The spread between stocks and commodities is overstretched. Will it matter?
To my knowledge, there has never been a larger discrepancy between the valuations of stocks and commodities. While each asset class has independent fundamentals and shouldn’t carry perfect correlation, they have always been somewhat tied to each other. Yet, we are currently witnessing both markets stretched to extremes; while stocks are at all-time-highs, commodity indices such as the Bloomberg Commodity Index are near all-time-lows.