We should celebrate the end of the commodity supercycle

By Lalit Sharma:Founded in January 1996, Greenlight Capital, Inc. is a privately-owned hedge fund management firm founded by David Einhorn. The firm manages the Greenlight Capital series of hedge funds and the assets of a reinsurance company, Greenlight Capital Re, Ltd [GLRE]. The firm has offices in New York and London.

WAS the sharp sell-off in commodities that took place yesterday good news for the global economy? It potentially could be, given that higher resource prices act as a tax and sap consumer disposable income. But whether they ought to greeted with a smile or frown depends on the nature of decline. If prices fall due to a weakening growth outlook, that's bad; the impact of slower growth may more than offset the benefit from falling prices. If prices drop because of new supply or innovation, that's clearly good. It's also good news if prices fall due to the collapse of a speculative bubble.

For the first time in three years, US Quarterly Earnings are Poised to Drop. Third-quarter earnings of Standard & Poor's 500 companies are now expected to fall 0.1 percent from a year ago, a sharp revision from the July 1 forecast of 3.1 percent growth, Thomson Reuters data showed on Thursday. That would be the first decline in earnings since the third quarter of 2009, the data showed.

Yesterday, Goldman was stopped out of its inflationary Long Brent reco for a 15.5% loss (for the clients of course, not for the Goldman counterparty traders who made 15.5%).

By Svea Herbst-Bayliss BOSTON (Reuters) - Hedge fund manager John Burbank, a long-time investor in gold, said the recent sharp selloff in the precious metal came as a surprise to many investors as some economic improvement and a general decline in commodity prices took their toll. The San Francisco-based manager called last week's dramatic decline an "unexpected event" that caught some hedge funds off guard because they were betting that inflation would rise at a time global central banks are sticking to easy monetary policy. ...