"Energy & commodity prices are in a firm downtrend and will likely get weaker."
I agree with the disinflation thesis and all the points except part of this one. 👆Look at DBA, it's rallying back toward 52 week highs. Not sure what comes of it but I think we're about to see commodity prices give the bulls a nice counter trend rally to keep the inflation narrative from dying a peaceful death.
Hey Brant, thank you for the thoughtful response and for bringing up $DBA!
I had totally forgot about this ETF, as I've been predominantly focused on broader commodity funds like $GSG and $DBC. While you correctly point out that DBA is ripping higher, my pushback would be that this is merely a segment of commodities, which often don't have industrial use-cases.
For example, cattle futures are ripping higher, but I don't think this development will reignite broader inflation outside of food prices (which continue to decelerate sharply YoY despite these developments in DBA).
I'll keep a pulse on this going forward, so thanks again for bringing it back to my attention.
Yeah it's definitely a subsection of the whole space, and thankfully one that usually responds to higher prices by producing more supply. I'm always looking for cracks in the prevailing narrative and thankfully for now this is the only major one I can find to refute disinflation. Hopefully it finds resistance soon and rolls over with everything else.
Doing well myself. Happy to see you're having a chance to do some extensive traveling, it looks like a great time. Enjoy it! --- and keep up the great work with the newsletter.
"Energy & commodity prices are in a firm downtrend and will likely get weaker."
I agree with the disinflation thesis and all the points except part of this one. 👆Look at DBA, it's rallying back toward 52 week highs. Not sure what comes of it but I think we're about to see commodity prices give the bulls a nice counter trend rally to keep the inflation narrative from dying a peaceful death.
Hey Brant, thank you for the thoughtful response and for bringing up $DBA!
I had totally forgot about this ETF, as I've been predominantly focused on broader commodity funds like $GSG and $DBC. While you correctly point out that DBA is ripping higher, my pushback would be that this is merely a segment of commodities, which often don't have industrial use-cases.
For example, cattle futures are ripping higher, but I don't think this development will reignite broader inflation outside of food prices (which continue to decelerate sharply YoY despite these developments in DBA).
I'll keep a pulse on this going forward, so thanks again for bringing it back to my attention.
Hope you're well!
Yeah it's definitely a subsection of the whole space, and thankfully one that usually responds to higher prices by producing more supply. I'm always looking for cracks in the prevailing narrative and thankfully for now this is the only major one I can find to refute disinflation. Hopefully it finds resistance soon and rolls over with everything else.
Doing well myself. Happy to see you're having a chance to do some extensive traveling, it looks like a great time. Enjoy it! --- and keep up the great work with the newsletter.
Nice analysis!
Credit contraction following the bank crisis is totally back of mind w/ markets rallying. Nice update on what's happening there.
Thank you very much and I'm glad you enjoyed it!