The Commodities Channel

Let’s Talk About Tax, Baby

If Trump gets his way—and let’s be clear, it’s going to be an uphill fight—U.S. corporate taxes will decline from being the highest among fellow Organization for Economic Cooperation and Development (OECD) economies to just a few degrees north of Ireland’s highly favorable 12.5 percent.

The Message of the Bond Market

At the beginning of the year, most market strategists were in agreement that interest rates were going to rise in 2017. The reasons varied: some saw inflation climbing, pushing yields higher; others worried about bigger budget deficits; a few blamed the Federal Reserve, which was thought to be planning to raise short-term interest rates two or three times and shrink its balance sheet. Whatever the reason, interest rates were expected to head higher, so seeing the 10-year U.S. Treasury yield here at 2.3% is a surprise.

Reflation Moderation

The “reflation trade” that began in late 2016 has lost steam. Russ discusses what comes next.

ECRI Weekly Leading Index: Lowest Since Early December

Today's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 143.2, down 1.0 from the previous week and the lowest since December 9th. Year-over-year the four-week moving average of the indicator is now at 7.19%, down from 7.93% the previous week. The WLI Growth indicator is now at 5.9, also down from the previous week.

Chicago PMI Up in April, Highest Since January 2015

The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, rose slightly in April to a value of 58.3 from last month's 57.7, beating the forecast. Values above 50.0 indicate expanding manufacturing activity.

Brighter Outlook for Commodities Suggests a Fresh Look at Investment Benefits and Risks

Though uncertainties remain, we have a broadly positive outlook for commodities in the next year.

Quarterly Letter

In this edition of the Muhlenkamp Memorandum, Ron and Jeff discuss the Small Business Optimism Index chart which is produced by the National Federation of Independent Business (NFIB). It is based on monthly surveys of its members in order to better understand the environment in which small businesses are operating.

The "Real" Goods on the March Durable Goods Data

Earlier today the Census Bureau posted the Advance Report on Durable Goods New Orders. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's now review Durable Goods data with two adjustments. In the charts the gray line shows the goods orders divided by the Census Bureau's monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Producer Price Index for All Commodities, chained in today's dollar value.

A Fortuitous Coincidence for the ECB

PIMCO expects no policy changes at the ECB Governing Council meeting on Thursday, aside from a minor adjustment to the bank’s outlook for growth. We think ECB President Mario Draghi will repeat the message that although the economic recovery is gaining momentum...

The Four Totally Bad Bear Recoveries: Where Is Today's Market After the First 100 Days of Trump?

In response to a standing request, here is updated comparison of four major secular bear markets. The numbers are through the Tuesday, April 25 close, almost 100 days into the new administration. It will be interesting to see how the market fares in the wake of President's economic policies.

April Precious Metals Watch

At Sprott, our investment thesis for gold is significantly long-term in scope. We believe gold’s methodical advance since 2000 has had more to do with the growing disconnect between productive output (GDP) and ever-inflating claims on that output (debt and equity valuations), than with short-term fluctuations in variables such as CPI-type inflation or interest rates.

An Exciting Time for the Energy Sector

Oil is back in the news, with the price of benchmark West Texas Intermediate (WTI) crude roughly doubling from last year’s lows driven by steady demand and coordinated supply cuts by Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers.

Fund Managers’ Current Asset Allocations

Fund managers have become more bullish, but not excessively so. Cash balances at funds remains high, suggesting lingering doubts and fears. Allocations to US equities dropped to their lowest level in 9 years in April: this is when US equities typically start to outperform.

Risque On!

The French President semi-finals were over the weekend and the vote went about as positive as they could have for the markets. While LePen won the first round, it is unlikely that she will be able to gather enough support to upset Macron in the final tour.

Home Prices Rose 5.8% Year-over-Year in February, 32-Month High (NSA)

With today's release of the February S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.7% month over month. The seasonally adjusted year-over-year change has hovered between 4.2% and 5.8% for the last twenty-five months. Today's S&P/Case-Shiller National Home Price Index (Nominal) reached another new high. The Real S&P/C-S HPI is at its post-recession high.