Tuesday, December 21, 2010

Commodities and QE2

From MarketTalk:

Yesterday we took issue with St Louis Fed President James Bullard’s assertion during a CNBC interview that there was no evidence that QE2 is a factor in jacked-up commodities prices, though he conceded that their relationship should be studied.

Well, study this, Mr. Bullard: today US corn futures close at their highest level since July 2008 at $6.02 a bushel. Nymex Feb crude futures hit their highest close since October 2008, at $89.82 a barrel, and up 6.8% this month. Nymex heating oil at a fresh 2010 high at $2.5164 a gallon. Cotton hits a fresh post-Civil War (yes, that Civil War) high at $1.59 a pound. Comex copper futures settled at an all-time record high at $4.276 a pound.

Now, we’re not saying it’s all because of QE2 and no influence from supply/demand, China, whoever, but come on. All of these different commodities hitting fresh or all-time highs simultaneously?...MORE