Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Commodities Schizophrenia - War Room Slides

War Room - July 2012

  • Login to see the comments

  • Be the first to like this

Commodities Schizophrenia - War Room Slides

  1. 1. War Room 31 July 2012 Commodities Schizophrenia
  2. 2. War Room •Monthly macro discussion •Using tools in context •Update on HiddenLevers Features •Your feedback welcome
  3. 3. Commodities Schizophrenia I. Nat Gas + Coal: A Tale of Two Electricities II. Oil Prices – Mid-year Pulse Check III. Agricultural Commodities = Winner! IV. Scenarios
  4. 4. NATURAL GAS + COAL: A TALE OF TWO ELECTRICITIES HiddenLevers
  5. 5. Nat Gas + Coal: A Tale of Two Electricities Nat Gas overtaking coal in 2012 as biggest resource for electricity generation source: US Energy Information Administration
  6. 6. Patriot Coal Takedown – Taste of Things to Come? Coal demand declines in 2012: • Competition from nat gas • Milder weather in US • Weaker industrial demand (China + Europe) • Tougher environmental rules • Wind + solar getting cheaper • Oversupply from bad planning PCX Coal ETFs
  7. 7. Natural Gas + Coal – Carnage in both camps Neither Coal Miners nor Natural Gas Drillers have been good investments source: HiddenLevers
  8. 8. Nat Gas Opportunity – Utilities, not Drillers Gas and Electric companies rock - lower prices for Nat Gas + Coal - Usually offer a nice yield Source: HiddenLevers
  9. 9. HiddenLevers OIL PRICES – MID YEAR PULSE CHECK
  10. 10. Oil Prices – Iran + Europe tug of war 2012 – strange days for oil prices Jan – Feb • Rhetoric from Iran + US + Israel drives prices to 110usd • Election year in all three countries Mar – Apr • Banks make ridiculous upside calls on oil • Oil fades as saber rattling fades May – Jun • Oil crashes – Euro dies, US Dollar lives • Europe is a way bigger deal than Iran July • US decoupling in tact – sluggishly improving econ data • Oil + USD rising together • Rhetoric returns – Romney in Israel • Trading on QE expectations 78usd Source: HiddenLevers
  11. 11. Oil Prices – HiddenLevers gets it right in Jan 2012 slide from Jan 2012 War Room – Got Oil?
  12. 12. AGRICULTURAL COMMODITIES = WINNER! HiddenLevers
  13. 13. Agro Commodities – Bucking Trend Source: HiddenLevers
  14. 14. Big Cap Food - Bright Spot in Commodities Source: HiddenLevers
  15. 15. Agro Commodities ETFs – Choose Wisely! click to get live chart Dude, where’s my alpha? Benchmarking Agro ETFs 6m performance • Agro Commodities Lever +22% • iPath Pure Beta Agro (DIRT +27%) • UBS E-Tracs CMCI Agro (UAG +15%) • PowerShares DB Agro (DBA +4%) • PowerShares Global Agro (PAGG +2%)
  16. 16. Long Agro? – Try Consumer Staples over Commodity Funds Benchmarking Agro Funds 1y performance • Agro Commodities Lever +8% • Fidelity Advisor Consumer Staples B (FDBGX +10%) • Vanguard Consumer Staples Index Adm (VCSAX +11%) • ProFunds Consumer Goods UltraSector (CNPSX +8%) no no no maybe yes
  17. 17. COMMODITIES SCHIZOPHRENIA - SCENARIOS HiddenLevers
  18. 18. Climate Change: Will We Adapt? Guidance 1. Agro commodities prices skyrocket due to decreased supply and increased global population 2. CPI rises with food prices, and consumer confidence is negatively impacted 3. GDP growth could slow to standstill, based on subpar legacy infrastructure 4. DOD budget rises to cope with rise in global conflicts over resources Guidance 1. Agro commodities prices rise, but less quickly 2. Manageable CPI rise, consumer confidence not heavily affected 3. GDP growth rises due to investments in infrastructure and durable goods Both Scenarios: 1. Agricultural Commodities rising 2. CPI rising - inflation
  19. 19. HiddenLevers – Product Update • Macro Profile - Improved • Scenario Impact Widget Coming soon: • iPad App (beta) • Big Screen Presentation (beta)

×