can someone clarify the commod vs stocks and bonds relationship for me? 1. according to CAIA curriculum, supply and demand influences commod prices. when demand for commods drop prices of commod futures drop inflation and short term inflation rates drop price of stocks and bonds goes UP therefore, commods are a good hedge against economic downturns 2. according to the relationships in this NY Times article http://www.nytimes.com/2008/09/30/business/30oil.html?ref=business liquidity drops causing cost of capital to go up returns to stocks will drop stock prices drop inflation goes up economic outlook worsens demand for commods goes down commods futures goes down the relationships contradict each other…
I think that if you are going to look for a relationship between commodities, stocks, and bonds it’s going to be complicated. In particular, the big commodity is oil and holding oil as a hedge against economic downturns (of the recession ilk) doesn’t sound smart to me.