Inflation? Deflation? Or some of both…. “Bi–Flation“
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A breakout in grains, could cause inflation in certain parts of our economy to scream higher!
The broad based MS Commodity Index (CRX) finds itself on a key support line, which could be the neckline of a bearish “Head & Shoulders” topping pattern.
During our global workshop two weeks ago (which is still available to view) we introduced our “Sector/Commodity Sentiment Extreme” research service. If you would like to get more details on this new service and how members are taking advantage of these patterns and extremes in sentiment right now, send us an email at [email protected] and in the subject line put “Sector/Commodity Sentiment Extreme” and we will send you a free copy of this new service and what extremes are currently in place.
What will this mean to you as a consumer and how can you take advantage of it? We will keep you updated on these opportunities!
Based on the recent parabola in Bonds (and the extreme bond and USD sentiment lining up with it), the top in bonds (intermediate or long-term) looks like it is very close to being in. After the parabola breaks down, the deflation theme should quickly turn into an inflation theme in the commodities sector (agriculture, energy, metals). Commodities (CRB) will probably get the lions share of the gains, and could keep the rally in equities muted at least relative to commodities (EEM, EFA, Basic Materials, Shanghai). Commodities performed very well in the 70s.
Jim,
Great macro thoughts and observations. Last May the Shanghai index broke below its multi-year flag pattern and since then the world has “Deflated.” CRB, EEM, EFA, Basic Materials, Shanghai all down over 20%. Gold is down 16% from it highs and Silver is down 46%.
In your opinion, what will stop the “Great Escape” from all of these assets, as their are more sellers than buyers, which is pushing prices lower?
Benna-Clause hasn’t been able to stop it so far….Think he can?
Chris
Bifurcation… inflation in commodities, oil and metals seem like they are ready to take off again. The US stock markets seem ready to follow the global markets and resume their secular bear market at any time however they may participate in a muted rally relative to commodities. If the bear market in US equities starts soon, it would drive more people into bonds and finally put a lid on the parabolic top in the bond market.
Several key technical factors support the bearish call for the US markets: very low VIX levels, Adv/Decliners ratio show a lack of enthusiasm in 2012, Rydex Bulls and Assets near extremes.
Gold and silver sentiment is at extreme, at support, and in a major consolidation thus adding to a bounce. The USD is at the opposite extreme. There are MANY people waiting on the sidelines for the triangle in both SLV and GLD to break. If it breaks south, it will make sentiment even more extreme, and likely to quickly create a bear trap. I as well as the rest of the world and central banks will add to our positions. Heck, paper trading SLV and GLD below our current levels may even create a shortage of physical gold and silver like Q4’2008. That is the most obvious time to buy the physical.