doesn't change my views that now that rates are above 5% in the US and on the way up in the EC and globally, the commodities cycle's as good as over as soon as the BoJ starts moving... and that may very well be July... but, good food for thought overall: http://www.prudentbear.com/internationalperspective.asp any comments welcome
no question that the Fed's hikes and concomittant global removal of liquidity by the BoJ, soon to be followed by rate hikes in Japan, is already having an impact, and some form of knock-on effect on key commodities-hungry emerging economies - see attached... what the medium term impact will be on such economies, their currencies, and the overall impact on the global growth picture is unclear, to me at least, beyond some form of negative bias... and the idea that we are going to go thru an era of fairly choppy and largely directionless currency & equity markets for a while... at least until worldwide inflation expectations have sufficiently abated and rates start 'stabilizing' again, if i can put it this way... the following ECB analysis (using IMF data): http://www.ecb.int/pub/pdf/mobu/mb200606en.pdf see notably from page 13 down, offers an interesting perspective, notably on a PPP-comparison basis, the impact on growth (deceleration) would be significantly amplified... how that 'negative country wealth effect' will feed back into high-octane global commodities & energy markets is anybody's guess of course, but the answer is more likely to be more painful than not methinks... thoughts?