Posts filed under “Commodities”
Have a look at the tables above showing the performance of various investments during the five years leading up to the financial crisis lows, and the five years after. It leads us to a rather fascinating exercise, looking at complexity, cost and performance.
Let’s start with the worst performers pre-crash: US Real Estate and Equities. Prior to the collapse, stocks had nearly doubled (March 2003 to October 2007). Note that doubling began just 3 years after the tech/dot com implosion. The peak to trough collapse of the S&P500 is even worse than that five-year track record suggests, falling 57% in about a year and a half ending March 2009. Ouch.
The Real Estate collapse was even worse: Off 58% in that five-year period. Perhaps a little context might help. Residential real estate was fairly flat (in real terms) from 1986-1996, before moving upwards until the end of the century, then exploding from 2001-06. Vacancy rates for office space in the 1990s was near zero; Shopping malls were getting built and sold off to REITs soon as they opened. Commercial real estate boomed in the 1980s, 1990s and early 2000s as real returns on fixed income was falling. The ROI for commercial real estate – and the low cost of capital – attracted lots of buyers looking for alternative to low bonds yields.
Goldman Sachs bets on the future price of aluminum while simultaneously goosing the future price of aluminum by creating a supply bottleneck in its aluminum warehouse.
John Oliver’s Arcane Details of Boron-Group Metals Pricing Update
Commodity Prices and Inflation: The Perspective of Firms Mike Bryan, Brent Meyer and Nicholas Parker July 16, 2013 We’ve been thinking a lot about commodity prices lately. In case you haven’t noticed, they’ve been falling. And with inflation already tracking well under the Federal Open Market Committee’s (FOMC) longer-term objective of 2 percent,…Read More
Summary: As the season progresses, we see corn production estimates declining, and corn prices declining. Indeed, the early information suggests yields will be less than government forecasts, and that the USDA estimates will decline starting in June. Higher corn prices and increased worries about yields should drive accelerating sales of fertilizers, pesticides and higher yielding…Read More
@TBPInvictus here. Things have not been going well of late for the ideologues who also wax economic regarding inflation, interest rates, austerity, etc. They’ve been wrong at every turn. Luskin, Ferguson, Bowyer, Laffer, Kudlow, the WSJ editorialists, and so on. Been a bad five or so years. As Barry has repeatedly pointed out, it is…Read More