Below is an excerpt from today's Early Look written by Hedgeye CEO Keith McCullough:
"If you want to be bearish on something that’s actually been making you money for the last 3 months, stay with Reflation’s Rollover:
- CRB Commodities Index (19 commodities) is down -3.8% in the last 3 months
- Energy Stocks (XLE) are down -6.0% in the last 3 months
- WTI Crude Oil is still down -7.8% in the last 3 months
- Silver is down -5.2% in the last 3 months
- Copper is down -7.0% in the last 3 months
- Soybeans are down -7.7% in the last 3 months
I’m not cherry picking. If I was I’d have started with Coffee prices being down -17.3% in the last 3 months and Starbuck’s (SBUX) investors who are long the other side of inflation expectations falling (i.e. real consumption growth accelerating) being +7% in the last 3 months."
As you can see in the Chart of the Day below, reflation popped in the first quarter of 2017 as the year-over-year percent change in commodities spiked. Basically, oil, copper and aluminum rallied off last year's lows, when these commodities were down -52%, -24% and -19% respectively. These commodities popped and now they are off first quarter highs.
Reflation continues to rollover...
