iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
22,158 Blog Posts

INFLATION MIGHT BE ABATING

Prices for raw commodities are definitely coming in and the trend is bearish. You can see it in the price of iron ore, copper, even wheat. Here are the 3 mo returns for some commodity ETFs.

Have a look at iron ore.

We are essentially normalizing post Russian war back to pre war levels. This can only make sense under one single backdrop: the global economic demand is collapsing.

It appears demand destruction is working and this is good news for the Fed, if only stubborn oil can pull in too. I believe energy is unique in this regard, due to supply issues. We will see oil collapse only after we have confirmed massive economic headwinds.

Bottom line: the market is bouncing because that’s what happens when we get oversold. Under the veneer of a nicely up tape is a hideous monster of an economy teetering. I moved to cash, up 75bps for the session. My gains were muted due to my heavy hedges.

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2 comments

  1. roguewave

    It’s a race between demand destruction and supply destruction.
    In energy, I think supply destruction wins for awhile.

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  2. Mr. Cain Thaler
    Mr. Cain Thaler

    I’m not sure I’m buying this yet. Commodity prices excluding energy are correcting but we had such a big run up, that’s probably as much a consequence of higher variance generally.

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