Seems many are positioned for rising inflation in their fund holdings. I am no chartist but see tops galore in commodities - either exhaustion tops or just plain old fashioned tops. And lumber shows a classic triple top. Some commodities with exhaustion tops are down 20% to 25% (and more if you include palladium) in a very short period of time. I am a bear on equities (like just about everyone else) In January I had alluded to the 73/74 period with prices unfolding far worse than many bears are currently expecting - much deeper and longer. And the bond market looks broken beyond repair. But I am beginning to wonder if we are all being fooled by the headline news of uncertainty over Ukraine, interest rates, inflation, and the pandemic The stock market is a counterintuitive creature and even more so at bottoms. Logic just doesn’t cut it. I don’t want my bearish bias to influence me and will be closely watching for one or two humongous momentum days that come out of the blue (upside over downside volume) and then go from there. In other words, let the market tell me what to do and not my opinion. Meanwhile, If anyone can explain what is going on with the plummeting commodity prices I am all ears.
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https://mutualfundobserver.com/discuss/discussion/59300/my-commodities-basket-got-clobbered-today-dbc
Since oil is a major component within the Bloomberg commodity index, large swings of oil price in both directions is what you are seeing. Crude oil went up to low $70/barrel to $130 briefly and now at $108. The Ukraine war and the sanction are part of the story here.
https://finance.yahoo.com/quote/CL=F?p=CL=F&.tsrc=fin-srch
https://stockcharts.com/freecharts/candleglance.html?$CRB,$GKX,$GJX,$GYX,$GVX,$GPX|C|0
$GKX - agricultural, $GJX - energy, $GYX - industrial metals, $GVX - livestock, $GPX - precious metals
The hedgies were profit-taking last week at the expense of the plebs.
"One change from the first days of the war, though, is that oil prices are now falling. That's possibly on hopes of a resolution, but more likely because China shutdowns are threatening the global demand for energy. Crude fell 5.8% on the day, to $103.01 a barrel. It's down 17% since March 8."
"For nearly two years, though, it's been the tale of two pandemics. As cases surged in the U.S. and Europe, China's "Zero-Covid" approach seemed to work. Covid waves in the West continued to crest, while China's numbers were virtually flat. Chinese factories kept going, one bright spot amid the global supply chain's problems.
But on Sunday, China reported 1,800 new cases of symptomatic Covid, its highest daily total in two years. The country put Shenzhen and its nearly 18 million residents under a new lockdown that will last at least a week. Shenzhen is home to key manufacturing facilities, including Apple iPhone assembler Foxconn. Shanghai is also dealing with new lockdowns."
I resemble that remark.
I don’t think I can time the markets. (Perhaps others can.) I almost always regret it. Raising my “alternative” sleeve from 30% to 40% is probably the best move I’ve made recently. it’s a moderate but diversified mix of various strategies and includes one equity. Some came out of growth and some out of income. Reduces neck discomfort from all the whip-saw action.
Still holding another 9-10% in hedges against equity downdrafts. About half of that in TAIL - which reduces the discomfort evident in that classic “Observer” thrill-ride photo that’s already been reposted.
Gold’s down over $45 today to just above $1900. May seem like a lot - but need to remember it got down to $1700 on 2 or more occasions in 2021. So still well above that.
EDIT: While gold is down, the p/m miners are having a decent day up nearly 1%. Looks like the industrial metals have trimmed their morning losses as well.
You can believe in inflation without giving it a name or degree: ie “transient”, “rampant”, “slight” or “just about right”. I can’t think of any other reason for those of us with gray hair (or none at all) to put a single dime at risk unless we think paper currencies will buy less in coming years than they do today.
I did have a trailing stop order trim my DBC holding by about 20% after a 5% drop from highs last week. But I plan to hold on for the ride with the remaining commodities money through 2022. This war has just added tremendous volatility and confounded all investing.