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COMMODITIES: Commodities are not an Asset Class

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Overview: Basic Points: “Its the Economy Banks, Stupid!” November 18, 2011

Too many equity investors are getting sick of the stock market. Glowing corporate earnings don't seem to matter anymore, and the market is subject to absurdly wide price swings. Many American equity investors who are pulling money out of their mutual funds are telling advisors they think the stock market must be rigged.
The seemingly endless pattern of risk-on risk-off days in European and North American stocks which scares investors originates from the Wagnerian-scale drama of the existential crisis of the euro, and the problems of European and, to a somewhat lesser extent, American banks.
These dramas play out against the backdrop of growing fears of a new global recession, which could, some analysts fear, be at least as challenging as its predecessor, because governments have exhausted their bailout funds.
We are not convinced that a North American recession is inevitable and, in any case, we doubt that its severity would approach 2008 levels. Zero interest rates and record deficits should be good cushions.
This month we explain why investors should indeed be worried about those badly-managed Wall Street and European banks in the light of the collapse of their asset pricing models. But we suggest that those endless crises in the eurozone could very likely trigger a policy response that would dramatically improve the outlook for European banks—and stocks generally.
We also consider the implications of the politicization of the Keystone application in a broader context of debates on US energy policies. The Canadian government and much of the Canadian oil industry were surprisingly naive about Keystone's chances, actually believing that environmental issues were the only barriers to an Obama OK.
We are leaving our Asset Mix recommendations unchanged.......

BMO Financial Group and BASIC POINTS
Basic Points is published exclusively for clients of BMO Financial Group.
For information about receiving a copy, please speak to your account representative.

Our Funds in Canada:
Coxe Commodity Strategy Fund - TSX:COX.UN
Coxe Global Agribusiness Income Fund - TSX:CAG.UN

For information please visit the BMO Capital Markets Structured Products “Investor Solutions” website: click here...

G20 - The Cannes Summit

November 2011: A New Way Forward

We were invited to submit an article for the G-20 attendee handbook:

Controlling Commodity Markets:

Commodities and the Global Economy

Donald G. M. Coxe

Strategy Advisor, BMO Financial Group

The Handbook can be downloaded here:

<http://www.g20.utoronto.ca/newsdesk/Cannes>.

Disclosures

All information contained herein is for informational purposes only. This is not a solicitation to offer investment advice or services. Coxe Advisors does not offer any products or services for sale; rather, it acts as a non-discretionary investment adviser to Harris Investment Management, Inc., a division of Bank of Montreal. An investor should consider investment objectives, risks, charges and expenses carefully before making any investment. Past results are no guarantee of future results and no representation is made that a client will or is likely to achieve results that are similar to those described. Please refer to Coxe Advisors’ ADV Part 2 for additional information.

Regulatory Information: Coxe Advisors is an investment adviser registered with the United States Securities and Exchange Commission. Coxe Advisors does not render personalized investment advice. The purpose of this web site is for information distribution only.

Dennis Gartman:
“Commodities are not an asset class!”
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