Asset Deflation Ramping-Up

Asset values are now plunging across many economic sectors. The debt crisis is now taking a stiff toll far greater than that of inflation. U.S. commercial real estate is now in full-blown collapse. There is a real risk of significant bank failures approaching. These are risk factors heading into late spring.

Central bank policy is mid-guided. Holding rates higher for longer is poison to the current economic set-up. Central bankers will react, but too late. Rate cuts are just one stock market crack away. And equities have already begun their descent.

The Bank of Canada is likely to cut rates very soon. Canada’s economy has been in-recession in some sectors for a full year already. The U.S. is also in varying stages of recession. Some states now hard hit by the economic contraction and turndown.

This is a look at lumber futures over the past month. Nothing is clearer than at the price path of base commodities.

MAY LUMBER OVER THE PAST MONTH. Commodity prices have been largely supported recently by oil and geo-political tensions. But base commodity prices particularly for construction have deflated.

It’s now become a buyer’s market . . . . Stay tuned to Errol’s Commodity Wire.