Supercycle or not?

Commodities tend to zig when equities zag.

Setting the scene

The last 12 months have been truly remarkable for (most) commodity investors. Industrial metals, energy – whether fossil fuels or green energy – most agricultural commodities and lumber have all enjoyed extraordinary price gains. Take for example a look at the Bloomberg Industrial Metals Subindex below and pay particular attention to early 2020 (Exhibit 1).

Exhibit 1: Bloomberg Industrial Metals Subindex
Source: The Daily Shot

Ravaged by COVID-19, the global economy started to close down in early March last year. Thousands of people died every day, and the global economy underwent the worst few months any living soul had ever experienced before. How could that possibly be the recipe for the mother of all bull markets in commodities? That is what this month’s Absolute Return Letter is about but, before going there, allow me to drop a brief note on ARP+.

As I have said before, the laws of this land don’t allow me to be explicit on investment recommendations in a free publication like the Absolute Return Letter. If I make any recommendations, the letter will be classified as investment research, and that can only be made available to paying clients of the firm. That is precisely why ARP+ was established, and the extraordinary bull market in commodities is why we have decided to make it the topic of the next ARP+ webinar. In other words, if you are an ARP+ subscriber, I urge you to tune in on the 3rd June at 3pm BST which you can do here, as I am going to share my current investment recommendations to do with commodities. If you are not a subscriber, you can subscribe here.