PJoo
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- Why commodity are down?
Why commodity are down?
Fear of rising inflation, but this week commodity prices are going down. Why? Let me attempt to make it simple. Transitory is the buzzword that is spoken regularly. This was months back after J. Powell said that inflation is going to be transitory. It means that inflation will be gradual and the prices that are going up will be temporary.CPI at 5% is reported recently, which is record high. The only time CPI is higher than 5% was back in Aug 2008. But wait. What happened in Sep 2008? It was the Lehman Brothers crash. Lehman was a symptom rather than the cause. Inflation was high in 2008 but the monetary policy was tight. Lehman suffered earlier from the housing bubble in 2003. Meaning, what really matters is liquidity. So as long as the rates stay low, the economy will have the opportunity
