Global inventory super cycle tops out

Monday, 5 July 2021

There is no commodity supercycle. There is a global inventory supercycle underway thanks to the COVID shock, stimulus and reopening. It works roughly like this:

Such a cycle can trick the unwary (and markets) into believing that short-term changes in demand patterns and inflationary impacts are permanent. They are not.

There is no saying precisely when the cycle peaks, and it will happen at a different pace in different areas, but one indicator we can look to is the JPM global PMI and it just rolled over:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.