Friday, October 17, 8:55 a.m.;
Anyone watching the ups and downs in the North American stock markets yesterday probably has whiplash today, because it was another day of huge, jerking swings up and down. Americans are probably a little happier today than yesterday, because their markets actually ended up in a big way, but our TSX didn’t quite make it into the green.
Commodities didn’t benefit fully from the amazing late-day rally in U.S. stock markets, with corn still ending down and wheat down a bit and only soybeans among the big American crop futures making a significant positive move to the upside. Which raises the question I’ve kept wondering about since last week: have our commodity markets decoupled from the stock market?Â
Read Also
Determining tariff compensation will be difficult but necessary
Prime minister Mark Carney says his government will support canola farmers, yet estimating the loss and paying compensation in an equitable fashion will be no easy task, but it can be done.
Signs began last week suggesting commodities had recovered a bit of life of their own and there have been more promising signs this week that commodities aren’t simply slaves to the “outside markets” any longer. But it’s kinda hard to tell, because there are lots of independent reasons for commodities to do poorly aside from the gravitational pull of the equity markets.
What was a bit weird about yesterday was the amazing late day stock rally in the U.S., on a day in which more and more evidence of a big recession coming came to light. All around the world troubling signs of economic slowdown are appearing. So it makes sense for commodities to be flat or weak, with overall demand likely to be weaker than expected, more sense than it does for stocks to have huge rallies like yesterday between two and four p.m. eastern time.
The people at Elliott Wave International I spoke to for this week’s issue of the paper predicted huge volatility in a voracious bear market, so we’ll see if they’re right about this still being a bear market.
A lot of eyes are going to be on how the equity and commodity markets end up this week. If the markets end up from last week, that’ll look good on the charts and pacify some folks and give us a happier weekend to enjoy the colours of autumn. If the market ends down, after Monday’s massive rally in the stock markets, the charts will look ugly and give something for people to be gloomy about over the weekend.
