woensdag 15 januari 2014

CRB Index Vs. Emerging Markets

I talked about how the emerging markets and especially China depend on commodities. If China does well, the commodities will do well. The mining industry (example Australia) will follow this trend. This means that the CRB index is correlated to the emerging markets.

This is illustrated by a nice chart from Ed Yardeni.


Apparently Ed believes the commodity supercycle has reached its end since 2011, contrary to what Peter Schiff believes. I do think that the mining industry had a huge boom since 2000 and is now in the process of unwinding. Commodities have been flat because the U.S. dollar was strong. But I don't think the Western world is in such a good shape as Ed thinks, that's why I think this commodity cycle is not over yet.

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