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Is the Commodity Super-Cycle Over Already?

ByEd Yardeni
Published 11/04/2013, 12:51 AM
Updated 07/09/2023, 06:31 AM

Raw Industrials and World Industrial Production

Global industrial production rose to a new record high during August, and is up 2.6% y/y. So why has the CRB raw industrials spot price index been weak so far this year? I am starting to think that it may be a misleading indicator of the global economy. The commodity index was highly correlated with the production index from 2001-2011 during the so-called “commodity super-cycle.” It was super, but it was short, lasting only 10 years. Lots of capital was invested to increase the supplies of industrial commodities. It paid off in more supplies, but weaker prices. Even the recent weakness of the dollar doesn’t seem to be lifting commodity prices as it did in the past.

The same can be said for crude oil and gasoline. Earlier this year, the prices of both were bolstered by geopolitical tensions, which may be subsiding now--resulting in downward pressure on oil and gasoline prices. Of course, the recent decline in pump prices should provide a boost to US consumer spending.

Today's Morning Briefing: Driving the Global Economy. (1) Some positive surprises. (2) The weakness in industrial commodity prices may be misleading. (3) The end of the super-cycle already? (4) US business sales support 5% growth outlook for S&P 500 revenues. (5) Intermodal railcar loadings at record high. (6) Short-term business credit jumps to record high too. (7) Manufacturing expanding everywhere. (8) Global auto industry leading the pack. (9) Analysts turning more upbeat on global auto margins and earnings as investors boost valuation multiple. (10) “12 Years a Slave" (+ +).
Trade-Weighted Dollar and Commodity Prices

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Latest comments

Oil is falling due to Hussein Obama getting in bed(and liking it)with the mullah regime(Hassan Rohani) thugs. So Hussein and Hassan copulation means oil will deflate.. . Your suspicion on gold falling initially due to deflationary down wave is sound. . USD is going up since deflation makes the USD, i.e. cash, King.. . The same deflationary down wave hitting us over and over is causing gold and oil to sink.. . . In light of this onslaught of deflation, Grandma Yellen will have to not only abandon tapering, but she is going to have to raise QE to $110+ billion just to push back against bond vigilantes... My vote goes to Grandma Yellen.. Tapering will die of natural causes.. . 'Nuff said.
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