CHART OF THE DAY: RECOVERY IN METALS PRICES?
From Bloomberg:
Investors displaying “a bout of impatience” for a worldwide economic recovery may soon find relief, according to Tim Bond, head of global asset allocation at Barclays Capital.
“The hard evidence of recovery that the markets seem to require will be available in August and September,” Bond wrote in a June 26 report. His estimate is based on data for business cycles since World War II.
The CHART OF THE DAY tracks the performance of the industrial-metals component of the Standard & Poor’s/Goldman Sachs Commodity Index and U.S. raw-steel production, as Bond did in the report. The metals gauge, consisting of aluminum, copper, lead, nickel and zinc, climbed 36 percent for the year through last week. Steel output rose 42 percent during the period.
Bond made the comparison to illustrate that industrial activity is rebounding along with commodities.
“The trend in demand is upwards, so the trend in industrial commodity prices should be similarly higher,” he wrote. “Prices have not run markedly far ahead of economic developments.”
Industrial production and corporate profits are likely to accelerate in the next few months as the global economy emerges from recession, according to Bond. This would bolster shares of raw-material producers and other companies most closely linked to fluctuations in industrial output, in his view.
“The trend in demand is upwards, so the trend in industrial commodity prices should be similarly higher,” he wrote. “Prices have not run markedly far ahead of economic developments.”
I’d like to see his data on how economic development is not running “markedly far ahead of economic developments”.
If metals and steel are ahead 36% and 42% for the year, then by his own statement that would mean that economic development data would have to match that.
“commodity prices” instead of first reference to economic development in second paragraph…
Anonymephistopheles,
we are on the same page. I dont know if you read my post on commodities, but there is very little evidence that the price changes are anything more than stimulus and seasonally driven….Oil is up 100% in the last 4 months. Gas is up 120%. The numbers just dont correlate to the economic and consumer weakness….
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