Industrial Insight

prices on the rise…. | February 9, 2011

http://online.barrons.com/article/SB50001424052970203926004576133233999289962.html?mod=BOL_hpp_dc

Up and Down Wall Street

| WEDNESDAY, FEBRUARY 9, 2011

Back to the Future?

By RANDALL W. FORSYTH | MORE ARTICLES BY AUTHOR

Commodity prices could squeeze economy, just as in 2008.

That inflation so far is visible mainly in the price of commodities (presuming rising asset prices are not counted in the calculation.) And based on the Continuous Commodity Index, an equal-weighted gauge of prices, commodities have exceeded their old highs set in 2008 and have set a new record, according to Bank of America Merrill Lynch’s technical analysis team led by Mary Ann Bartels.

But commodity inflation could threat asset deflation, Stephanie Pomboy, the ever-provocative proprietress of MacroMavens, contends. Commodities and financial assets compete for liquidity at the margin. So, rising prices of stuff siphon away buying power for stocks and bonds. Conversely, disinflation has been bullish for financial assets.

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2 Comments »

  1. The overall market for steel casting is still only at 60% of the 2008 heights, and any steep increase in commodity prices could adversely impact market growth for steel foundries and dampen efforts for revival and new developments

    Comment by N S RAGHAVAN — February 10, 2011 @ 4:01 pm

    • Steel foundries are on both sides of commodity prices. Steel casting demand is high because copper prices support mining equipment investment. High oil prices support energy investment like fracking.

      Comment by raymondmonroe — February 10, 2011 @ 4:11 pm


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