Feb 13, 2018|
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
And you're talking almost endlessly about the incredible stock market volatility we've seen the last of him three weeks. But there's been a lot going on in the commodities market to interest potentially some opportunities were joined by into hacked from seeking alpha is you talk to us about the markets. And you what are we seeing just in the last few weeks in the gold market. Good morning I'm Valerie and Mike. Basically we've seen. The two things polling. The gold in the oil and a lot of the other monies to different directions. First the dollar. Has been falling since the beginning. 2017. And is an historical inverse relationship between the dollar in commodity prices so that's been supportive but over the last couple of weeks with the bond market going down and affecting the stock market. Lower bonds higher interest rates. And to increase the corporate carrying commodity inventories and can be bearish. If it's not caused by inflationary pressures. So we've seen commodities being pulled into different directions commodities came out of the gate in in 2018. Rallying. But kind of a risk off environment lately has caused a little bit of selling across the B defector. So I mean that makes sense if you want goal tries to do well you want a cheap dollar that it makes perfect sense but we're talk to us about interest rates and inflation like what if we saw. Interest rate movements which I think most people are saying it's fairly likely and 28 teen tween nineteen we should see some interest rate hikes. What do that would come along with really no inflation what do you think that might do to the commodities market. Well that's an excellent question I mean you know that. Interest rates have two components real rates and and and the inflation. Factor no real rates go up and inflation does not go up. That could weigh heavily on on some commodity prices that have done well. What one of defectors that I'm keeping my eyes on here you know it was Groundhog Day last Friday it's Valentine's Day tomorrow. Pitchers and catchers report this week is spring training and that's it as a commodities trader that tells me that the plantings he's in the brain is just around the corner and we had five straight years a bumper crops. Because the weather mother nature has cooperated. But that's no guarantee that piece here is going to be the same now if we have shortages of grains. Because of drought floods the weather event. That will translate very quickly to increases and things like this PPI. And that could stoke some inflation so I'm keeping my eyes on that sector right now. Yahoo! has that can be really is there any early indications are we might see them and we've had a pretty interesting. Whether you're already this year with fires out in California. And hurricane hurricane season. Exactly exactly you know vote in every year with a new adventure when it comes to grain markets it's really mother nature. Would have to cooperate and five straight years has been an anomaly in terms of you know crock enough crops to feed the world. One of one of the macro things that I look at in terms of commodities. Is it is these demographics. You know that there's two sides of the commodities equation the fundamental equation you have to supply side and the demand side. And when it comes to demand back in 1960 when I was born the way back then there with 32 billion people on our plan. Today this seven point 44 billion people and and wealth has increased in places like China. So today you have more people with more money. Competing for playing ninth warm material. And that means that the demand side of the equation has strengthened over decades and we if you look at long term charts of things like. Corn and soybean and wheat and many other commodities. You'll find that for the past couple of decades they've been making higher lows of the base prices have been going up to the demand side. Does it in underpin. These market these commodity markets more material market. And before the break I heard you mention you know potential spending of a trillion may have dollars on infrastructure projects. And that's certainly if that passes congress. And it seems to be some bipartisan support for that. That will also increase. Industrial commodity demand things like copper and two man didn't. And other commodity base metals and an even energy commodities like oil. Right well Andrew we've got to get out but it really appreciate your take that into Hecht and seeking alpha talk about commodity prices looking into 2018 and beyond that's coming on under. Thank you.