Commodities’ Prices Signal Downturn as US Stocks are “Last Asset Class Standing”
The chart says it all. In addition to “Dr. Copper” (the metal with a Ph.D., as veteran analyst Barry Ritholtz once quipped), Gold, Aluminum and Coffee have all joined the downturn in commodities prices.
Every time we see this sort of divergence, stocks eventually follow. It’s likely to happen even in a Quantitative Easing-fueled, “buy the dips” environment. US stocks have shrugged off an exceptional amount of disappointing macro data in recent months, including plunging Purchasing Managers’ Indexes, a huge miss on the nonfarm payrolls number, and shockingly low GDP growth. Let’s see how long equities can stay aloft before the QE helium starts leaking out of the balloon.