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SMF Notes About $4.6 trillion was wiped from the value of global equities this month.
The “rapid escalation” of Europe’s crisis threatens all of the region’s sovereign ratings. The Organization for Economic Cooperation and Development yesterday said growing doubts about the survival of the region’s monetary union represents the main risk to the world economy.
The MSCI All-Country World Index of equities has dropped 6.7 percent this month. Treasuries rose 1.2 percent, on a total return basis, Bank of America Corp. indexes show.
The GSCI index is up 3.4 percent in 2011. Commodities are beating equities for a fifth consecutive year, signaling that demand from developing economies is sustaining global growth. The raw-material gauge more than doubled from a four-year low in February 2009 as demand increased in China, the biggest user of everything from energy to copper to cotton.
Commodity demand from emerging markets has “seen some slowdowns, but generally speaking, they have not been at the same level that we saw in 2008,” said Nelson Louie, the global head of commodities at New York-based Credit Suisse Asset Management who helps manage $11.4 billion in commodity-related assets. “From a long-term standpoint, we’re bullish.”
Speculators’ net-long position is more than eight times larger than at the bottom of the slump in 2008, when the GSCI tumbled 43 percent. Still, holdings are down 64 percent from a record 1.56 million contracts in September last year.