Tobias Merath, a commodity analyst at Credit Suisse Group, talks with Bloomberg’s Bernard Lo and Haslinda Amin in Singapore about the impact of declining demand, falling prices and the global economic slowdown on commodity markets.
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00:00 Demand decline, global slowdown; speculation
03:13 Soft commodities, "correction not collapse"
Running time 05:52
Source:
Merath Says Commodities Drop `Correction not Collapse’: Video
Bloomberg, Aug. 6 2008
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amYpTvSP_OSk
You’re up early. I was just reading the wire services report about this interview. So – where do you think this goes and what does it mean? If high oil prices were a drag on the economy, and they were, then are low oil prices a push on the economy? I don’t think so. Its asymmetrical.
Regards,
Roy
Gosh Mr Merath looks and sounds very self assured. It does seem to be a bit of a Dutch characteristic.
We are all wondering about just this though. Correction not collapse …look out after 2009! Thanks Tobias and Barry!
Merath’s point about speculation is something investors, voters, policy makers need to understand: it’s only speculation if prices and inventory are rising (herein lies the inherent conflict in the speculative market structure which causes its end.)
To use commodity metaphors: is it conflict kimberlite that leads you to conflict diamonds? Or, since we’ve won the war in Iraq, does your fill-up blend have less conflict oil?
I certainly hope it’s a collapse…
A correction makes sense for now, a collapse would only happen if there is a global recession. Gartman was on TV this morning. He has talked a lot of sense throughout the oil spike in contrast to all the rest of the babble.
Since there is not much room for $ strengthening from here, do you think we may see oil stabilize now that the froth has been knocked off the top of the bubble?
The Freddie results are horrible. Hedge funds will have some version of the short financials trade on again before long, but it won’t be long oil this time. Tech? Dennis Kneale will be sooo excited.
Alexis G got confused between the BoE and the ECB this morning. Isn’t that all one country over there in Yoorp?
What do the technicians say about the oil chart? It felt like a lot of chart readers could accurately predict the next leg up in oil based on the charts. If so, what does this move from $140 to $120 say to you?
The prognostications about commodities, correction vs collapse reminds me of that british video that circulated some time ago where two gentlemen were describing an overly fickle market sentiment. Unless the modernization/industrialization of Asia, specifically all the BRIC countries, including the middle east comes to a grinding halt, and I meant full STOP, due to mass and inertia alone, commodities are not going to collapse as demand has only one way to go, and it’s not down. Recall what happened to certain commodities during the re-building of Europe and Asia post WW2. Now extend at a multiple. Overlay a necessary infrastructure build in NA and many parts of Europe and it is not difficult to appreciate supply strains, except on perhaps, where are we in NA going to get the cash to undertake the infrastructure build-out.
A lot of smart investors and analysts have declared the bull market in oil to be over, at least for the foreseeable future.
I’m somewhat neutral right now, because of all the inflationary/deflationary crosscurrents. However, I’ll be surprised if oil doesn’t make at least one more run at $140 some time in the next few months.
So many smart investors were declaring a top in oil @ $100 too. Many of these same folks been saying the same thing since $40, then $50, then $60, then $70, then $80, then $90, and ESPECIALLY when it retraced back to near $80 from $100. It’s over, it’s over they exclaimed…un huh. Onward to $140+, now it’s back to sub-$120.. and like clockwork, they’re out, “it’s over, it’s over”. People will remember their names, later. Sort of the equivalent of Mike Norman on home values.
Certainly not a collapse. It’s simple supply and demand. Demand will increase at an accelerating rate due to emerging markets and supply just is not unlimited. What we call high oil prices for oil now will be redefined in a few years.
That interview was a gem. I didn’t sense any bias.
Thanks for posting.
Haven’t watched the video yet, but I found this he and another guy put out less than a year ago:
Little upside left for oil at $82
I’m just glad I got some DUG awhile back and got some more today on the pullback.
Wasn’t trying to be a smart ass in my previous post, but I thought Hussman’s explanation of the oil bubble and it’s inevitable demise made a lot more sense, even without the contango argument. It’s in the second half of this weekly comment:
A Clue from Contango