Each asset class is special but have some defining characteristics that make them an asset class. Each also has dispersion in returns within the members in the classification. Commodities are an asset class with a very diverse collection of members which may give very conflicting macro/micro signals.

Look at the differential between crude oil and industrial metals over the last year. In the case of crude oil, the signal of tighter supply with good demand has pushed prices higher by almost 50% over the last year. Alternatively, industrial metals, which is often used as a barometer for global macro growth, is down slightly with a stronger decline since the issues with emerging markets at the beginning of summer. It is noticeable that crude oil has surged on Turkey economic issues. The crude oil is also suggesting a geopolitical premium that is having a negative effect on industrial metals and global growth. Crude oil increases can shock economic growth, but industrial metals will usually follow economic growth.

When asked the question, “How are commodities doing?” there never is an easy answer.