Rising commodities cause a decline in purchasing power and a decline in profitability. The outcome is slower growth in the economy.
The stock market responds to a slowdown in the economy.
A slowdown in the economy eventually causes commodities to decline.
A slowdown in the economy reduces the need for money. The outcome is lower high-grade bond yields and higher bond prices.
The bottom line is that in a weaker economy the only safe refuges are cash and high-grade bonds. More details in The Peter Dag Portfolio.
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest
To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.
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