STOCK MARKET WATCH -- Monday, 21 May 2012

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50. Investors Least Bullish In 2012 As Crisis Escalates: Commodities

http://www.bloomberg.com/news/2012-05-20/investors-least-bullish-in-2012-as-crisis-escalates-commodities.html

Hedge funds reduced wagers on a rally in commodities to the lowest this year on mounting speculation that Greece will leave the euro, slowing global growth and curbing demand for everything from copper to soybeans.

Money managers reduced net-long positions across 18 U.S. futures and options by 15 percent to 616,841 contracts in the week ended May 15, the lowest since Dec. 27, Commodity Futures Trading Commission data show. Gold bets fell for a second week and to the lowest since December 2008, while copper holdings tumbled 69 percent, the most in five weeks. Cotton wagers dropped to the lowest in five years.

About $4 trillion was erased from the value of global equity markets this month as Europe’s debt crisis escalated. Moody’s Investors Service lowered debt ratings on 16 Spanish banks on May 17, while Fitch Ratings cut Greece’s credit rating on concern that the country may be the first to exit the 17- nation currency bloc. Home prices in China, the biggest metals consumer, fell in a record number of cities last month, government data showed.

“The outlook for commodities is not good,” said Eric Sprott, who runs Toronto-based Sprott Asset Management LP, which manages $9 billion of assets. “The world economies are slowing down. China’s growth rate is softening, and it’s not even debatable whether there will be a recession in Europe.”