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Bloomberg's Commodity Index Drops To Lowest Since 2009: What Does It Mean?
Moments ago we learned that for all talk of a commodity "bottom", the "energetic" dead cat has resumed its inverse bounce. To wit:
- BLOOMBERG COMMODITY INDEX EXTENDS DROP TO LOWEST SINCE 2009
So what does that mean? The answer: it all depends on whose narrative one chooses to believe and/or which narrative the US Ministry of truth is promoting on any given day in order to boost confidence.
The main plotline now is simple: plunging commodity prices (just don't call them deflation, "negative inflation" is much better) are a huge tax cut on the US consumer the pundits will have you know. And why not: so simple a Jonahtan Gruber could have come up with it.
The only problem is that you learn all this from the same pundits who told you just a few months ago, that soaring commodity prices are great for the economy, for jobs, and, drumroll, for the consumer. Behold CNBC from March 2014:
Booming US energy sector feeds manufacturing, may overtake it
Could the booming U.S. energy sector assume the mantle that Detroit's big automakers once held in the economy? Although it's still too early to tell, recent trends suggest soaring energy production may replace automobile manufacturing as an economic powerhouse. Even as the U.S. recovery falters, manufacturing and energy are in the midst of a broad expansion that is helping to generate growth.
....
In a study released in early February, The Boston Consulting Group said shale gas "will have a greater impact on U.S. manufacturing over the next several years than is commonly assumed," as cheap gas makes manufacturing more competitive—and becomes a major source of jobs and growth in its own right.
"This is why our economy is starting to wake up," Sirkin said. "We are looking like a growth country compared to developed countries and emerging markets."
Oil and gas employment has been one of the few sources of job growth in a fallow labor market, with direct employment soaring 40 percent since 2007. According to a study by consulting firm PriceWaterhouseCoopers, the shale revolution may add as much as one million manufacturing workers by 2025, due "to benefits from affordable energy and demand for products used to extract the gas."
"Absolutely, the energy sector can be a basis for the U.S. becoming an industrial powerhouse," said Ken Ditzel, a principal at Charles River Associates who performed the data analysis for the America's Energy. "It's clear that the developments in the energy sector are feeding the manufacturing renaissance."
Well so much for that narrative, because with WTI in the mid$-50s where it is now (or lower), the only industry that will boom as a result of shale is that of bankruptcy attorneys and restructuring advisors.
So what is the narrative now? Best to put the whole shale "angle" on the back burner and just focus on the Grubering of the story. Case in point, here is CNBC yet again, this time with the counter-narrative, from "Falling gas prices seen as early Christmas gift for consumers"
As falling oil prices stoke worries about flagging demand and a weakening global economy, some are pointing to the silver lining that lower energy costs could shine on consumers.
With this global slowdown, you're starting to see a real meltdown in the oil and petroleum markets, which obviously affects the stock market because it affects the oil companies," he said. "But it is a huge tax cut for the world. The market right now is so absorbed with the negatives, there's some huge positives that are coming out of this."
In a research note released on Wednesday, Joseph LaVorgna and Brett Ryan of Deutsche Bank broke down the effect that lower gas prices could have on the economy.
With retail gas prices down to $3.30 per gallon as of Oct. 6 from a peak of $3.70 in June, LaVorgna and Ryan wrote, "this 40 cent decline in prices will give U.S. households a significant lift to their cash flow." For every 1 cent that consumers save on gasoline, Deutsche Bank calculates that U.S. households can spend about $1 billion more in the broader economy.
And of course there is Goldman who as recently as July said "the long awaited global recovery appears to be getting on track, lifting commodity demand":
Uhmm:
In other words: rising commodity prices mean the recovery is here while plunging commodity prices mean the recovery is imminent. In yet other words, the greater the global deflation, the better.
And to think Austrian economists have a bad rep.
So the bottom line for all those wondering if the commodity plunge to the lowest level since 2009 is good or bad, now you know the answer. Or rather, have no idea whatsoever.
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ZIRP TO ZERO. Paying people Zero for the money so bankers can collect bonuses...isn't a good plan for the 99%.
What Does It Mean?
I warned you, dad.
https://www.youtube.com/watch?v=PNcc3LgO2hI
One thing is for sure, Ben is converting his FRNs into ASEs...
It's Bush's, Putin's and North Korea's faults, along with racism and intolerance of the Religion of Peace and Xenophobia of Foreigners and their rights to live freely on the Dole in America, ISIS, climate change and the EU.. Fuck the EU. Let alone Constitutionalists and domestic terrorists.
. . . you forgot to mention ROMNEY and PALIN !
It means BTFD!! Comprende, Dickhead?
Edit: And here's how:
http://btfd.org/
'What does it mean'? Obviously another flashing green blow horn signal to double down on stawks + full leverage.
That's the scariest possible answer, and you're right.
THIS is GUD!!!! I need be buying stawks!!!!!! /sarc
Everyman lives! Long time no see.
they are simply running out of gas
it's a big club and you ain't in it BITCHEZ
The Canadian Economy Doesn't Work With Oil Prices At These Levels
The closures have been particularly acute in Canada, where some 40 oil & gas rigs have been taken out of operation recently. In fact it's not clear if economists fully appreciate what's about to transpire with the Canadian economy. This decline in rig count is just the beginning.
Read more: http://soberlook.com/2014/12/if-energy-prices-remain-near-current.html#ixzz3MeXFGJGtruh, roh ... moar of Barry's anti-Russia/Saudi Plan blowing back.
Move to Florida.
It means we're in the final days of the liquidity trap. The only thing left is war.
gonna go lower in 2015
watch as corporate earnings hit the skids ... and layoffs accelerate
Still haven't spent a dime on Christmas, and don't intend to.
Because you're Jewish?
Daddy?
Don't be a grinch, support your local craft shows and gun stores.
"and layoffs accelerate"
Great for Stawks.
We deflated some folks!
Goldman Sachs: "...the long awaited global recovery appears to be getting on track..." ROFL!
They must be talking about their assets under management for debt ridden nations.
Where did Ukraine's Gold go?
Probably the Netherlands, but nobody's fessin' up.
Too bad folks, I just beat you to the precious store.
They do have a little left though.
Better hurry and buy yourself a nice Christmas gift.
Don't question it, there's no logic. The economy is booming, things have never been better, we need fewer commodities and they're cheaper to produce than ever before. Just accept it, accept Janet's love.
USD has entered a new epic bull market. Commodity super-cycle is turning down into a 20 year bear from 2008 high. We will have ZIRP and NIRP for the next 10 years at least. The Great Reset will not happen. All ZH readers have been punk'd.
It's not to late too get long anything other than real things.
Twitbook? Faceapp? Something internety and with leverage? How about an enterprise whose purpose is not yet known but of great promise?
I really like the sound of that last one you mentioned. What symbol does it trade under?
BUBL
Dupe
Trupe
SPY
LOL
Punking makes me head hurt.
Bull Market? more like Hyperbole on your part...
https://www.tradingview.com/x/BDeRXqTH/
This is what I know.
I was listening to CNBC on my way home via satellite radio last week and during one of the commercials they were pitching oil rigs.
"Are you an individual with $40,000 and want to take part of America's energy boom? Call 1800 xxx BOOM."
So yeah. Things are fucked.
I got an email from a Nigerian ambassador, who said his records show that, due to my being a long-lost second cousin of the Prince, I have inherited some fracking rigs in New York, and would I like to clean them up, I mean participate in the financial benefits they are apparently about to commence bestowing.
Interesting graph. It looks like the economy started crashing around 2011.
Still have 107 points to chew through before everything is free.
looks more like a dead cat bounce
Looks like the AUD.
The economy will recover after gold shakes off the CB interventions. You cannot purposely devalue the core of of the system and global savings without causing a depression.
We're not allowed to spend on gas, food or energy...just on overpriced housing (mortgages), overpriced consumer crap and overpriced stocks...
CNBC has more tools than Home Depot and Lowe's combined.
tools or fools?
Becky Quick likes tools.
The basis for any industrial economy is the chemical business NOT the oil business. And to say they consume copious amounts of energy is like saying Jabba the Hut was a little on the large side.
There is zero empirical evidence that as prices for energy collapse "suddenly people stop using it.". Indeed....THE EVIDENCE says the exact opposite is true.
Now granted I'm no engeneeer...and sure, I spend most of time traveling around Area 51 trying to explain to people about the alien beings that in fact are running that place and who knows what else...but, hey...you're not gonna convince me that collapsed oil, metals, softies and the hard is the end of the world.
You see it all started in 1955 when THEY made first contact....
When derivatives are tied to commodity prices-small %, but enough to start the balkl rolling with the potential spiral of the 280 trillion deriv trade banks are holding.
Woody Dorsey has some turn dates approaching. Sentiment just reached extremes on the bullish side-but not to be mistaken for bearish. The December 8th high predication was a trade-and now expects the lows to hold-into earlyt January.
http://www.sentimenttiming.com/sentiment-turn-dates-trades/
Bring on the rate cuts!!
It means th CRB are owned by The Fed too, and they don't want anything except their stawks going up.
Peter's bubble is always about to pop. Any day now for 8 years.
,,,,,like the MAJORITY of the zhdge reader
Goldman wants that $1060 year end gold target. Let's see if those new Comex limits are working...
Here we go. Real panic begins @ $1131 so only $40 to go. Triple digits to ring in the new year?
Shit why not? Light 'em up like the 4th, Janet!
Must get Dow to 18,000 before Christmas...
All it means is that oil got cheap. You can't have a recovery unless people have disposable income to buy stuff.
For every 1 cent that consumers save on gasoline, Deutsche Bank calculates that U.S. households can spend about $1 billion more in the broader economy.
There must be about 100 million households in the US, so these guys are saying that for every million dollars saved on gas, households can spend a billion dollars?
I though even Wall Street was limited to leverage less than 100X.
Called the weakness in Gold:
http://investfts.blogspot.co.uk/2014/12/gold-update-for-week.html
I know logic is no longer "operative" but how can the global or national economy be recovering when commodity prices and demand are in the tank? What am I missing here?
you are missing a lobotomy
the trouble with having a working brain these days
"...the energetic dead cat has resumed its inverse bounce."
As Louis CK would put it: Hilaaaarious.
It's funny how everyone is saying "speculators" except the US and EU.
The CRB overlayed with the S&P500 - most divergence in history
http://bullandbearmash.com/pending-stock-market-train-wreck-deflation-pi...
Many thanks goes to all central banks who continue to print and prop up these bloated markets.
gotta give it to goldman for prescient timing
commodities started slumping right after the July print of that report
maybe I should subscribe to it as early-warning toilet paper :)