Mar 8, 2016
Get short? Goldman says this commodities rally is just a mirage
By Victor Reklaitis
Marketwatch.com
Pundits are marveling at the S&P’s five-day march higher and Brent crude back above $40 a barrel. What’s getting the credit? Short covering.
“In some ways, recently it seems that the worse your fundamentals are, the better your price performance has been. That is a classic, if not the classic, symptom of short covering, which is naturally the reason for skepticism in some quarters,” writes financial blogger Macro Man.
“It’s probably fair to say that if this is just a short-covering rally, it’s probably getting long in the tooth,” he adds.
Many bulls aren’t interested in debating the root cause. They’re just happy with their profits:
But the bears can soothe themselves a bit today, as they’re in control so far this morning. Global stocks and other riskier plays are retreating, with some blaming awful Chinese trade data and a contraction in Japan’s economy.
And on that theme, today’s call is all about skepticism toward recent rallies. It comes from a Goldman Sachs note that’s peppered with words like “premature surge” and “false starts.” Goldman basically suggests the commodities rally is a mirage, and the bank gives specific commodities to bet against. More below.
Meanwhile, today’s chart shows one dramatic advance that was driven in part by short covering, while our stat of the day illustrates how much the global economy depends on U.S. strength.
More: http://www.marketwatch.com/story/get-short-goldman-sachs-says-this-rally-in-commodities-is-just-a-mirage-2016-03-08
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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