A Commodity Love Affair : Sandy and Obama

” Investors should recognize that asset and currency prices ultimately rest on the ability of a real economy to grow. If growth cannot be boosted by monetary policy, and fiscal policy is in the hands of a plutocracy more concerned about immediate profits as opposed to long-term vitality, then no Genie or Flavor Flav with a magic clock can make a difference. If, therefore, real economic growth is stunted in the United States and globally, then portfolio strategies should acknowledge bite-sized future returns and the growing risk that the negative consequences of misguided monetary and fiscal policy might lead to disruptive financial markets at some future point.”   Bill Gross

So Obama has won, quite obviously. Commodity prices year to date  tell us why too.

Fuel is cheaper now than on 1st Jan this year which is good for equities (year to date change).

But industrial and consumer commodities are not doing well, except for drought hit ones.

If the economy is turning, then demand should increase ?

Yes, I should not be naive to assume just demand driven for commodities. Also I should not speculate on conspiracy theories on fuel price manipulation to please the voter.

Bill Gross is right. You cannot squeeze water out of stone. The economy cannot steam up when it is running at half empty. And that is why none of the industrially significant commodities are flying. Looks like we can only create virtual value out of Apple and Facebook to drive stock indices higher.

For me, I bought some DIG US because it has priced in Obama victory last week and crashed as it discounted the probability of war in the Middle East (headlines dismissing the Syria situation). Will also load up on soft commodities going ahead DBA US and DBC US.

Hell, Obama has won… for the next 4 years, anything is better than cash again.