Are Commodities Signaling A Wider Slowdown?

The potential for a slump that affects the West is growing

The Asian crisis may not have done much to corporate earnings or stock markets in the West--yet. But it's certainly showing up in the trading pits of Chicago, London, and New York. These barometers of global financial anxiety are sending ominous signals. Wildly gesticulating commodity traders are bidding down prices of everything from crude oil to copper to corn. All but 5 of the 22 commodities in the Goldman Sachs Commodity Index (GSCI) have fallen this year. And the index is down 30% since Asia's woes surfaced in October. "This is a classic bust accompanied by tremendous financial instabilities," says Allen L. Sinai, chief global economist at Primark Decision Economics.

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