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Commodities on the rise, but can they pull back?Commodities have been in a bull run since 2020, within an uptrend that can resume after the pullback observed in 2022. Analyzing the CRB Commodity Index, I believe that the pullback from that recent 2022 high isn’t over yet. There’s potential for a C wave that could retrace to 38.2% of the 2020 bull run. This may suggests that inflation might cool down, but much depends on the Federal Reserve’s rate decisions. Premature rate cuts could spur demand and drive prices higher, complicating the inflation scenario.
TVC:TRJEFFCRB
by ew-forecast
So… how’s that deflation narrative looking?We’ve become so accustomed to headlines of ‘peak inflation’ and falling input prices that some have been throwing the wonderful ‘deflation’ word around. And we think most would enjoy a bit of deflation, as that would result in lower interest rates. However, with commodity prices (particularly oil) being a key driver of inflation, a lot of the softness can be tied back to the underperformance of commodities over the past 12 months. Supply chain disruptions have also been in the rear-view mirror and no longer a concern (or are they?) Over 30,000 UPS workers are vowing to strike if a new pay deal is not negotiated by 1 August, which should throw a nice spanner in the works of the US (and global) parcel delivery system. Russia has pulled out of a key grain deal and is bombing Ukraine ports to derail trade in the Black Sea. And India has banned rice exports (apart from Basmati) to fight domestic inflation, adding to fears of another round of food inflation. It is therefore worth noting that the Thomson Reuters CRB commodities index is seemingly breaking out of a 12-month retracement on the monthly chart. Furthermore, the retracement lasted 11 months before June’s small bullish candle, so the broad commodities index may have bottomed in May at -19.8% y/y. And assuming this is the breakout of a falling wedge, it projects a target around the 329.60 high. But if it were deemed a bull flag, the target sits around 365. And what do we think will happen to consumer prices further down the track? Of course, they will begin to rise again. And the worrying fact is that inflation tends to come and go in waves, so if commodities continue to rally then it looks like the next wave of rising y/y inflation is pending.
TVC:TRJEFFCRBLong
by CityIndex
ANALISIS MATERIAS PRIMAS, CRUDO Y LATAMLa correlación entre el índice de materias primas CRB y latam es muy cercana al 100 %, las materias primas desde 2008 han caída 80 por ciento de su valor con deflación igual que ILF etf de latam, son los productos baratos, si la inyección de liquidez de la fed produce más inflación en bolsas, e inflación en materias primas los commodities y latam están baratos, si primero hay deflación en wall street le falta una ultima caída a latam y materias primas para luego alinearse con inflación hacia 2021-2022
TVC:UKOIL
by ruartereports
Commodities rolling over (but likely not yet) to the downsideBuilding on The_Unwind 's post about commodities . I agree commodities are on the way down to new lows (and multi-year bottom). It is a deflationary cycle, interest rates is the most obvious proof that we live in a deflationary environment. Having extremely low or negative interest rates simply means that fewer and fewer people/businesses take credit (the price of money deflates) or the supply of money exceeds the demand for it. Either way, it means trouble for commodities that thrive in the inflationary environment and for stocks eventually. Having agreed to the big picture my Elliottwave count suggests that before we go onto a death spiral with oil testing 25-20 and stock market crush at least 30% we might have one final rip upwards which will unsettle bears and make everyone talk bullish nonsense again. Elliottwave.com says 'waves E are attended by psychology as emotional as that of a fifth wave'. I might be wrong. I base my judgement on the gut feeling that the structure does not look complete. Those 3-3-3 moves come in 5-waves pack (ABCDE or WYXZ) at least. Final wave E may not travel all the way up as indicated on the chart. It sometimes ends below the previous high (wave C). As for fundamentals.. well it might be anything. The Fed may suddenly drop comments that they will do an emergency, earlier cut. Or they cut more than expected. Or Trump tweets something about alignment with the Fed to act aggressively or any similar short-term hype. The irony is that the news will be deflationary by nature (increasing money supply when nobody needs it) but people will talk about the money flood which is supposed to raise prices and the powerfull Fed saving the economy.
TVC:TRJEFFCRBLong
by Fomenka