Commodities Boom or Bubble?

The Department of Labor released its closely watched consumer price index for April, which jumped 4.2 percent — the biggest in any 12-month period since 2008. The core price index, which does not include the volatile components of food or energy, was up .9 percent compared to March. Up until now, March had been the largest single month jump since 1981. Labor costs and housing prices continue to rise at record paces.

China’s National Bureau of Labor statistics added fuel to the fire by reporting their prices rose the most in three-and-a-half years.

The ending of the pandemic and the accompanying stimulus, weather and climate concerns, shortages of copper, lumber, bicycles, computer chips, political threats to the supply chain and trade wars all contribute to the buying frenzy. But is this a bubble waiting to deflate as it did in 2008, or will the prices of everything become even more volatile in both directions without a clear either up or down? Stay tuned.

June Gold traded at $1,839 per ounce Friday midday, whereas July copper brought $4.66 per pound, July corn $6.60 per bushel and soybeans for July fetched $15.90.

Pipeline Hacked, Gas Prices on Rollercoaster

People in fear of gasoline shortages hoarded fuel this week in unsuitable containers ranging from storage bins to plastic grocery bags. Impending shortages spurred the panic buying after a cyber attack shut down a major pipeline, and felt reminiscent of Americans taking more than their fair share of toilet paper at the beginning of the COVID-19 pandemic. As a result, gas stations all along the East Coast were run down to empty.

The Colonial Pipeline Company transports roughly 45 percent of the fuel used on the East Coast, with a pipeline running from Texas to New Jersey. Perhaps that’s the reason they were the target of a ransomware attack U.S. officials said came from an Eastern European gang called DarkSide. The national average of retail gasoline went up over two cents a gallon because of it. Thursday saw a swift turnaround in gasoline prices to the downside as portions of the pipeline reopened. Reformulated gasoline for June delivery (without taxes and costs associated with retail prices) traded at $2.11 per gallon toward Friday’s close, virtually unchanged from last Friday.