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.
