CC, Rising commodity prices will affect foreigners far more than US consumers as long as their currencies are tied to the dollar, like half the world. The vicious circle is set IMO that will cripple marginal demand causing overproduction and soon a big drop in commodities followed by a recession. While purchasing power may be increasing for foreigners in the US, their input costs are rising much faster than their meager wages. If you have family overseas, or have traveled recently, it is expensive even for Americans with US dollars. The Chinese Yuan is pegged to the dollar and floats very little. This cratering of our currency has taken the Yuan with it and done nothing in terms of our competitiveness with China. All these dollar-denominated commodities have just become that much more expensive for China too. IMO, the bubble is about to burst because this torrid pace is ridiculous and unsustainable. This is window dressing at its best. RIO has doubled since its lows on 8/16. Look at SID, up to 71 from 40. And like PBR, it too is very high. My high yield closed end funds HYX are up 22% and still have a yield near 10% at current prices. All again since 8/16. This is not your normal scenario. What has changed for the better to warrant such moves? I think there is a surprise coming, but who knows...
BTW, meat at Publix IS expensive alright. I bought 6 strip steaks a few weeks ago, nicely cut and marbled, luckily, for a mere $57! But then again, I couldn't go out and have that kind of dinner for that price either.
Best, |
