Resource Alert Briefing June 5: Tarnished Silver to Shine Again and Bake-Cation Bonus
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The Futures business, synonymous for Commodities as all Commodities are Futures but not all Futures are Commodities, always has forward focus. The current market level is derived from all of the data and information we know and is the reason price is where it is. That established equilibrium is not a forecast but more of a look backward at price inputs.
An interesting reversal of thought has overcome skittish investors with Energy prices going from too high to support any bullish environment to so low that an immediate catastrophic global slowdown is almost assured. The 2011 Staycation concept of not being able to afford the gasoline prices for summer family travel has diminished as an economic excuse to remain close to home. Crude Oil has dropped 30% since the April peak a year ago.
That drop has not necessarily translated into lower pump prices at the same ratio, another riddle wrapped in a conundrum by Big Oil, but record all time low interest rates making mortgage payments much lower and diving food costs have to help the consumer bottom line.
The Commodity Research Bureau Index that covers a broad swath of the commodities markets has declined 100 points from the 2011 peak and back to the prices from the end of 2009. Resources are cheaper as price pressure is now on the downside to renew DE-flation concerns.
Metal action Friday after the monthly Employment report tells a story of possible stimulus undercurrents with Gold rallying $60 to finish back inside the long standing trading range between $1800 and $1600 for the past 10 months. A three-week base was made below the critical threshold with this breakout evidence of changing internals.
A Key Reversal in the Dollar Index Friday, new highs with a lower close, and also in 30-Year Treasuries in Monday's session signal stability for the markets. The US Dollar rally is unsustainable in the current economic and political climate.
A note about the jobs data Friday in that it has not been mentioned that half of the sell off happened before release on global concerns. A 2% slide has not put America in the economic peril as some would lead you to believe.
Heightened expectations are not always easy to achieve as evidenced by a positive employment payroll increase that was a disappointment. The trend is not a strong as anyone would like but on the plus side for 27 consecutive months and heading in the right direction.
Click here for more from my CNBC clip.
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