Everyone’s Bailing on Commodities
The commodity story is part of a larger narrative in which investors have become increasingly cautious as 2012 winds to a close, pulling money from the markets and causing drops across most investments other than bonds.
The looming fiscal disaster in Washington coupled with the seesaw presidential election and the European debt crisis have been persistent thorns for investors.
Toss in a weak earnings season and the inability of the third round of the Fed’s quantitative easing program to make inroads on its goals, and the markets are setting up for a fourth-quarter flu that may be hard to cure.
Traders who thought global growth and easy monetary policies from central banks would translate into big commodity profits are heading for the sidelines, said Kevin Ferry, president of Cronus Futures Management in Chicago.
“If this is real fundamental selling and if these guys got it wrong and now they’re bailing out of the commodity market and that’s telling you that globally we’ve hit stall speed, then watch out,” he said. “If you put $3 trillion on the Fed balance sheet and you can’t point to the inflating asset class, then you’re going into the abyss.”