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    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

One of our big macro themes for back half of 2012 and into 2013 is that the super commodity bubble that’s occurred due to the Federal Reserve’s inflation-inducing policies will deflate. Sure enough, if you look at the chart we offer up below, you can see that the cycle is moving and that commodities are deflating after a massive run in 2010 and 2011. For the record, the CRB Index is down -17.7% since the start of 2Q11 and down another -4.3% quarter-to-date. Interestingly, deflation could act as an economic stimulus of sorts through disinflation in actual consumer and producer prices.

Deflating Commodity Bubbles - select commodities