BrotherMaynard

Asset Class Review: Crude, Gold and the Dollar

all of these correlations go to 1 when you most need them to be at zero.

furthermore, "crude oil" is not an asset class. even goldman sachs knows not to refer to it as such. crude oil is a commodity - which in my opinion is as a much an "asset class" as insulin. but that's another debate.

Commodities Will Lead the Recovery - Matt McCall

"That represents an awful lot of lead, copper and steel. And oil to keep them running. To boot they now have cheap money to buy."

be careful when extrapolating data points during periods of tumult. 1st - that growth rate is off a seasonally weak base as feb last year had a handful fewer days given the timing of the new year holiday. 2nd - that's in addtion to taxbreaks and stimulus that would stimulate the dead to get up and walk. 3rd - keep in mind that china's 25% increase is more than offset by the 35%-45% decrease in US auto sales, as the US auto market is several times larger than china's.

(china is indeed selling more cars than the US, on an absolute basis...but it is not a sustainable trend...given that at near flatline levels, the US still moves 650k cars vs. China's "record" pace of 850k vehicles.)

Regarding "oil to keep them running"...during Jan and Feb of this year, China exported the most diesel (their fuel of choice) in over a decade amidst weak demand and oversupply. Going back to the deatils about passsenger cars...engines under 1.6 liters accounted for 70% of the passenger vehicle market...so these vehicles are not exactly caddies guzzling 10mpg (no offense to caddies).


diesel article: news.alibaba.com/artic...

70% car stats article: www.google.com/hostedn...

Commodities Will Lead the Recovery - Matt McCall

consumption is the match that ignites inflation. without a decent level of growing consumption there is no inflation. The reason why there is not a growing level of net consumption is because the financial system is in ruins. That is why financials will lead us out of this mess. Until financials show some semblance of normalized health, we are going nowhere.

And just using common sense, financials led us in to this mess, starting all the way back in early 2007. In fact, if everyone recalls, commodities didn't tank until we were 6 months into this recession (July 08). So the fact that commodities were the last ones to join this recesssion leads one to think that they will be the last to appreciate during the recovery cycle. Financials mend first, then the consumer, then tech, then industrials and materials. Financials and consumers are the ultimate drivers of demand for materials...inflation is merely a by-product.