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Commodity & Equity Market Interpretation

The commodity and equity markets both declined in September. The CRB Commodity Index PR was -3.07% for the month, while the December S&P 500 futures PR were -3.91%. U.S. debt markets were basically flat and December gold futures PR were -4.2%, while the U.S. Dollar Index was +1.89%.

The primary drivers of the market movements were:

  • The impasse on the vote for the next “stimulus bill,” which should be referred to as the “anti-depression bill”.

  • The flat U.S. Federal Reserve Balance Sheet, which was supposed to trend to $10 trillion by year-end, but peaked on June 3rd at $7.165 trillion, and as of September 23rd was $7.093 trillion (down 1% in 3.75 months).

  • The minor U.S. Dollar rally, which has hurt most commodity assets.

  • The pick-up worldwide in COVID-19 cases, which has caused anxiety over further shutdowns.

The most recent economic data has shown the rebound is continuing, due to the government spending of $2.2 trillion through the “Cares Act” and the $3 trillion U.S. Federal Reserve balance sheet since February 2020. This combined $5.3 trillion will cause GDP to recover most of the 2nd quarter decline of -32.9%. However, this will not be a recurring event as the 4th quarter GDP is currently estimated to be approximately +3%.

Of course, the upcoming U.S. November elections are expected to be a major cause of volatility in the near-term. I’ll give you my two cents on the outcome of the election in another blog post. I believe the risk coming into the elections is high, due in part to the unknowns of such heavy voting by mail-in ballots and fears over how long it will take for results to be known. Thereby, caution is warranted.

Perhaps you may want to ponder this observation by a world-class advisor to kings, Niccolò Machiavelli: “It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution, and merely lukewarm defenders in those who gain by the new ones.”


The statements in this communication are the opinions of its author, Victor Sperandeo, and are not to be relied upon by anyone as the basis for an investment decision. Any investments made by a party in reliance thereon are made at such party’s sole risk. No guarantee of any kind is implied or possible where opinions as to past or future market conditions/events are provided. Past performance is not necessarily indicative of future results.


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