An analyst at US financial firm Raymond James says not to take your eye off steadying and rising commodity prices.
- “The rally in equities globally since October has been built partially on the continued decline in commodity pricing, which has helped U.S. and European consumers, lowered the inflation outlook/rates, and generally helped build a narrative of “soft landing” around capital markets,”
- “However, since late May, the Bloomberg commodity index has been moving up (~10%), and though still down on the year, it’s worth paying attention to, because continued commodity inflation has the chance of transitioning the dominant narrative from ‘soft landing’ back to ‘stagflation’, essentially returning to summer/fall 2022 narratives.”
Says they could poison the equity market, acting as “bull market kryptonite".
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Earlier I posted on what JPM is watching to prompt an end to the bull market:
Weekly candles showing what a great year for equities 2023 has been so far.