It is not much fun being a bear at the moment with seemingly everything going up - except the US dollar. But there is still hope, according to Soc Gen’s Albert Edwards.
In his latest Strategy Weekly he draws our attention to the recent performance of the Baltic Freight index, which is some 40 per cent off its June high.
I was reading the other day the blog of my former colleague Daniel Pfaendler, who was making some interesting observations on bond yields and the Baltic Freight Index which we replicate on the cover chart. He believes the weakness of commodities is evidence that the Chinese commodity re-stocking cycle is drawing to an end. He cites Trader’s Narrative blog - that suggests equity investors should also be watching closely.
Here’s why.
Scary huh? Albert thinks so.
An end of the Chinese bubble of belief will have serious consequences for the global financial markets. For those who are looking for a trigger for a retrenchment in equity markets, we suggest watching the RJ/CRB and Baltic Freight indices closely.
And here’s the recent performance of the RJ/CRB commodity index.
Some way off its August highs.
And there’s one more thing Albert thinks investors should be looking for. (Emphasis ours).
It’s almost as if the biggest credit bubble in history never occurred.
Investors are increasingly convinced that a sustainable global recovery is emerging out of the wreckage. All praise to the central bankers (and Gordon Brown) for saving the world!
I’m waiting till someone writes about the return of The Great Moderation and suggests Ben Bernanke is the new Maestro. Then I’ll know the lunatics have taken over the madhouse…..yet again!
Related link:
This bear is not for turning - FT Alphaville
