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January 5, 2007
The First Important Trend of 2007?
With visions of sugar plums barely erased from investor memory, a torrid wave of selling has befallen many commodities to begin the New-Year. The most monitored of these commodities, crude oil, declined by 4.68% yesterday and is off by more than $5 a barrel to begin the year.
Another widely monitored commodity, copper, has crashed by almost 10% in the last 3-sessions, and is if off by almost 30% from the highs seen in December.
Precious metals have held up surprisingly well in the face of these sell-offs, which suggests that commodity/inflation enthusiasts are not in full-fledged panic mode. Moreover, commodity related indices such as the CRB and Baltic Index are not as broken down as that of copper and crude. In other words, you could build the argument that a sharp decline in copper in crude are isolated price declines in a broader commodities uptrend.
But the danger in building a commodity rotation argument is readily apparent: crude and copper are two of the most widely used commodities in the world, and the implication of a continued decline in C&C is global recession. It goes without saying that a sharp slow down in the global economy would send super-cycle fundamentalists scrambling to the exits from many other commodities.
In short, while it may still be too early to paint the entire commodity spectrum with a negative brush, there should be no mistaking the fact that the conditions that made $4+ pound copper and $78/barrel crude possible last year have, just as visions of sugar plums always do, vanished.
Related Words:
September 25, 2006 Crude Realities
September 21, 2006 Super Cyclist’s Staring out their Windows
August 23, 2006 Market Rigging Can’t Stop the Super Cycle Speculators |
