Commodities

Strategy

Could unreliable weather be a reliable return source?

True diversification requires looking for independent return streams. You normally cannot rely on the weather, but in investments that lack of reliability is an interesting feature.     

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Economics

Keeping an eye on lithium battery prices

Recently on CNBC, I discussed technological disruption in the auto industry from car sharing, autonomy and electric vehicles. I argued that batteries were likely to be similar to microchips – falling 20% in price every year – and could therefore disrupt the internal combustion engine.

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Economics

Champions League clique

The rise of Chelsea and Man City shows that it takes a lot of money to break into the Champions League elite, but once you're there, it creates a virtuous circle. The same is true for inflation. There is a self-reinforcing loop of high inflation expectations, wages and prices. But the 2014 oil shock looks to have knocked the US and Japan out. Consumers' inflation expectations remain stubbornly low.

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Portfolio Thinking

Assuming the position

We worry about sharing popular investment ideas, since the view is probably in the price. But how do we know if a trade is crowded? Positioning information can give us a clue, although it requires careful interpretation.

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Portfolio Thinking

The obvious choice isn’t always the best

We have become more constructive on commodities this summer, in particular on the energy complex. After many years of supply outstripping demand in oil markets leading to rising inventories, we now see the oil market moving towards balance in 2017. But is buying commodities directly the best way to express our view?

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Economics

Oil price - Kriss Kross will make you jump, jump

The oil supply and demand lines have criss-crossed for the first time in 2 1/2 years. With demand back in harmony with supply, oil inventories have probably peaked, helping oil prices 'jump jump'.

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Economics

Kickstart the Kitkat machine

Global manufacturing inventories are falling for the first time in two years. This suggests the industrial cycle could be bottoming out.

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