So far I will score my battle with Goldman over the nature and form of today’s commodity bull market at a draw. They have been right so far on metals and oil. I have been right on iron ore and other materials.
The most pressing disagreement between us is whether or not strong price action to date is evidence of a structural or cyclical bull market. This matters a lot to investors in terms of how long high prices can last which flows into notions of stagflation and equity factors.
My contention is that there is no underlying scarcity in anything. The China supercycle built that out for decades. In energy, metals and softs, the China supercycle delivered immense worldwide excess capacity in ports, shipping, rail, mines, processing. You name it. So any apparent scarcity will be brief.
