China is a major player in the commodities markets as far as demand goes. Their economy grew at 8.7 percent last year, which is far above the U.S. and European growth rates. In fact, most of the incremental demand for many base metals like copper is coming from China and certainly not the U.S.
The high growth rate from China has been very positive for commodities, but that is going to seriously slowdown. China has already implemented programs to drastically cut bank lending and other measures to slow their economy as inflation and speculative bubbles are a serious concern. This is a serious negative for the oil and metals markets. It is not so bad for the food commodities.
Don't buy into the hype that the U.S. economy is firing on all cylinders - it is not. Watching shows like CNBC makes you feel like it's the late 90s once again. The folks on Wall Street and the financial shows all have a vested interest to talk up the market and they feed on one another. The stock market should trend lower into the summer. Then I would expect it to make another jump higher if the Fed and Obama do another major economic stimulus or it should a slow grind lower if the economy is left to stand on its own.
Don't discount the developments from China. Much of this rally has been fueled by China and expectations for future demand - namely from China. All bets will be off if they can't control their growth and inflation shoots higher in China. But that is unlikely as they are in much better financial shape than us and they have more tools at their disposal to control growth - up or down.
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