This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Stocks for the 2006 Commodities Crunch

Inflation -- as measured by the consumer price Index, anyway -- showed a huge drop in November. Driven by a 16% plunge in energy prices, this broad measure of inflation at the consumer level fell by 0.6% from October. That's the biggest monthly decline in inflation since 1949, and it reset the annual inflation rate to 3.5% from a 4.3% reading in October.

But before you break out the champagne, I suggest you take a look at the evidence that the global system for producing and delivering commodities is breaking down under the pressure of demand.

The world may indeed have plenty of oil, coal, copper, iron, nickel and other essential industrial commodities in the ground to meet current demand -- especially with the big incentives to production that current high prices provide. But there's increasing evidence that commodity industries are suffering from shortages in key materials, gear and personnel. And because of those shortages, they can't get the oil, coal, etc., out of the ground without substantially higher production costs.

And that argues that we're in for another round of commodity inflation in 2006 that will increasingly feed inflation for the economy in general. In November, the core CPI -- that's the CPI with the effects of food and energy prices stripped out -- climbed by 0.2%.

That doesn't seem like much, but November marked the second consecutive month when the core rate climbed by 0.2% instead of the 0.1% monthly increases of April through September. In January 2004, the core CPI hit a 40-year low at an annual rate of 1.1%. With the November number, the core CPI is showing annual inflation of 2.1%. That's still low, but you don't have to be chairman of the Federal Reserve to know which way the trend is headed.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ACI $0.71 1.28%
AWC $4.20 0.48%
AA $8.12 0.00%
BGC $10.62 0.00%
BTU $4.24 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs