More pain ahead for commodity producers

As the global economy begins to reflate, the Fed continues to delay rate increases, and China pumping further stimulus into its economy, commodities have enjoyed a healthy rally this year. But can it continue? Chris Watling, Chief Market Strategist at Longview Economics, thinks not. The iron ore price has gone over $60, but he says the clearing price is $30-$35. This price increase has been driven by a switch in China from an equity market bubble, into a Tier 1 housing bubble. “One just has to think about how far [China’s Tier 1 housing market] has gone to rekindle one’s concerns about some of these commodity prices… Yes, it may run a bit further, but this isn’t the beginning of a great big bull market for commodities. No way. This is a proper bear market rally.” Watch the full video below for his views on bonds, equities, and the USD.