Commodity complacency, Sharpfokus77
February 2nd 2019
⏰ 3 minute read
⏰ 3 minute read
Snow & -16
I just came back from Bandung yesterday & when I left the temperature was 17 degrees. You can easily forget that cool exists in Indonesia. But that’s nothing compared to the U.K. with -2 in London & snow outside. That too is nothing compared with -8 in Chicago with the Polar Vortex; cue jokes on whatever happned to global warming.
Iceland farce
Visit
But those temperatures are nothing compared to the -16 freezers at Iceland, the U.K. supermarket chain. Their young owner came to Indonesia early last year & after a couple of days with an NGO decided that Palm oil was killing orangutans by destroying their homes, before flying home & declaring a ban.
Ban
His brilliant plan was then to quickly remove all palm oil from Iceland’s own products to force the industry to become more ‘sustainable’. Various publicity stunts culminated in regurgitating a Greenpeace anti palm video as the Christmas ad & at that point things stopped going to plan & started to go awry.
Fail
First Richard from Iceland was ridiculed live on breakfast TV by Piers Morgan for saying palm oil was bad but continuing to sell other products which contained it. Then a couple of weeks ago, the Daily Mail discovered that instead of removing palm oil, Iceland had been forced to remove their brand name from products.
Shortage
Demand
The embarrassment for Iceland shows a deep set of truths. We rely on commodities, we cannot enjoy our lives without them & supply is now running into shortages. The 2006-8 price increase was a signal of what’s coming,, then the real situation was temporarily masked by weak economic growth & demand.
From Sustainability...
We did not heed the warnings of the 2000s & instead focused on the lack of growth through ‘sustainability’ which if you google its use over time, jumped in frequency during the 1990s from zero & translates litterally to no growth. Targeting no growth always always results in decline & that’s what has happened to supply.
To Hubris
Sustainability has turned to hubris. Edible oil is part of human life & frequently mentioned in the Bible. Palm oil is by far the biggest & is irreplaceable. Iceland should be working to ensure future supppy not ban. Apple also recently publicly claimed it would stop using mined Tin & recycle, which is impossible & this will end embarrassingly too.
The play
Bonds
Supply being tight is about to play out in the markets in real time. The driver is economic growth & here’s how to watch it. The world’s best measure of growth is the most liquid asset, US 10 year bonds. Despite an end 2018 decline, yields are still close to 3%, signaling faster growth in the US not a recession. A weakening $ (recovering rupiah) signals growth spreading now.
Oil
I’m going to suggest to you that the next thing to happen will be a surge in oil prices. The price of oil was rising last year & then fell back. I think that the price will quickly go back to the previous level & on to $100. Oil has the same supply issue which has been temporarily masked by fracking, but not new supply.
Tin & palm
I’ve used the past 5 years (worst of the economic weakness) as my measure. US bond yields have recovered to 5 years ago levels. That’s why oil will go back to $100. Some are already ahead, Apple’s tin is back to its 5 years ago level, making our forgotten TINS jump 89% in January. Palm oil has the most to gain in a commodity recovery. When the oil price jumps, palm will follow.
I just came back from Bandung yesterday & when I left the temperature was 17 degrees. You can easily forget that cool exists in Indonesia. But that’s nothing compared to the U.K. with -2 in London & snow outside. That too is nothing compared with -8 in Chicago with the Polar Vortex; cue jokes on whatever happned to global warming.
Iceland farce
Visit
But those temperatures are nothing compared to the -16 freezers at Iceland, the U.K. supermarket chain. Their young owner came to Indonesia early last year & after a couple of days with an NGO decided that Palm oil was killing orangutans by destroying their homes, before flying home & declaring a ban.
Ban
His brilliant plan was then to quickly remove all palm oil from Iceland’s own products to force the industry to become more ‘sustainable’. Various publicity stunts culminated in regurgitating a Greenpeace anti palm video as the Christmas ad & at that point things stopped going to plan & started to go awry.
Fail
First Richard from Iceland was ridiculed live on breakfast TV by Piers Morgan for saying palm oil was bad but continuing to sell other products which contained it. Then a couple of weeks ago, the Daily Mail discovered that instead of removing palm oil, Iceland had been forced to remove their brand name from products.
Shortage
Demand
The embarrassment for Iceland shows a deep set of truths. We rely on commodities, we cannot enjoy our lives without them & supply is now running into shortages. The 2006-8 price increase was a signal of what’s coming,, then the real situation was temporarily masked by weak economic growth & demand.
From Sustainability...
We did not heed the warnings of the 2000s & instead focused on the lack of growth through ‘sustainability’ which if you google its use over time, jumped in frequency during the 1990s from zero & translates litterally to no growth. Targeting no growth always always results in decline & that’s what has happened to supply.
To Hubris
Sustainability has turned to hubris. Edible oil is part of human life & frequently mentioned in the Bible. Palm oil is by far the biggest & is irreplaceable. Iceland should be working to ensure future supppy not ban. Apple also recently publicly claimed it would stop using mined Tin & recycle, which is impossible & this will end embarrassingly too.
The play
Bonds
Supply being tight is about to play out in the markets in real time. The driver is economic growth & here’s how to watch it. The world’s best measure of growth is the most liquid asset, US 10 year bonds. Despite an end 2018 decline, yields are still close to 3%, signaling faster growth in the US not a recession. A weakening $ (recovering rupiah) signals growth spreading now.
Oil
I’m going to suggest to you that the next thing to happen will be a surge in oil prices. The price of oil was rising last year & then fell back. I think that the price will quickly go back to the previous level & on to $100. Oil has the same supply issue which has been temporarily masked by fracking, but not new supply.
Tin & palm
I’ve used the past 5 years (worst of the economic weakness) as my measure. US bond yields have recovered to 5 years ago levels. That’s why oil will go back to $100. Some are already ahead, Apple’s tin is back to its 5 years ago level, making our forgotten TINS jump 89% in January. Palm oil has the most to gain in a commodity recovery. When the oil price jumps, palm will follow.
The Earth Boar
With perfect timing we are about to start the year of the Earth Boar. The Boar means money so an easy translation is money in commodities. The hubris which suggests people think we can do without most basic materials is getting smashed as Iceland shows. Things are about to get much more dramatic & provide a fantastic investing opportunity for you.
Be a great investor!
Sebastian
With perfect timing we are about to start the year of the Earth Boar. The Boar means money so an easy translation is money in commodities. The hubris which suggests people think we can do without most basic materials is getting smashed as Iceland shows. Things are about to get much more dramatic & provide a fantastic investing opportunity for you.
Be a great investor!
Sebastian
Check out our TINS data file here with production, sales, tin prices, financial results & TINS share price inside a spreadsheet ⬇️
