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Commodities

Oct 05 2018

Time To Get Contrary With Commodities?

  • Oct 5, 2018

After a strong 2016 and a “Bridesmaid” (i.e., sector runner-up) performance in 2017, the Materials sector seemed primed to benefit from the “late cycle” character of the economy in 2018.

Sep 08 2018

The Commodity Bull That Equity Investors Missed...

  • Sep 8, 2018

While the bottom-line impact may ultimately be the same, there’s one thing we find more demoralizing than getting the direction of an asset wrong: getting the direction right and not getting paid for it.

Apr 06 2018

A Troublesome Commodity Pattern...

  • Apr 6, 2018

During each of the last five months, the U.S. economy has shown a broadening array of “late-cycle” characteristics.

Apr 06 2018

The Commodity Stock Disconnect

  • Apr 6, 2018

We’ve chronicled the ever-expanding gap between commodity prices and commodity-oriented equities.  Don’t expect a rebound in one based on the strength of the other. There’s no clear historical tendency for the weaker asset to catch up.

Sep 08 2017

Commodities: How Strong Is Too Strong?

  • Sep 8, 2017

While the bond market doesn’t believe it, the past couple of months leave no doubt that the U.S. industrial economy has recovered from the energy-related slump of 2015-2016.

Feb 07 2017

Stock Market Observations

  • Feb 7, 2017

The Major Trend Index stabilized in a moderately bullish range during the past several weeks, yet the Momentum/Breadth/Divergence category is almost the sole carrier of the bullish torch.

Aug 05 2016

Commodities: More To Come?

  • Aug 5, 2016

Commodities have enjoyed a strong year thus far, and the GS Scores on the Materials sector have followed suit (albeit with a slight lag), as highlighted in June’s “Of Special Interest” section.

May 06 2016

Thoughts On The Commodity Bounce

  • May 6, 2016

The global economic expansion will enter its eighth year later this summer, yet the world’s central bankers continue to fight deflationary demons as if it’s 2008.

Apr 07 2016

Has The Hook Been Set?

  • Apr 7, 2016

Two months ago, we suggested a short-term bounce in oil might prove to be the fundamental “hook” that would rationalize a bear market rally. We thought a bounce to $45 might do the trick—and oil futures essentially cooperated, reaching $41.90 on March 22nd.

Mar 08 2016

Where’s The Profit Leverage?

  • Mar 8, 2016

Industrial commodity prices and the latest ISM figures both point to a stabilization in the manufacturing sector following a two-year deceleration. Expectations for this year’s earnings have turned more optimistic as a result, but are the hopes warranted?

Mar 07 2016

Muddle-Through Still Has The Benefit Of The Doubt

  • Mar 7, 2016

The market’s latest infatuation with bonds was driven by grave concerns that the weakness in energy and manufacturing sectors might be spreading to the U.S. economy as a whole.

Nov 06 2015

Surveying The Commodity Carnage

  • Nov 6, 2015

The wreckage is beginning to look interesting and—with our cautious stance on the stock market—it would be fun to be bullish about something. Both our GS Scores and intuition suggest it’s still too early.

Nov 06 2015

What’s Driving EM Currency Weakness?

  • Nov 6, 2015

A strong dollar and low commodity prices are major forces dragging down EM currencies across the board.

Jul 08 2015

Navigating The First Rate Hike

  • Jul 8, 2015

Our current view is the lift-off will be December or later. Assuming inflation will pick up and the Fed hikes the rate by the end of 2015, stocks will perform relatively well, with international stocks a better bet than U.S. stocks.

Apr 08 2015

Commodity Washout?

  • Apr 8, 2015

Oil’s 60% decline in the last nine months has been the headline-grabber, but the remaining components of the Continuous Commodity Index (CCI) deserve some love, too.

Dec 05 2014

Sector Margin Trends

  • Dec 5, 2014

The S&P 500 record median profit margin of 10.3% is now almost a full percentage point above the last cycle’s peak of 9.4% (second quarter of 2007). Trends across S&P sectors are not as uniform as one might expect, though, with only half of the ten sectors last quarter at profitability levels that exceeded their 2001-2007 expansion highs.

Dec 05 2014

The Surprising Winners In Emerging Markets

  • Dec 5, 2014

While we expect an eventual break in this relationship, today Emerging Market equities are following, fairly tightly, the cycle of industrial commodities—a cycle that rolled over (on a secular basis, we believe) in 2011.

Dec 05 2014

Commodity Sentiment Crushed, Yet Commodity Stock Valuations Above Boom Levels

  • Dec 5, 2014

We’ve been negative on industrial commodities for some time, reflecting the persistently (and unsustainably) high levels of investment evidenced by our Global Group analyses of commodity-oriented industries.

Nov 07 2014

Commodity Bears (i.e., Everyone) Should Read This

  • Nov 7, 2014

The commodity “oversupply” story remains intact, with high levels of capital spending in the Energy and Materials sectors persisting, despite the 3 1/2-year downtrend in commodity prices.

Aug 07 2014

Correlation Breakdowns

  • Aug 7, 2014

We’d rather eat broken glass than have to forecast financial market correlations, but that doesn’t mean we ignore them altogether.

Jun 06 2014

Commodities: Not A New Bull

  • Jun 6, 2014

The year’s second biggest surprise (next to the relentless drop in bond yields) might be the YTD bounce in the major commodity indexes.

Mar 07 2014

The Bull Market Turns Five

  • Mar 7, 2014

The post-2009 stock market upswing now qualifies as only the sixth cyclical bull market since 1900 to last five years or more. But only three of the previous five-year-old bulls lived to see a sixth birthday.

Feb 07 2014

High Correlations And Their Meaning

  • Feb 7, 2014

While our tongue-in-cheek “Correlation Of Everything” measure has retreated from record levels, it remains far above anything seen prior to 2010.

Jan 08 2014

Buy The Bridesmaid, Not The One Looking To Rebound

  • Jan 8, 2014

The investment leadership of a given year has historically had better-than-even odds of outperforming in the following year at both the asset class and equity sector levels.

Jan 08 2014

Commodities In 2014: Supply Remains A Concern

  • Jan 8, 2014

While gold garnered most of the headlines last year (down 27%), commodities performed badly across the board in 2013. We expect more of the same in 2014.

Aug 07 2013

A Comprehensive Look At The Emerging Markets: Diagnosis And Prognosis

  • Aug 7, 2013

We examine Emerging Markets from both the top-down and bottom-up perspectives as we try to identify where to move and what to expect. We check in on two successful EM thematic group ideas as well.

Aug 07 2013

A New Leg In The Commodity Decline?

  • Aug 7, 2013

For more than two years we’ve discussed the supply-side risks to commodity producers stemming from capacity built during the manic “Third Act” of last decade’s Three Act Play in commodities. Commodity-oriented equities have indeed underperformed since 2011, but to date, most pundits have laid blame squarely on the demand side.

Jul 09 2013

Gold’s Implications For Other Commodities

  • Jul 9, 2013

Gold’s recent weakness may be more ominous for industrial commodity investors.

Jun 07 2013

Commodities: Still Worried About Supply

  • Jun 7, 2013

Commodity producers seem to believe that last decade’s commodity boom is set to repeat. This belief itself probably ensures that it won’t.

Jun 06 2013

Are Alternative Assets Effective In Hedging Portfolios?

  • Jun 6, 2013

Alternative assets have attractive return rates since 1994. But their portfolio diversification benefits have diminished as they become more equity like, though their correlations to bonds have fallen.

Jan 07 2013

The Role Of Commodities In A Multi-Asset Class Portfolio

  • Jan 7, 2013

The primary benefits are their inflation and U.S. dollar hedging capabilities.

Dec 06 2012

The Outlook For Commodity Stocks

  • Dec 6, 2012

Energy looks cheaper and appears much more washed out from a sentiment perspective. Contrarians looking for commodity exposure should favor this sector over Materials. 

Oct 04 2012

Gold: Twelve Years And Going Strong

  • Oct 4, 2012

A textbook, commodity-like top in gold would be a panicky, spiky event that would take the metal well above $2000.

Feb 05 2012

Up Market In January = Up Year??

  • Feb 5, 2012

As January goes, so goes the year. 2012 looks like it could well be an up year for stocks based on the January barometer. Market cycle chart from 1958 also says 2012 will be the “time to buy.”

 

Feb 05 2012

Falling Commodity Prices Tamping Down Inflation Pressures

  • Feb 5, 2012

Through November, the CPI is now up 3.4% from year ago levels, while the PPI is up 5.7%.

Oct 05 2011

Near Term Measures Pointing Toward Lessening Of Inflation Pressures

  • Oct 5, 2011

Twelve month rates of change will not rise much from current levels through the rest of 2011.

 

Aug 04 2011

Market Interrelationships: “Unlearning” What We Thought We Knew

  • Aug 4, 2011

Doug Ramsey examines several once very reliable relationships between stocks, bonds, inflation, and commodities.

Feb 04 2011

A “Late-Cycle” Economy?

  • Feb 4, 2011

Economic growth is re-accelerating, but that growth is coming at a cost…price pressures are building significantly. Manufacturing prices are up along with commodity prices.

 

Jan 05 2011

Inflation Acceleration In 2011

  • Jan 5, 2011

Commodities are on fire, and it’s not just because of the weaker dollar. Commodity prices are signaling significant pass-through inflation pressures building.

Nov 04 2010

Commodities vs. Style Factors: A Risk Perspective

  • Nov 4, 2010

Chun Wang uses the CRB Index as a risk proxy to test the effectiveness of a range of quantitative factors in various environments. Commodity prices have become an increasingly important measure of risk, since higher commodity prices indicate a greater risk appetite and vice versa.