Macro Update: A Better Look, Commodities, and A Monster Mountain Left to Climb

This week saw a notable improvement in our macro index, with a net gain of 7.69 points taking it to -44.23. Still scary-low, but a far cry from its all time low -82.69 on 6/1.

While, again, the move is clearly positive, the components responsible from the move, rather than actually scoring positive, went from negative to neutral. In fact, overall, the % of components scoring positive remained stuck at 17%, while negative scores dropped from 69% to 62%, taking neutral scores up to 21%, from 14%.

The next few weeks will be telling, as, per the latest news, a number of states are delaying, and or, reversing certain stages/aspects of their reopening plans.

Half of this week’s improvement showed up in the commodity space. Which, coincidentally, is something we anticipated and, therefore, have begun to express in client portfolios. 

I should tell you, however, that while rising commodity prices does show up as a positive in our macro index, our bullishness there has everything to do with the prospects for a weaker dollar going forward (and, ultimately, with regard to metals, the prospects for infrastructure spending), as opposed to the prospects for robust economic growth anytime soon.

Bloomberg Commodities Index

Industrial Materials


Assuming you’re a price-conscious investor, what looks more attractive?


S&P 500, 20-yr graph

or commodities?

Bloomberg Commodity Index, 20-yr graph

Industrial Materials Index, 20-yr graph

Copper, 20-yr graph

The only comment I’d add to yesterday’s post on the jobs report is that we’re better served to think of the positive number as simply a reflection of the extent to which people are getting back their old jobs, as opposed to the creation of “new jobs”. 

I.e., per yesterday’s post, we’ve a monster of a mountain yet to climb…

Happy 4th of July!


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