Adam Rozencwajg and Yra Harris joined the Financial Repression Authority to discuss Commodities and Geo-Political Risks.
They offer valuable perspectives on the overall economy and financial markets. Delving into the intricacies of the subject, they analyze charts curated by Chief Investment Strategist Judd Hirschberg of WhiteWave Trading Strategies, providing a solid foundation for the discussion.
Adam Rozencwajg initiates the discussion with this insightful perspective:
We try to stay in the weeds in the different commodity markets. One thing I can tell you, which I think is a little bit of a different view than you'll hear from reading Bloomberg or The Wall Street Journal, is that from the markets that G&R looks at, demand remains and has remained very strong through most of 2023 and into 2024 on a global basis. I think that catches a lot of people off guard.
The commodities markets, after a very strong 2021 and 2022, treated a little sideways in certain pockets last year and weak in other pockets and a huge concern among investors - was this impending Chinese property bubble implosion and a general economic malaise and recession that, of course, did not arrive last year and has not arrived so far this year propped up by a lot of government spending here in the United States.
But what I'll tell you is whatever it is - it seems to be working from a demand perspective. We see very strong physical demand across the board which is true in energy, copper, iron, ore, steel, etc. So, we're not seeing the big slowdown and weakness that so many have expected. But that doesn't mean we won't. There are certainly lots of things to worry about (I guess). But as of now, we see really strong demand - and I should point out that it's really widespread. So if you were to see a pocket of strength in let's say copper and it wasn't being confirmed by strength in natural gas demand and into the Asian basin or oil demand or what have you, that could be an anomaly. But the more markets seem to show strong demand in concert - I think the more likely you are to see a true signal there and not just an anomaly.
So we see strong demand and I think that the economy is probably stronger than people expect.
To watch the interview, please click below (recorded on June 3rd, 2024).
Want to learn more from Goehring & Rozencwajg? We invite you to download or revisit our entire Q1 2024 investor research letter, available below.
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