Over the past 9 months markets have rallied from the sublime to the ridiculous in the risk-asset melt-up since March. Just one of the many areas where prices have gone delusional once more is commodities. The Canadian stock market with our rocks and trees concentration has been a major recipient of melt-up euphoria, leading some familiar culprits back to the “decoupling” banter of 2007-2008: “Commodity bubble? What bubble?” they say, wide-eyed and hopeful.

The flow of the US carry trade into our Canadian stock market speaks for itself in this picture of the falling U$ and it’s near perfect negative correlation with the Canadian TSX year to date:



Today's Bloomberg article "Aluminum Bubble Concerns Mount as Surplus May Add 29%" highlights some important facts about the present supply/demand disconnect in pricing...   more »