Please examine the following chart to see where the complex is as a whole in terms of its technical posture. With traders currently leaning towards the "slowing global economy" theme, the complex is moving lower to revalue many of the individual markets comprising this index. That is more of the deflationary emphasis and is reflected in the breach of chart support and accelerated move lower once price broke out of the downside of the recent channel.
There has been some chatter that the G20 will attempt to take some sort of concerted action to assuage investor fears. also, today there was news of a speed up in the formation of a European Stabilization Mechanism by some of the European nations. I would also not be surprised to learn at some point further yet down the road that the Fed will openly buy equities to prop up the US market should they feel the need to do so. This will be another form of QE but would target stocks instead of interest rates. The idea would be to influence investor sentiment and "revive the animal spirits".
If the investment world believes that some sort of liquidity mechanism will be introduced that might serve to reflate stock markets and stave off deflationary pressures should those get too far out of hand in the minds of monetary officials and some policy makers, the commodity complex would get a jolt higher once again.
Sadly, until we get structural reforms and changes in fiscal policy, the efforts to shock the economy into getting a stronger heart beat are destined to fail. The economy in the US is being held back by policy blunder after policy blunder by the current administration, which is in way over its head and is actually making matters worse.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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