In this article, the author discusses the relationship between interest rates and the performance of growth stocks. They argue that while there isn’t a simple mathematical relationship between the two, there are certain moments when rate increases cause growth stocks to slump. The author references a study by Sven Ebert and Pablo Duarte, who found that sharp changes in inflation expectations and short rates have historically been followed by underperformance by growth stocks. The study suggests that it’s not the level of rates and inflation that matters, but rather the speed and direction of their changes.
The author also discusses the outlook for copper. They note that there is expected to be a shortage of copper in the medium to long term due to increased demand for use in the green transition. However, the author is skeptical about the supply of copper being able to keep pace with this demand. They reference a report by Bridgewater, which suggests that copper may be the exception among metals, as it has not yet seen the investment or supply growth needed to meet energy transition demand. The report suggests that unless new mines are dug soon, there could be structural shortages of copper around 2030.
The author concludes by discussing the complexities of investing in commodities like copper. While there may be potential for price spikes and significant returns, commodity investments have historically not performed well. The author suggests that investors may need to explore options markets for diversifying exposure to commodities.
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