Displaying items by tag: supercycle

(Houston)

Commodities are doing very well this year. Every big bank, including Goldman Sachs, thinks we may be starting a new commodities super cycle. The big question is exactly which commodities and who will be the big winners. Everything from food, to metals, to oil has been rising and this creates some clear winners, particularly producers of those commodities. That means a big windfall for countries like Saudi Arabia, Australia, and Chile, who are big net exporters of various raw materials. It is net importers that get hurt the worst, with an absolute behemoth—China—likely to suffer the most, as it is one of the largest buyers of commodities in the world. In fact, it almost single-handed drove the big commodities boom in the 2000s.

FINSUM: So the key here is picking the right emerging markets. Additionally, investors may want to double-think investing in oil, as production hikes could undermine prices quickly.

(New York)

Jeffrey Currie, head of Commodities Research at Goldman Sachs, said there is the beginning of a structural bull market in raw materials…View the full article on our partner Magnifi’s site

(Houston)

Investors in oil need to be aware—the market is increasingly looking like a price surge is in store. Supply constraints are currently looming over the market, which has pushed prices to a 3.5 year high. Now, some are calling for a spike that would take oil to $150 or, almost double the level of now. The call comes from renowned research house Sanford Bernstein. The logic is that the oil price tumble over the last few years has caused “chronic underinvestment” in supply which will power the next “supercycle”. According to Bernstein, “Any shortfall in supply will result in a super-spike in prices, potentially much larger than the $150 a barrel spike witnessed in 2008”.

FINSUM: The view here seems sound. However, we must saw\y that there is one overarching logic that bothers us about this call—that the world has bountiful oil that has becoming ever cheaper to extract. That makes us think supply constraints could be overcome more quickly.