What are commodities telling us?

The trend of commodities (click on chart to enlarge) is very interesting and it may signal an important change in the investment environment.

Commodities seem to have reached a bottom. The rising trend is obvious. Let's assume this is the case. What are the implications from a business cycle point of view?

1. The global economy is strengthening.
2. Inflationary pressures are on the way up.
3. Bond yields are bound to rise with the increase of the inflation premium.
4. Commodity driven stocks will perform well and are likely to outperform.

What is bothering me is that a month ago the markets were concerned about depression. Now we are looking to such a strong expansion to drive commodities higher.

Time to pause.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977