Short-Term Key: Negative Long-Term Key: +48

Over the weekend, representatives of the G8 nations got together for a confab. Their main concern was how to eventually remove some of the many trillions of dollars worth of stimulus injected into the world economy over the past year or so by both government spending and central bank easing. (For some reason, however, this was strictly a government meeting - central banks weren't represented.) Frankly, we think this is a little bit like worrying how to spend all the money you'll get when you win the lottery – a little premature.

Right now, we're still looking for green shoots of economic recovery. Admittedly, there are a few. But they tend to be overshadowed by things such as unemployment reaching 9.4% in the U.S., and surging in other developed nations too. You must remember that unemployment is a lagging indicator, which means the number of people out of work may not yet have reached its peak.

To be fair, one undeniable green shoot has been the rise in commodity prices, especially industrial raw materials. Typically, wholesale commodity prices correlate very strongly with corporate profits. The industrial commodities index over the past 13 weeks has been rising at a record high rate – over 26% - which bodes well for profits.Read more...