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Respected economic research firm, BCA Research, suggests the top is in for food and energy prices in its latest freebie. A chart shows its proprietary Leading Economic Indicator for the developed world has been dropping for some time, but has now also turned down in emerging Asia. This will spell trouble for commodity prices.
BCA’s report is timely, especially in the context of Chinese and Indian stock market indices, which are down some 40% from their highs.
Why is that important? Stock markets often foreshadow economic performance.
Why is that important? Various estimates put China and India’s share of incremental demand for commodities at over 50%.
Why is that important? Canada’s economy has been resilient largely due to the commodity cycle. Any turn in that cycle is worth paying attention to.
If you still need to know why that’s important, then click here.
Tom Brown makes the case for the bottom in banks, listing eleven reasons why he thinks the bank bear market is over. Among them:
1) Data in the monthly mortgage services reports continues to get better.
2) Earnings reports from non-bank financials should be encouraging.
3) Oil prices could continue to decline.
Count them: not the ubiquitous three bullet points or five or even ten – but eleven! Surely, he could have dropped one of them to give us a nice round number — especially #3 which kind of feels like it was added at the last moment. Still, Tom is definitely a guy worth paying attention to. He was the top-ranked bank analyst on Wall Street during the 1990’s and runs a financials hedge fund right now. While his postings have had a “things are not as bad as you think” tone over the last year, in the last week he’s become more prolific and bolder on his market call. Whether he’s right or not, a lot of people have been drawing a line in the sand for July 15 and bloggers are taking notice.
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