Below we provide Bespoke’s trading range charts of ten major commodities. The green shading represents two standard deviations above and below the commodity’s 50-day moving average, and moves above and below indicate extreme overbought and oversold levels. It’s no news that commodities have suffered major pullbacks over the last two months, and the charts below provide a good view on how bad it has been.
After trading at the top of its range for what seemed like forever, oil finally traded to the bottom of its range late last week, and after touching extreme oversold territory, it finally bounced for a couple of days, only to see big declines again on Friday. Like most other commodities, natural gas unfortunately hasn’t gotten a bounce. Since touching 13.58 in early July, nat gas is down 42%.
While gold declines from $1000 to under $800 make the headlines for precious metals, platinum and silver have actually gotten hit harder. From their peaks, silver has fallen 38% and platinum has fallen 40%.
Corn, wheat, orange juice and coffee have actually staged some pretty good rallies off of oversold levels over the last couple of weeks. Wheat almost touched overbought territory last week, but all four are still well off their highs earlier this year.
While we know all too well that most commodities have risen in price so far in 2008, how much has it cost consumers? We set out to answer this question by calculating the price change of the major food and energy commodities in the CRB index (Corn, Soy, Wheat, Cattle, Hogs, Oil and Natural Gas) and multiplying these changes by the annual per capita consumption of each item. While this method may oversimplify the actual costs, it provides a good idea of how changes in commodity prices have impacted consumers in the wallet.
As shown in the chart below, the rising price of these commodities works out to an average cost of $1.77 per person per day. While this may not sound like much, it adds up to almost $650 per year, or 1.34% of median household income. Compared to where we were, however, the current hit to the wallet feels like chump change. At the peak on July 3rd, the hit to consumers from rising commodity prices was almost $5 (there goes the afternoon coffee at Starbucks), which translates to about $1,750 per year, representing over 3.5% of median household income. Let’s hope the line continues to fall and not rise.
July 10, 2008 - (Courtesy: Bespoke Investment Group) Even after oil’s $8 pullback in two days, the long-term uptrend line for the commodity hasn’t been tested. For oil to test the bottom of its uptrend, it needs to get down to the $132-$133 range. Until then, talk of a “bubble” bursting is pointless.
Along with oil, most other commodities have seen pretty big declines in the last two days. Based on their trading range charts shown below, the declines in copper, coffee and corn seem to be the most extreme. However, none of the ten commodities shown below are even trading in oversold territory after this week’s selloff.
Donald Coxe: Capitalism Faces its Greatest Challenge
[caption id='' align='alignleft' width='163' caption='Donald Coxe'][/caption]
Donald Coxe, Chief Investment Strategist, BMO Capital Markets has just released his latest instalment of Basic Points, 'Capitalism Faces its Greatest Challenge' for Nove
Worst Oil Bear in Decades
The 53% decline in oil prices since September 22, 2008, without a 20% rally is the biggest since 1986 (based on available daily data). The week of Sep. 16 to Sep. 22, oil rallied 20%+ after dropping 37% from the July 3, 2008 high.
In all, the pric
Year to Date World Stock Market Returns
Is this a buyer's market or what?
Look at Russia; although most folks aren't interested (but should be) Russia is not only off by -64.5%, its valuations have compressed to 4.3 times trailing earnings. China stocks are down -64.3% is fetching 14.55
Hugh Hendry Interview: Invest in Long Government Bonds
Hugh Hendry, the brilliant, brash and outspoken and eloquent CIO of Eclectica Asset Management, one of the UK's most prolific asset managers discusses global markets and is investing in long-term government securities in the US and UK. Dominic Frisby
Donald Coxe: Barron's Interview
This week's issue of Barron's features an in depth interview with Don Coxe, Chief Investment Strategist, BMO Capital Markets. Mr. Coxe is best known for his highly read monthly newsletter, 'Basic Points,' as well as his bi-weekly conference calls. Hi
New Audio Resource at GreenLightAdvisor.com
Now you can listen to the Investment Outlook and Commentary from Bill Gross (PIMCO), Vanguard Funds' Portfolio Managers, and others on GreenLightAdvisor.com's Audio Resources page.
This month, Bill Gross presents his latest investment outlook,
Risk of Default at Large Financials
It appears that CDS rates at the largest US financials has fallen. Morgan Stanley and Goldman Sachs have the highest CDS prices while Wells Fargo and HSBC now have CDS prices below 100. These prices are indications of the cost to insure $10,000 of bo
Obamarket?
The-day-after-the-election results are in. Some folks (partisan) seem to believe that this is due to expectations that left-wing policy-making from the Obama administration will have consequences, particularly in the way of tax hikes. However, while
Commodities Snapshot
A snapshot view of commodities reveals that they have all experienced some mild recovery at the end of the month of October, as liqudation pressure caused by the deleveraging of hedge fund and bank balance sheets which wreaked havoc on markets duri
Global Writedowns vs. Capital Raised
According to Bloomberg data, capital raised now exceeds global writedowns, and this may be a strong signal for the market that the banking sector has rounded the corner on the credit market debacle. During the previous month capital raised was tra
Heebner and Holmes on Emerging Markets
[caption id='' align='alignnone' width='342' caption='Click image for video'][/caption]
Ken Heebner, CGM Funds, and Frank Holmes, US Global Investors, discuss emerging markets in the context of the Fed's 50 bps rate cut last week. Both their
Wise Words
The important thing is not to stop questioning. — Albert Einstein
Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment ... by Charles P. Kindleberger, Robert Aliber Amazon Price: $13.57
Customer Review: I am no economist and just an interested general reader. I expected to read narratives about past financial crises and how they played out. But this book is not organized that way. It doesn't tell any story from start to finish. Instead it references...
Gold: The Once and Future Money by Nathan Lewis Amazon Price: $16.77
Customer Review: This is a great book discussing the reasons why Gold will be the ultimate monetary standard and why an individual should consider making gold a part of his personal portfolio. However, the people looking for an investment guide should look elsewhere....
The Master Swing Trader: Tools and Techniques to Profit from Outstanding Shor... by Alan S. Farley Amazon Price: $37.77
Customer Review: This is a great book and I'm buying it for the second time as the other is packed away in another country somewhere. Farley is awesome. If you don't like the book, you simply don't get it. If you're lame enough to complain about it on here you've got...
The Millionaire Maker's Guide to Wealth Cycle Investing by Loral Langemeier Amazon Price: $16.47
Customer Review: While this book covers some of the basics, it is far too general to be of much use. You can do better elsewhere. Think of it as an infomercial that funnels people into their other programs and personalized coaching where they can really get into yo...
Selling to Zebras: How to Close 90% of the Business You Pursue Faster, More E... by Jeff Koser, Chad Koser Amazon Price: $13.57
Customer Review: We've all been through many sales training classes and learned different sales methodologies, but Jeff's "Selling to Zebras" is unrivaled. It's different, it's logical, it's real, it hits home with prospects, and it works! Jeff's knowledge, deliver...
Professionalizing Business Analysis: Breaking the Cycle of Challenged Project... by Kathleen B. Hass Amazon Price: $24.00
Customer Review: Business Analysis is an up and coming career opportunity. While Business Analysts work with Project Managers, they specialize in understanding the processes, their limitations and potential impact change will have on the processes (positive and negat...
Stock Cycles: Why Stocks Won't Beat Money Markets Over the Next Twenty Years by Michael A Alexander Amazon Price: $13.45
Customer Review: This book changed my life! This is a must read for everyone whether you invest in the stock market or not. This book displays the kind of economic and literary genius that comes along once in a lifetime. His points are well thought out and clearly ar...
BCA Research
Click on image for
BCA’s Daily Insights
Podcast: WSJ What's News Twice Daily
Updated Twice Daily - Click to Listen
Stay on top of the latest headlines from the Wall Street Journal Online.
Wall Street Journal's What's News, Nov. 18, 2008by The Wall Street Journal
Yahoo CEO Jerry Yang will step down and Senator Harry Reid has pledged to press ahead with legislation to help automakers
Jeffrey Saut Daily Audio Comment Raymond James
Listen to the recording with one of the media players below:
Jeff Saut’s Daily Audio Comment is recorded every weekday, except Wednesday, at 9 a.m. ET. It is made available to the public on this Web page at approximately 1 p.m. ET.
Updated Twice Daily - Click to Listen