SOURCE: John Thomas Financial

John Thomas Financial

May 25, 2011 10:00 ET

John Thomas Financial Chief Economist Mike Norman Sees Commodity Prices Declining

NEW YORK, NY--(Marketwire - May 25, 2011) - John Thomas Financial Chief Economist, Mike Norman, sees commodity prices trending lower as a renewed economic slowdown takes hold in the US, Europe and China.

Recent data ranging from industrial production, purchasing managers' surveys and leading indicators in the Eurozone, China and the United States indicate a renewed period of economic slowdown is underway. Moreover, given the prospect for further austerity in Europe, spending cuts in the U.S. and continued measures to fight inflation in China, commodity prices look set to weaken as demand falls.

In addition, according to Norman, investor perceptions of Quantitative Easing as being inflationary are misguided as QE merely constitutes a change in the duration of the financial assets held by the public and adds nothing to aggregate demand. Secondly, interest income is removed via the interest channel and that is deflationary, he says.

Commodity prices are therefore likely to trend lower in tandem with weakening economic output and rising unemployment.

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