The current market narrative and patterns are increasingly resembling those of last summer, when upside inflation surprises and hawkish Fed revisions drove a correction in risk assets. This time around, however, the sell-off is likely to deepen as traders scale back bets on rate cuts – with consensus shifting from as many as seven cuts this year in January to now less than two.
JP Morgan’s Call to Sell Stocks and Buy Commodities
In a note to clients on Monday, JP Morgan advised staying defensive, with the Equities backdrop looking “Problematic”. The banks analysts closed the note by reissuing their call to “Sell Stocks and Buy Commodities”.
While the fundamental picture looks increasingly volatile and uncertain for Stocks – on the flipside the fundamental backdrop continues to remain ultra-bullish for Commodities due an ever-growing number of macro and geopolitical tailwinds that are currently unfolding.
These include; persistent geopolitical tensions, strong central bank purchases, growing demand from China as a hedge against economic instability in the world’s second-largest economy, along with November’s high-stakes U.S presidential election.
And last but definitely not least – the global supply crunch, which is whipping up an unprecedented phenomenon known as a “Super-Squeeze” – sending Metals, Energies and Agricultural markets on a parabolic run that shows no signs of slowing down anytime soon.
Seizing Opportunities in the 2024 Commodities Market
To quote analysts at GSC Commodity Intelligence – “This is the pullback so many traders who missed out on the first leg of the current Supercycle in Commodities have been waiting for”.
