After reviewing market returns and the July 11-15 week’s macro news, DoubleLine’s Jeffrey Mayberry and Sam Lau field a question on what indicator is the best predictor of commodity prices going forward (21:08). Jeff and Sam start by reviewing the two major commodity indexes, the BCOM and S&P GSCI; their sector weightings; and how momentum is gauged. They then move to a discussion of the outlook for commodities based on longer-term macro factors (26:03), including the futures market, which they cover in-depth in Episode 48*. The two note that current commodity performance is just one of the signifiers influencing the talk about recession (34:00). If you are interested in putting together your own indicators, check out Jeff and Sam’s appearance on Channel 11 News for some additional guidance**.
It was an interesting market week (1:49) full of market-moving macro data. It was a mixed bag for fixed income (3:05), and the struggle in commodities continued (8:05). Currency conversions on the week got a little easier as the euro broke parity, basically achieving a 1-1 exchange with the U.S. dollar (9:35). On the macro front (11:55), the main news was the higher than expected CPI print for June, which broke into the 9 handle. Meanwhile, June retail sales numbers were actually pretty strong (16:30).
*MMM Episode 48: 7% CPI, Pricing in 4 Rate Hikes and a Primer on Commodities Futures
** Channel 11 News S3 E4: Do Commodities Have Room to Run?
Mr. Mayberry joined DoubleLine in 2009. He is a Portfolio Manager on DoubleLine’s strategic commodity strategy while working in portfolio management and trading for derivatives‐based and multi‐asset strategies. Mr. Mayberry is a Strategist on the Fixed Income Asset Allocation (FIAA) committee and a contributing member on our Global Asset Allocation and Macro committees. He also co-hosts DoubleLine’s weekly Monday Morning Minutes (Twitter @DLineMinutes, Minutes@Doubleline.com) podcast. Prior to DoubleLine, Mr. Mayberry was a Senior Vice President at TCW for nine years within the Mortgage Group, where he specialized in portfolio and fund monitoring and analytics. He holds a B.S. in Engineering from Harvey Mudd College and an M.S. in Financial Engineering from the Peter F. Drucker Graduate School of Management at Claremont Graduate University.
Mr. Lau joined DoubleLine in 2009. He is a Strategist on the Fixed Income Asset Allocation (FIAA) Committee and a contributing member on the Global Asset Allocation and Macro committees. Mr. Lau is a Portfolio Manager on DoubleLine’s strategic commodity strategy while working in portfolio management and trading for derivatives-based and multi-asset strategies, including DoubleLine's Shiller Enhanced CAPE®, Shiller Enhanced International CAPE®, Real Estate and Income, and Multi-Asset Trend strategies. He also co-hosts the Sherman Show (Twitter @ShermanShowPod, ShermanShow@Doubleline.com) and Monday Morning Minutes (Twitter @DLineMinutes, Minutes@Doubleline.com) podcasts. Prior to DoubleLine, Mr. Lau was a Vice President at TCW where he worked under Jeffrey Gundlach as a Research Analyst in the Mortgage Group. He holds a B.S. from the University of Wisconsin, Madison and an MBA from the Marshall School of Business at the University of Southern California.