We have seen a reasonably significant sell off in the majority of commodity markets over the past several weeks, particularly in the precious metals area. This sell off has been visited on the materials producers, as well as those areas inextricably linked to global growth. The downturn has been precipitated by discussions as to the possibility that the Fed will start to wind down its massive unconventional bond buying in the very near term. What is curious is why equity markets have, for the most part, sloughed off this possibility when the majority of the liftoff in stocks since 2009 has been the result of global Central Bank activity. We have talked at length about how the various QE’s have had little impact on some of the physical markets that we follow, which would imply that money printing has little affect on real commercial activity. Having said that , if this activity were to cease, we really should see no real shift in real demand (not paper demand) for commodities. However, we would definitely see a response in the public capital markets as much of the 3 year tailwind has been Central Bank induced. However,equity investors seem to imply that they can have it both ways. The market action in stocks seems to insinuate that a more hawkish Fed might hurt the economy, but that this damage will somehow not migrate into the equity markets. We are highly suspect, as we always are, of any divergence between the reflation in paper (stocks) and the reflation in the real economy.