The crash continues...
In a note to subscribers this morning, Hedgeye CEO Keith McCullough (once again) highlighted the developing commodity bear market:
"The crash in Copper (-1.8% this am to $2.02) continues and Oil is down another -3%, testing $40 WTI (again) – hardly the green shoots a supply/demand bull is looking for, but I’m probably being too bearish looking at fact vs fiction."
It's no coincidence that the Copper and Oil price crash coincided during a week of U.S. dollar strength. The U.S. dollar index was up +0.6%, and +10.3% YTD, after ECB President Mario Draghi said, "We will do what we must to raise inflation as quickly as possible." That sent the Euro -1.2% on the week to -12% YTD.
This strong dollar event is just as deflationary a force as it was during the summer.
Consequently, things like Copper have plummeted. Copper is off 28% year-to-date.
It's happening all throughout commodities. The CRB index is down 20% year to date.
Here is a look at some other commodities:
- Wheat prices dropped another -1.6% on the week, taking it back into crash mode at -20.8% YTD
- Nickel deflated another -5.1% week-over-week, taking its crash to -41.5% YTD
- Oil (WTI) continued to crash, closing down another -1.2% week-over-week at -30.9% YTD
***In related news, Saudi Arabia announced earlier this morning that it is ready to work with other countries to stabilize the price of Oil.