About Me

Retired chief investment officer and former NYSE firm partner with 50 plus 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 !!!

Wednesday, July 18, 2012

Commodities Market & Inflation Potential

Commodities
In a post on this broad market on June 4, I argued the commodities market was too oversold
to ignore and that I was looking for a long side entry on a bump up in the CRB comp. It came, I
bought the DBC ETF and enjoyed a moderate run. I am lightening up now because the market is
getting overbought short term and also because of the high volatility of commodities. CRB Chart
I lucked out some on this trade because of the drought in the midwest and plains which has
sharply punished prospects for grains.(The old saying is that "Wall Street kills the corn crop every
year",with this year shaping up as one where It has been right.)

Inflation Potential
Fuel prices have turned up along with basic foodstuffs and this is leading to a sharp  rise in my
inflation pressure gauge. It remains subdued, but when inflation pressure is ignited by upturns
in basic commodities, then you must be mindful because of the impact accelerating basic costs can
have on real household earnings and consumer confidence.

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