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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 !!!

Thursday, March 14, 2013


Back in late Jan. '13, I mentioned that a downtrending CRB commodites composite was
rallying up to trend resistance. I did not forecast it would swing through to the upside and
it did not. To my surprise, that failure did not trigger a strong negative response, either.
Players seem interested in seeing how much widespread central bank QE programs might
spur faster global growth.

As discussed just below in the post on global economic supply and demand, the global
economy, following a steep "V" shaped economic recovery over 2009-10, has settled into
a slow growth mode, with production growth only a little better than half as fast as that
seen from 2003 through spring 2008, when the CRB more than doubled from 230 to a lofty,
bubbly 480. This period featured strong economic growth by China, the major global
buyer of commodities, and aggressive inventory carry policy, as China business binged on
FIFO accounting and large cash inventory profits. China joined the other major economic
powers during the 2010 - 2012 recovery period as it too experienced decelerating growth
and had to struggle against over-inventorying in a sluggish global trade environment.
Commodities prices, after a strong rebound from late 2008 toward mid-2011, have fallen
about 20%.

The CRB chart does show an index value support level of 290 which was violated only
briefly in mid-2012. $CRB Weekly  It could be important to note that my long term chart
dating back to 1932 has trend support right around the 290 level for much of this year.

I did happen to catch the 6/12-9/12 lift in the CRB nicely, and with broadscale QE in
place, I am expecting there could be a trade worthy +20% pop in the index during the year.

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