May 2018

Released May, 2018

Commodity Bull Appears Young and Vibrant Vs. Mature Stock Market (Bloomberg Intelligence) -- Less than three years into a recovery, commodities are gaining momentum vs. the decade-long rally in stocks. Favorable demand vs. supply and a multiyear price decline vs. bottoming equity-market volatility from the lowest in decades should continue to favor commodities. The grains remain stalwart in 2018, yet would need to rally another 80% to match the 2012 peak. WTI crude oil is a bit too hot near $70 a barrel, though positive carry and backwardation indicate an improved landscape. Metals appear in transition with increasing stock-market volatility, but should prevail in most scenarios, particularly if the greenback remains weak. Sustained dollar strength is a key commodity risk, but unlikely, as the buck's bounce with increasing bond yields should be limited.