Mining GFC takes a break

Brent oil rocketed 10% on Friday night and the Pavlovian share market went with it:

Alas the odds still favour this being another bear market rally, not a bottom. There is nothing to suggest that the macroeconomic settings driving the Mining GFC have changed. Indeed, with the rally launched by the ECB mulling more easing, what we do have is an illustration of the Chinese finger trap that world markets are caught in. After all, one of the two major drivers of the shakeout is a rising US dollar and the ECB pushed it up firmly again Friday:

That is not to say that this is not a solid bear market rally. Oil does not jump 10% every day of the week. Commodity currencies also reversed spectacularly though not so much the Aussie:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.