Below are some of the most interesting articles, quotes and charts I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
As much as investors may want to believe otherwise, the environment has changed dramatically in recent years…
"The danger of these long cycles is that the belief lives on for much longer than markets allow. Many investors are therefore unprepared for this new environment." –@Convertbond https://t.co/3ainK0WcWA
— Jesse Felder (@jessefelder) April 2, 2024
…and in such a way as to suggest that the long downtrend in commodities prices relative to equities has already come to an end.
To put things into perspective: the Ratio of Commodity prices to the S&P500 is near All-Time lows. Time for a turnaround? pic.twitter.com/6AdCcpfa2v
— Holger Zschaepitz (@Schuldensuehner) March 17, 2024
In fact, the catalyst for a new primary uptrend in the ratio should be fairly obvious starting with the “scarcity of capex” in the commodities space amid a new boom in construction spending in recent years…
The chart below portrays a predicament that is progressively becoming the centerpiece of the demand argument for commodities.
Despite the recent upsurge in construction spending, commodity producers have evidently fallen short of matching this trend.
Capital expenditure in… pic.twitter.com/fim6scrcy7
— Otavio (Tavi) Costa (@TaviCosta) April 4, 2024
…and paired with the rapid and intentional devaluing of the primary currency used to buy them.
A true veteran insider shares his view of how the Federal Reserve, the Treasury & Congress truly operate
It's not a pretty picture
Dr Thomas Hoenig was CEO of the Kansas City Fed, a voting member of the FOMC, and a Director of the FDIC
Few sat closer to the center of power pic.twitter.com/5N0YZa8UWz
— Thoughtful Money (@get_thoughtful) April 4, 2024
Not to mention that some individual commodities are a particularly good hedge for this sort of risk, a fact investors may soon come to appreciate.
'In the end, it may take a crisis — perhaps a disorderly rout in the Treasuries market triggered by sovereign US credit-rating downgrades, or a panic over the depletion of the Medicare or Social Security trust funds — to force action.' https://t.co/z3ycETDjjc
— Jesse Felder (@jessefelder) April 2, 2024
