Global Commodities Surge To Longest Win Streak In History

The Bloomberg Commodity Index, which tracks returns on 22 raw materials, posted an unprecedented 14 days of gains to Wednesday, closing at the highest since February.

In fact, the global commodity index has not had a down day since The Fed hikes rates in December...

 

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(So, commodities are soaring and the USD plunges as The Fed is "tightening")

As the ongoing surge in upside economic surprises around the world forced what looks like a major short-squeeze in commodities...

 

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Some remain unconvinced, warning that economic growth could slow down as the year progresses, turning into a headwind for the commodities sector.

"We think prices are reflecting undue optimism about demand," said Caroline Bain, chief commodities economist at consultant Capital Economics Ltd in London.

"Indeed, weaker demand, as China’s economy slows, should trigger somewhat lower prices this year," she added in a note to investors.

There's just one thing about all this commodity-based exuberance...

 

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As Bloomberg concludes, in the weeks ahead, Chinese credit data and central bank policy will be key to determining whether the gains continue, Citigroup’s Layton said.

“The only reluctance that people have in terms of getting more bullish on metals and bulks is that China has clearly shifted the tone from growth targets to quality over quantity, and people don’t know what that means yet.”

“Chinese credit numbers are going to be critical to setting the tone for the first half, and I think they’re going to be fine,” he said.

Finally, we note that while commodities have been soaring, some have gained more than others and in the case of copper/gold, perhaps a little too much compared to the bond market's view of the world's growth outlook...

 

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Comments

chubbar Jan 4, 2018 6:07 PM Permalink

This is about the quality of the money, not about growth. Inflation is being sniffed and this is the result. We'll end up in stagflation with commodities spiking and incomes falling with the economy unless they are shoveling money in via the back door, which is a distinct possibility. The raising of rates is likely being done because the FED sees inflation and would like to dampen it as much as possible without blowing up the economy, but that isn't going to work. If velocity picks up even a little bit because of an uptick in the economy, it's Katie bar the door time for inflation and commodities.

ReturnOfDaMac chubbar Jan 4, 2018 7:28 PM Permalink

It won't.  Will you guys EVER get it through your thick freaking skulls that paper printing banksters are NEVER, EVER, going to let rocks rule again?

They saw the discipline imposed in example after example over thousands of years and declared no mas!  Too hard to steal with sound money.  Thus you will not get sound money, and the velocity will stay moribund (its locked in the bank system).

In reply to by chubbar

J J Pettigrew Jan 4, 2018 6:42 PM Permalink

The stupid effing Central Bankers will learn that the FAKE low rates crushed the velocity of money and contributed to any deflationary pressures....

Once they realize this, the TOP WILL BLOW OFF in inflation...and everyone will realize how destructive faked, arranged, controlled central bank markets are...

MuffDiver69 Jan 4, 2018 6:42 PM Permalink

Sure glad I don’t take advice from many of the articles here and elsewhere. Glad you post the info though the doom and gloom keeps me on my toes..

Salmo trutta Jan 4, 2018 7:09 PM Permalink

Long term monetary flows, volume X's velocity, bottomed in Jan 2016.  The secular trend bottomed in Dec. 2017.  Now they're on a tear.  The Fed is behind the curve.  The explosion until the peak in February will cause taper tantrum # 2.

- Michel de Nostredame (the greatest market timer in all of history)