Investors Hate US Equities & USD Sentiment Signal
The Commodity Report #202
*YTD our absolute return strategy is up 9,7%
Investors Hate US Equities
The latest BofA survey highlighted exceptional positioning by professional fund managers.
In fact, we currently see the fifth most bearish positioning in past 25 years as tariffs drive global growth expectations to 30-year lows. The outlook for US stocks is the worst since 2006. Therefore, the contrarian trade is currently long US and especially long US tech stocks.
Positioning in commodities meanwhile remains resilient. This is probably due to the fact that investors fear that the tariff shock could lead to sharply higher inflation expectations.
This is also the biggest market fear at the moment - stagflation. Fund managers expect higher inflation while short-term rates should continue to drop. That is a toxic mix and would be quite frankly a disaster for the US economy if it holds true and exactly what the Fed is currently fearing. And environment where inflation is rising, but growth is shrinking - which would lead to a situation where Powell probably could not stimulate the economy despite slowing.
Become a member to get our live portfolio updates every Sunday
(some subscribers currently have trouble signing up for the service. Substack is currently actively fixing this bug. I’ll notify all readers once the problem is finally resolved - thanks for your patience!)
Cover Sentiment Signal
The Economist published an agressive cover story about the fall of the USD over the week. In mid October of last year the financial publishing company published a very bullish USD cover story. Afteer that the greenback continued to strengthen. The DXY rose from 103 points to almost 110 points afterwards.
Now the USD sentiment seems to be bummed out quite a bit. Over the week the DXY hit the lowest level since March 2022, closing below 98 points.
In Other News…
Several factors can influence metal recycling rates. According to this International Resource Panel report, metals that are used in large quantities (steel) or have a high value (gold) tend to have higher recycling rates.
However, for materials used in small quantities in complex products (REEs in electronics), recycling becomes far more challenging.
Finally, a metal’s EOL-RR is strongly influenced by the least efficient link in the recycling chain, which is typically how it’s initially collected.
This week, look out for the following:
Richmond Manufacturing Index on Tuesday
Flash PMIs on Wednesday
It’s also IMF meeting week
Institutional Services
If you’re an institutional investor that wants to commit money into our strategy, receive a portfolio-overlay or copy our strategy to participate directly from our framework - contact us via info@lukas-kuemmerle.com
Till next Monday, Lukas
If you have any questions in the meantime, please feel free to contact me via X or Mail.