CRB vs Sp'500, 10yr
CRB, weekly, 6yr
Summary
Considering the massive ramp in equity prices since the Oct' 2011 low of sp'1074, it is remarkable to reflect on just how weak commodity prices have been.
Obviously, the Feds 'QE/hot money' is not yet feeding its way into the commodity market. Yet, each month there are ever more 'benny bux' floating around in the US capital markets. Sooner or later, equities will become saturated, and the surplus money will start to flow into commodities.
Best guess?
I would guess a shift into commodities - especially Oil, could begin as early as this summer. Considering SP' is already in the mid 1600s, it is a little surprising that Oil hasn't already broken back above the big $100 threshold.
A weekly close for WTIC above $100, will easily open up $110, and then the more important $120s. Where it will get real difficult for the Fed to continue QE is with Oil in the 130s. If we do see a ramp in energy prices - whether this summer or next, its going to be real tough for the Fed to keep on printing.
Perhaps Oil in the 120/130s, along with headline jobless <7%, will be the excuse the Fed need to end, or at least trim, the current programs.
That's all for this week....goodnight from London
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*next main post, late Saturday, on the US weekly index charts.