Materials

In late-summer 2010, we published a Special Report overviewing long-term U.S. equity sector relative performance during deflationary periods. Since then, inflation – core PCE deflator to be more specific – only briefly flirted with the Federal Reserve’s 2% target in mid-2018, while long-term…

Underweight Base metal prices are a real time indicator of the wellness of the S&P materials sector. Currently, base metals are deflating both on the back of a firming U.S. dollar and contracting global manufacturing. Such a commodity price backdrop is dampening prospects for a profit-led…

Gold's Rise Is Stretched…

Highlights Portfolio Strategy The contracting manufacturing sector that rekindled recession fears, the harsh reality of the Sino-American trade war weighing on profits, downbeat business confidence and mushrooming capex slowdown signals all warn that investors should tread carefully in the…

Away from the Sino-U.S. trade-war headlines – and the remarkable commodity price volatility they produce – apparent steel consumption in China is up 9.5% y/y in the first seven months of this year. This is being spurred by fiscal stimulus directed at infrastructure and construction spending,…

Chart II-1Is Deflation In Steel And Coal Back? Is Deflation In Steel And Coal Back…

Highlights The current global trade downtrend has primarily been due to a contraction in Chinese imports. The latter reflects weakness in China's domestic demand in general and capital spending in particular. The current global manufacturing and trade downturns will prove to be drawn out.…

Double Trouble Double…