a few occasions in which market moving economic announcements were made on days in which the NYSE was closed, but various futures markets were open for abbreviated sessions. It typically isn't an ideal trading environment, luckily Friday won't be such a case.