About Me

Retired chief investment officer and former NYSE firm partner with 40 years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Monday, June 04, 2012

Commodities Market

As the momentum of global economic growth has slowed further this spring, the commodities market
has suffered substantially. It has broken important support as traders have become progressively more
concerned about the global economy and the outlook for China in particular. The China economy
has slowed precipitously and so far, monetary policy accomodation and proposals for new fiscal
stimulus have been muted as China policymakers look at more modest support for the economy in
preference to a large scale program like 2008 - 2010, when sizable "fat tail" risk arose in the
form of more inflation and an unsustainable real estate boom.

Well, I have not given up on the global economy for this cycle yet. With business confidence easily
shaken both here in the states and abroad, it would seem that G 20 may want to look at the potential
for more stimulus at its mid-year confab, and as announced today, G 7 may want to look at how it
and the EU can provide greater assurances of available liquidity for a stressed southern tier EU
banking system.

So, with commodities under pressure but substantially oversold, I am happy to look for trades
here, particularly broad baskets. I would also look first for a positive turn in the broad market
like the CRB composite. Here is the CRB chart.

I also link to my Apr. 24 discussion of the commodities market here.

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