The real quote is, “nowadays people know the price of everything and the value of nothing.”
Oscar Wilde, immortalized in bronze, waits for the rain to stop.
Value has little to do with price. And vice versa. 
In the case of the market and particularly commodities, that is especially true.
A commodity’s price when cheap, might bring in value buyers.
But, should that commodity rise in demand, the price becomes irrelevant.
Buyers will pay up because the perception of its value has shifted.
The market’s value and its price are at a critical inflection point.
While some see it as cheap relative to the value, others see it as rich, or overvalued. Didn’t Powell say that today?
Investors have a basket of tools to use to help determine whether the market is cheap or overpriced.
Lately, we have looked at the price of the US dollar, the level of interest rates, the equilibrium between supply and demand, and how commodities or inflation numbers factor in.
If the market is Oscar Wilde, and the rain represents factors beyond our control, what can we say is current price versus value?
After the Federal Reserve announced the rate hike, the reaction was fairly muted.
The TLTs, talk about an inflection point, sit slightly above critical support levels.
From here, we either see another huge shift up in the yields, or a relief rally causing the yields to drop.
The dollar has a similar scenario. As measured by UUP, the weekly chart indicates more upside, unless the price breaks below 24.80.
Looking at supply and demand, we go to the Russell 2000 (IWM) as representative of supply and Transportation (IYT) representative of demand.
IWM went into an unconfirmed warning phase. Not only could that spell trouble for the overall economy, but could also imply that supply has diminished in value.
However, IYT rose today, implying demand remains stable.
Commodities, most still near record low prices, didn’t move very much.
Leave A Comment