Odd Lots Goldman’s Jeff Currie: It’s a Commodities Supercycle, and We Still Haven’t Hit Max Pain
Oct 18, 2021
Jeff Currie, Global Head of Commodities Research at Goldman Sachs, shares his insights into the current commodities market. He discusses the surprising surge in prices, forecasting continued increases ahead. Key topics include the complexities of post-pandemic inflation and the impact of OPEC on oil markets. Currie highlights how energy prices affect production across sectors and examines the challenges faced by U.S. oil producers amid evolving ESG considerations. He also explores how rising demand, particularly from low-income groups, is driving inflation and shaping commodities dynamics.
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Unexpectedly Bullish Market
- The commodities market is far more bullish than predicted, with oil, copper, and other resources experiencing significant deficits.
- This interconnectedness exacerbates shortages, as seen with oil being used in place of coal and gas.
Revenge of the Old Economy
- Underinvestment in the "old economy," driven by poor returns, is a major factor in the current commodity crisis.
- This underinvestment has affected various sectors, from trucking to chip manufacturing and energy.
The Role of ESG in Fossil Fuel Underinvestment
- Poor returns in fossil fuels, not just decarbonization policies, have discouraged investment.
- ESG concerns are now a factor, raising the cost of capital for these investments.