DBO - Reflation Or Supply And Speculation?
Please Note: This analysis was prepared using end of day data from March 8th, 2019. All indicators and valuations reflect the same.
Quick Take
Despite the popular narrative that the recent rise in industrial commodity prices is due to a shift towards reflationary policy, I believe the predominant impetus lies with supply and speculation. Given the linkage between industrial commodity prices and inflation expectations, this in turn has been transmitted into precious metal prices as well, deceptively providing more fodder for the reflation narrative. With stretched fair valuations and a bearish macroeconomic backdrop, I don't