April 2019

<strong>Commodity-Recovery Foundation Solidifying vs. Extended Equities</strong> (Bloomberg Intelligence) -- All risk assets are subject to sharp stock-market declines, but we expect commodities' favorable reward vs. risk profile to continue improving. Futures' increasing expectation of Federal Reserve easing leaves a final pillar of dollar support -- U.S. vs. global equity outperformance. Commodity risks center on West Texas Intermediate crude oil and its increasing correlation to the S&P 500. Limited upside to above 2,800 in the latter indicates a WTI revisit of $50 a barrel. Metals should continue to shine in most scenarios, as the end of U.S. equities outpacing global stocks would be a primary dollar headwind. Sentiment about the Corn Belt's risk of production cuts in early growing season has rarely been this complacent, elevating the prospect of higher prices. Our updated quarterly analysis indicates early commodity recovery.