CRB (commodity index) / S&P 500:. The Thomson Reuters CRB index is a basket of 19 different commodities heavily weighted towards Energy and Ag (39% Energy, 41% Agriculture, 7% precious metals, 13% industrial metals)
In bullish cycles with strength in stocks and commodities, it is typical for commodities to have a correction in the middle of a Stock Market bull run. It is healthy for the stock market, and consumer driven economies, to see commodities pull back to keep cash in consumers’ pockets. Cheap food and cheap fuel leaves more cash in consumers’ pockets…A correction or bear move in Equities pull commodities down with it and then a new cycle begins.
Many fundamental reasons to be bullish commodities, but one must be careful.
1. A stock market drop will take commodities with it, maybe for just a short period.
2. The govt has injected major cash into this economy. They may take drastic measures to secure their investment. I have no idea what it could be but I wouldn’t rule out policies, programs, reports, and etc that target the rising price of food and fuel…..
In bullish cycles with strength in stocks and commodities, it is typical for commodities to have a correction in the middle of a Stock Market bull run. It is healthy for the stock market, and consumer driven economies, to see commodities pull back to keep cash in consumers’ pockets. Cheap food and cheap fuel leaves more cash in consumers’ pockets…A correction or bear move in Equities pull commodities down with it and then a new cycle begins.
Many fundamental reasons to be bullish commodities, but one must be careful.
1. A stock market drop will take commodities with it, maybe for just a short period.
2. The govt has injected major cash into this economy. They may take drastic measures to secure their investment. I have no idea what it could be but I wouldn’t rule out policies, programs, reports, and etc that target the rising price of food and fuel…..
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