Why are markets going up despite all the bad news?
The chart below is the monthly CRB index. It is produced by the Commodity Research Bureau and comprises the monthly average futures contracts of a basket of commodities.
2009 was understood to be a bubble which burst during the GFC. But wait a minute - why is it now doing the same thing again during a global recession??? Maybe it wasn't a bubble? Maybe its just continuing strong demand from China?
The charts below show the metals component of the CRB (monthly then daily). Its not hard to see why Australia just reported the biggest ever monthly trade surplus driven by strong demand for resources from China. So no bubble this time, its just the mega resource boom continuing.
When you consider that this strong demand for resources from China is about to be repeated from Asia, India, South Africa, etc, as they become modernized countries, it seems reasonable to assume that the monthly CRB chart shown above is just the foot of the mountain.
why are markets going up despite bad news?
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