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Thoughts On The CRB

Current Reuters CRB Components
Subgroup Markets Subgroup
Weight
Energy Crude Oil, Heating Oil,
Natural Gas
17.6%
Grains Wheat, Corn, Soybeans 17.6%
Industrials Copper, Cotton 11.8%
Meats Live Cattle, Lean Hogs 11.8%
Softs Coffee, Cocoa, Sugar
Orange Juice
23.5%
Precious
Metals
Gold, Silver, Platinum 17.6%

The CRB is a weighted Commodity Index. I think it gives some perspective. Chart attached going back about 2 years and 5 years.

The Index is pretty much right where it bottomed in late 2012 (debt ceiling debate) around 550.

The CRB also traded right around 550 last Dec (2011) (another bottom for Precious Metals).

With the exception of March - early July 2012 (European elections and bad US economic data) the CRB has held the 550 level since October of 2010.

I don't really have a point except that we're at an "interesting" level. If commodities do NOT hold here - I don't see how it augurs well for Equities (domestic or international).

US, European, and Asian equities have been on an absolute tear for the past few months.

Credit markets and volatility have been flashing concern for the past month and the equities may be "confirming". However - I DO NOT believe the efforts to reflate with easy monetary policies are coming to an end anytime soon. Deflation freaks out Central Bankers.

You just can't have your cake and eat it too. Being honest and understanding WHY we've seen the runup in equities, commodities, etc is key. Psychologically we like a narrative to explain market movement. The answer (in my opinion) is easy money and yield chasing......not real global growth. I can't wait until that day comes, but I just don't see it yet.

We'll get a reminder of the global picture tomorrow morning when we get the Eurozone GDP release where they expect contraction of 0.6%.(Lagging Indicator) The ECB also releasing economic "growth" (they use that term loosely) expectations tomorrow.

Crude closing on lows.

Stocks on lows

Metals well OFF lows.

Grain options expire TOMORROW.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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