Investment banks love a super cycle.
It spurs irrational investment and sucks in unwary investors. Furthermore, it encourages passive funds to up their allocation, even if only by fractions of a percent.
But with some $14 trillion invested in US equities alone, even a modest increase in passive investments into ETFs would reap significant rewards in fees.
As such, it may be not surprising that the big boys — like JP Morgan, as reported in Bloomberg, and Goldman Sachs, as reported in the Financial Times (admittedly focused more on oil) — are calling the start of the next commodities super cycle.
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Commodities super cycle?
On the face of it, they appear to have some foundation.
As a separate post in the Financial Times observes, metals, agricultural and oil commodity indices have risen up to 40% since last July.
In part, this is due to a surge of interest in green-energy projects.
The EU, US and China have all promised to spend big. Hydrogen projects alone could receive €30 billion from the EU.
Copper has rallied to eight-year highs, around $8,375 per ton. The metal is benefiting from strong Chinese demand and the prospects for a more rapid transition to electric vehicles gains momentum. Glencore is quoted as saying world copper demand will double by 2050 and that mine investment is insufficient,
All of that certainly makes for a bullish landscape.