The big news in the world of Wall Street calls today was Citi's Edward Morse calling the end of the commodity Super-Cycle. The argument, basically, is that the age of investment-led Chinese growth is over (giving the way to household consumption-led growth) and that this shift would have a profound negative impact on the rate of demand growth in all sorts of industrial commodities. Add in booming supply in more areas (E.G. Iraq and US oil) and you have the case for the end of the great commodity bull run. And really this is huge given how long the commodity bull story has been a thing.
So should you listen to Morse?
Well beyond the logic of his call (which is spelled out in a note that's over 100 pages) he also has one well-timed call to his name
Take a time machine back to 2008, back when he was at Lehman, and oil was going into the nosebleeds....
Business Insider
The Analyst Calling The End Of The Commodity Boom Has Made One Spectacularly Timed Call You Need To Know AboutJoe Weisenthal
Randy Wray, then Jeremy Grantham, and now Edward Morse.
5 comments:
Tom -- When I read Randy's explanation of how all the new, fast money was affecting the commodity markets, it fit right in with what I have been saying for about 10 years about the danger of the financialization of everything in this country, starting with the explosion of mutual funds in the 1970's. A market becomes financialized and the original purposes become overwhelmed by the drive for ever-increasing profits. The housing bubble would have been severely limited if not for the financialization of the RMBS's. Even the original purpose of mutual funds, to provide a vehicle for small dollar investors, has been perverted. I am amazed that there are more mutual funds today than there are publicly traded stocks!
In the end the only real beneficiaries are the rentiers who skim their commissions off the hard working investors, trade their own account against their customers, and distort the system so it will bail them out of their mistakes.
Tom -- OT, but this is the most recent post from you. Please let me know if you've seen this:
http://www.nsfwcorp.com/dispatch/milton-friedman
I think the link was on Naked Capitalism's links page a couple of days ago.
I did not see that John. Thanks for the heads up. It's a bombshell.
I promoted it to a post.
Thank you. I found another interesting post on talking to you relatives about economics during Thanksgiving. Although not really in paradigm, it mostly deals with the Great Betrayal and the falsity of the debt and deficit terror.
http://blog.workingamerica.org/2012/11/16/working-americas-second-annual-turkeytalk-the-seq-what-ster-edition/
Thanks, promoted.
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