$RJA 4 Reasons Why Commodities Will Attract Lots Of Interest
https://seekingalpha.com/article/4149152-4-re...s-interest
Summary
Commodities prices impact our lives and our investments.
Reason 1: The dollar is a buy signal.
Reason 2: Inflation is the best friend of the asset class.
Reason 3: Divergence is a potent bullish cocktail.
Reason 4: Demographic trends and economic growth.
Volatility is picking up in markets across all asset classes. At the end of January, the stock market began to move lower as interest rates across the yield curve began to rise. The long bond broke down through an area of technical support and the rise in rates has threatened the bull market in bonds that had been in place for three decades. When rates rise, fixed income securities become more attractive when compared to stocks which had been on a one-way path higher since the last significant correction in the equities market in early 2016.
In markets, capital tends to flow to asset classes that offer the best opportunities for both yield and capital appreciation. Over recent years, stocks have been the place to be, but that could be changing. When it comes to bonds, if rates are rising because the "real" rate of interest is moving higher, these instruments are likely to pull capital away from the stock market. However, if the rise in rates is due to an increase in inflationary pressures in the economy, both stocks and bonds could suffer an outflow of assets. Inflation eats away at the value of money, and it tends to be an economic condition that causes the prices of raw materials to move higher, and in some cases to skyrocket.
Commodities prices impact our lives and our investments
The production of commodities is a local affair as they come from areas of the world where they exist in the crust of the earth or where climate and weather support crop output. Chile is the world's leading producer of copper, while more than half the world's crude oil reserves are located in the Middle East. The U.S. is the largest producer of corn and soybeans, while Brazil is a leader when it comes to sugar, coffee, and orange production. Meanwhile, most people on the earth are consumers of commodities. We use energy to power our daily lives when we fill up our cars with gasoline, a processed product of oil. When we heat or cool our homes, we consume heating oil, natural gas, and electricity, all commodities. The food we eat are commodities whether we are carnivores, vegetarians, or vegans. Our homes are made of construction materials, which are industrial commodities. Think about it, when we turn the faucet on for a drink of water or to take a shower or bath, the water flows through pipes that are often made of copper. There are so many other examples of how the commodities that trade each day on futures exchanges touch our daily existence.
https://seekingalpha.com/article/4149152-4-re...s-interest
Summary
Commodities prices impact our lives and our investments.
Reason 1: The dollar is a buy signal.
Reason 2: Inflation is the best friend of the asset class.
Reason 3: Divergence is a potent bullish cocktail.
Reason 4: Demographic trends and economic growth.
Volatility is picking up in markets across all asset classes. At the end of January, the stock market began to move lower as interest rates across the yield curve began to rise. The long bond broke down through an area of technical support and the rise in rates has threatened the bull market in bonds that had been in place for three decades. When rates rise, fixed income securities become more attractive when compared to stocks which had been on a one-way path higher since the last significant correction in the equities market in early 2016.
In markets, capital tends to flow to asset classes that offer the best opportunities for both yield and capital appreciation. Over recent years, stocks have been the place to be, but that could be changing. When it comes to bonds, if rates are rising because the "real" rate of interest is moving higher, these instruments are likely to pull capital away from the stock market. However, if the rise in rates is due to an increase in inflationary pressures in the economy, both stocks and bonds could suffer an outflow of assets. Inflation eats away at the value of money, and it tends to be an economic condition that causes the prices of raw materials to move higher, and in some cases to skyrocket.
Commodities prices impact our lives and our investments
The production of commodities is a local affair as they come from areas of the world where they exist in the crust of the earth or where climate and weather support crop output. Chile is the world's leading producer of copper, while more than half the world's crude oil reserves are located in the Middle East. The U.S. is the largest producer of corn and soybeans, while Brazil is a leader when it comes to sugar, coffee, and orange production. Meanwhile, most people on the earth are consumers of commodities. We use energy to power our daily lives when we fill up our cars with gasoline, a processed product of oil. When we heat or cool our homes, we consume heating oil, natural gas, and electricity, all commodities. The food we eat are commodities whether we are carnivores, vegetarians, or vegans. Our homes are made of construction materials, which are industrial commodities. Think about it, when we turn the faucet on for a drink of water or to take a shower or bath, the water flows through pipes that are often made of copper. There are so many other examples of how the commodities that trade each day on futures exchanges touch our daily existence.
