Inflation/Deflation
All the Luminaries: of the Banking and Wallstreet Communities are calling for inflation and higher Interest Rates . I would like to add my voice and shout it is not inflation but deflation we have to be prepared for.
Watch the RJ CRB Index: I believe the RJ CRB will top out this Summer and come Fall 2008 we will see falling commodity prices across the board. After a 7 year run another bubble is bursting, watch out below.
(Click on Link to see updated daily chart)
* The RJ/CRB Index: is widely quoted and referenced in leading print media sources such as the New York Times, Wall Street Journal and Financial Times and broadcast media outlets such as CNBC, CNN, FOX and Bloomberg Television.
* Respected academic white papers: on the subject of commodity investing - such as The Tactical and Strategic Value of Commodity Futures and Facts and Fantasies about Commodity Futures highlight the RJ/CRB Index.
* Included commodities and weightings Reuters/Jefferies CRB Index: maintains broad diversification through 19 commodities representing all commodity sectors – energies, base metals, precious metals, livestock, grains and softs. In determining starting annual weights for component commodities, benchmark indices employ differing approaches. The RJ/CRB Index employs equitable distribution wherever feasible while re-weighting exposure to selected markets, such as the economically important energy sector. The index is designed to be liquid and rational.
* RJ/CRB Index target weightings by sectors:
- Energy 39%
- Grains & Softs 34%
- Base Metals 13%
- Precious Metals 7%
- Livestock 7%
Weekly RJ/CRB Index : http://www.mrci.com/client/w-crb.pdf
Conclusion
I suspect Ben Bernanke is correct in saying we will see falling inflationary numbers toward the end of 2008. Ben is a world class historian and I am sure eying the what ifs. Folks, for a Central Bank, deflation is a nightmare due to lack of a robust toolkit available for fixes.
Jim
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