Wednesday, March 4, 2009

Commodities confirm the global slump

How commodities confirm the worst

If anyone had any lingering doubts about the seriousness of the global economy's collapse, recent moves in the commodities markets should firmly dispel them.

Posted by damien @ 09:43 AM (992 views)
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4 thoughts on “Commodities confirm the global slump

  • It completely ignores the huge supply destruction in oil (as it is uneconomic to produce at such low prices) and the existance of peak oil. Almost everyone is talking about a huge oil spike in 1 to 3 years time. Also other Moneyweek articles have taken an opposing view saying commodities are due for an upturn:
    http://www.moneyweek.com/investments/commodities/commodities-primed-for-an-upturn-14617.aspx

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  • sold 2 rent 1 says:

    The deflationist view is reaching exhaustion levels. IMHO the Armstrong turning point in mid April could well be the maximum level.
    After this the inflationists will gain ground

    Watch for 2 indexes to exhaust into a spike before a change of trend.
    CRB (commodity) index
    10 Year T-bill yields

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  • Cynicalsoothsayer says:

    Aye, talking leads to speculation, which leads to a bubble forming. That’s what the previous oil price peak was. We’ve since been through the deflation undershoot, and oil prices are into realistic supply/demand levels. These prices are uneconomic for some producers who thought the ridiculously high prices would continue on forever. There is still going to be a shake-out in the oil industry.

    Generally, if consumer demand levels remain lower, which they should be given house prices aren’t going to fund consumer spending like they did, then the raw material demand will be lower too.

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  • S2R1 – and keep an eye on monetary liquidity too by watching the TED-spread. (although I’m no believer in Armstrong, and think inflation is much farther away – I’d say mid 2010).

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