Our 4 Big Themes
Throughout history, long periods of energy underinvestment create economic and currency instability.
We are witnessing that today after a nearly decade-long period of low oil investment, with no signs of it abating, leading to global oil pumping capacity constraints and record low inventories.
While this might sound alarming (and it might be in time), it follows a long-term economic cycle based on energy re-investment rates, offering new opportunities that differ from past trends.
Tight energy supplies trigger these multi-year megatrends, and history has shown that natural resources tend to experience enormous uptrends after long periods of underinvestment, with oil leading the way.
Based on all the incoming data, we are heading into a two-world system for trade, and the next U.S. commodity Supercycle is likely to be insane.
As the U.S. dollar continues to become less prevalent in international trade, U.S. Treasuries will continue to become a less relevant mix of foreign reserves, and U.S. debt monetization and dollar inflation will likely become more persistent.
This combination of low energy supplies and a less utilized U.S. dollar for overseas trade is unprecedented, and printing dollars into commodity shortages will have enormous investment consequences.
In 2023, we are on the cusp of what may be one the largest commodity bull markets in North American history (the Fed needs to un-tighten still).
By 2025, we can expect substantial increases in wealth while a confluence of energy and geopolitical factors catalyze this new megatrend, which very few are thinking about.
We have already crossed the Rubicon, and as we hit lightspeed in the upcoming natural resource uptrend, some will experience exhilaration while others will suffer. Our focus should continue to be on belonging in the former camp over the next few years.
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