Is the stock market topping? Will deflation return soon? Is oil about to tank?
As we continue to wrestle with the various policy gyrations that are complicating the macro picture, we’re going to continue to keep our eyes firmly on market activity for clues.
Our old friend, the Continuous Commodity Index (CCI) has made a new closing high today. If it does not soon turn down, it will give traders a powerful motivation to run it up even higher, as it will have broken out from a potential double-top formation.
“Things” are getting more expensive. That is a fact. Energy, metals, and the ‘softs’ (grains and cotton) are all headed higher, both in the US and elsewhere across the world.
True, the new daily closing high for the CCI is by a whisker, but it’s a new high nonetheless:
I know there are skeptics out there who doubt that commodities are telling us anything useful. The argument goes that commodity prices are just a very minor component of final prices, and no pricing power exists for producers, so the commodity increases are just buried somewhere along the production chain.
This is true for some things – cereal comes to mind, where the grain costs are literally pennies per box – but not for others, such as energy, where price increases are quite rapidly and completely transmitted to the consumer.
For those with a US or European bias to their daily experiences, you may wish to ponder these next two charts in succession.
Food
by robie-robinson-2 
