'Shock And Awe' In September: Energy, Food ‘Going To The Moon’ | Jeff Currie

Summary

Jeff Currie lays out a broad commodity supercycle thesis driven by global supply shocks and refining bottlenecks, arguing refined products such as diesel matter more than crude for inflation. He recommends owning broad commodity indices, energy, grains, gold, precious metals, electrification metals, and oil producers with dividends. He also sees a tactical opportunity to be long crude and short the diesel crack spread as record refining margins pull crude higher.

• Jeff Currie is very bullish energy and grains, calling grains the real sleeper.
• Supply disruptions span Hormuz, Red Sea, Black Sea, refining capacity, Rhine, and Panama routes.
• Diesel and gasoline prices are more important than headline crude; diesel is around $189 and crack spreads are at records.
• He expects WTI to end the year higher with inventory draws of 4-6 million barrels per day and China buying crude.
• Wheat, corn, and food prices are supported by Black Sea corridor losses and El Nino weather.
• Gold is supported by real yields, central bank buying after 2022 sanctions, and debasement concerns.
• He recommends owning full commodity indices and hard asset baskets instead of picking single commodities.
• Oil producers and majors, the 'municent seven,' offer a 15.5% free cash flow yield versus 2.7% for the Magnificent Seven.