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Crbindex

So… how’s that deflation narrative looking?We’ve become so accustomed to headlines of ‘peak inflation’ and falling input prices that some have been throwing the wonderful ‘deflation’ word around. And we think most would enjoy a bit of deflation, as that would result in lower interest rates. However, with commodity prices (particularly oil) being a key driver of inflation, a lot of the softness can be tied back to the underperformance of commodities over the past 12 months. Supply chain disruptions have also been in the rear-view mirror and no longer a concern (or are they?) Over 30,000 UPS workers are vowing to strike if a new pay deal is not negotiated by 1 August, which should throw a nice spanner in the works of the US (and global) parcel delivery system. Russia has pulled out of a key grain deal and is bombing Ukraine ports to derail trade in the Black Sea. And India has banned rice exports (apart from Basmati) to fight domestic inflation, adding to fears of another round of food inflation. It is therefore worth noting that the Thomson Reuters CRB commodities index is seemingly breaking out of a 12-month retracement on the monthly chart. Furthermore, the retracement lasted 11 months before June’s small bullish candle, so the broad commodities index may have bottomed in May at -19.8% y/y. And assuming this is the breakout of a falling wedge, it projects a target around the 329.60 high. But if it were deemed a bull flag, the target sits around 365. And what do we think will happen to consumer prices further down the track? Of course, they will begin to rise again. And the worrying fact is that inflation tends to come and go in waves, so if commodities continue to rally then it looks like the next wave of rising y/y inflation is pending.
TVC:TRJEFFCRBLong
by CityIndex
Weekly Chart - Commodities This weeks chart features commodities & the benefits of investment portfolio diversification. US Equities (shown here via $SPY, plotted in orange) had a tremendous run off the March 2020 Covid lows. But if you've missed it, note how the relative strength of commodities (in this case the CRB index) have outperformed SPY (relationship graphed via the blue line) well before US Equities started to stall out. Every commodity index is different, and most have recently been "held back" (thus far) by their precious metal weightings (CRB has approx 7% PMs; several other popular commodity indices have more). Always paramount to "Know what you own".
AMEX:SPYLong
by jay_S_
Oranges and the Next Inflation CycleOJ1 Oranges have been building a higher low since spring of 2019 and completed the higher low in the Feb. 2020 crash. With broad commodities CRB having formed a long-term cycle low in the 1Q2020 and the global economy already heating up and many commodities already breaking out of their multi-year downtrends (Uranium, industrial metals, agriculture), it has become increasingly clear that we are in the next re-flation (growth and inflation) cycle. a higher low for oranges over a trend duration, at a time when most commodities hit all-time cycle lows, is a more structurally healthy bullish set up than most other commodities. Gold and silver tend to be the popular way to express a bullish view on inflation, but during times when bond yields are rising with inflation, consumer and industrial commodities tend to outperform the precious metals.
ICEUS:OJ1!Long
by Ludwig_Von_Mises
4
Oranges, Citrus, Commodity Inflation CycleI couldn't find any ETFs for oranges, I don't think one exists. In instances like this you have to get creative. In one of my value scanners, I found a citrus company $LMNR Limoniera. International citrus producer. I've been long this stock since it the mid-$14s. If the thesis on commodities, oranges, and global reflation turns out to be even somewhat correct, this stock should do alright. Revisiting or surpassing previous all-time highs is not out of the question.
NASDAQ:LMNRLong
by Ludwig_Von_Mises
Trading the Coming Pop in CommoditiesI don’t think its a coincidence that commodities across the board are looking bullish at exactly the same time as the economy is slowing down and the Fed is quietly conducting QE4. Fed bought twice as many bonds this month than their monthly total during QE3. October rate cut odds are at 90%. I don’t think inflation is going to explode tomorrow but I do think its coming. When the Fed launches their new QE program that will be larger than the first 3 QE’s combined, inflation will definitely tick up. DBC is not a long term hold due to decay, but it is a good way to trade commodities. I’m researching individual commodity companies to get maximum leverage during this next bull market. Go take a look at natural gas, soybeans, corn, copper, platinum, silver. They all look ready to take off. The CRB index also looks ready to take off. The relative strength index shows that commodities have strong support and are gearing up for a bull trend.
AMEX:DBCLong
by Ludwig_Von_Mises
1
Commodities are Getting Ready to POP!!Gold typically leads commodities by a few months and so given the surges and breakouts in gold, silver, and platinum, I think the CRB index is next. Looking at the chart, its clear this is a chart that has been gradually shifting in trends. In my opinion, most of the heavy selling is over. CRB index has been forming a sexy looking base and looks like it could begin surging. Timing wise, this coincides perfectly with the Fed & central banks globally beginning new easing cycles. Its still early, as the breakout has not started, but its looking ready to get its first real pop sooner rather than later. In my view the CRB index presents tremendous value over the next several years, especially now at these ridiculously suppressed prices.
TVC:TRJEFFCRBLong
by Ludwig_Von_Mises
3