For the second year in a row the broad commodities index has risen. Not nearly as much as the overall market, but after being left for dead it seems those companies that use, mine or sell commodities might finally get their chance at leading the stock market in 2018.
The lack of inflation has been a big headwind and with the tax cut passed by Washington, and much stronger economic growth this year, we will see signs of inflation both in price of goods and services and wages. If commodities rise again this year that will attract asset managers’ dollars and this should push prices up causing more inflation. For commodities that means even higher prices.
Commodities have under performed the rest of the market for seven years in a row. That is a very long time in the investment world. Maybe it’s their turn?