uddrag fra Zerohedge:
The drive towards electrification, whether that’s electric vehicles and data centers powering artificial intelligence, as well as reshoring manufacturing trends, the need to expand the nation’s power grid to handle surging load demand is in full swing but comes as new copper mining capacity has dwindled, and a squeeze on the Comex exchange has sent prices to record highs.
Odd Lots’ Joe Weisenthal began by introducing Currie and referencing his past comments from as early as 2021 about the beginning of a commodity supercycle:
We’re going to talk to Jeff Currie. So we’ve had him on the podcast at least a couple of times before, back in 2021. We talked to him and he talked about this idea of like a new commodity supercycle, and of course oil was surging and all these commodities were surging as the global economy was reopening.
Then we talked to him again in 2022 and he said that copper specifically may end up being one of the, the tightest commodity markets he’s ever seen. So real issues with supply and again, looking pretty good these days.
So we are back with Jeff Currie, who is now in a new role. So when we talked to him before, he was the head of commodities research at Goldman Sachs, but today he’s the chief strategy officer of Energy Pathways at the Carlyle Group. So Jeff, thank you so much for coming back on Odd Lots.
A little more than 11 minutes into the conversation, Odd Lots’ Tracy Alloway asked Currie:
Alright, I have a very important question for Jeff, which is, are you wearing a copper bracelet right now?
The commodities veteran responded:
You know, it is the most compelling trade I have ever seen in my 30 plus years of doing this. You look at the demand story, it’s got green CapEx, it’s got AI, remember AI can’t happen without the energy demand and the constraint on the electricity grid is going to be copper.
And then you have the military demand. So unprecedented demand growth against unprecedented weakness in supply growth because we have not been investing, it’s teed you up for what I would argue is the most bullish commodity that I actually, I just quote many of our clients and other market participants say, you know, it’s the highest conviction trade they’ve ever seen.
Currie’s comments come as a historic Comex copper short squeeze is underway this week.
It all started one month ago, when we reported “US, UK Banned Deliveries Of Russian Copper, Nickel And Aluminum To Western Metals Exchanges.” This sparked a massive dislocation for copper prices traded in New York and other commodity exchanges has rocked the global market for the base metal and prompted a frantic dash for supplies to ship to the US.
We have discussed the fundamental case for copper:
- “Goldman Says “Copper’s Time Is Now””
- “The Copper Supply Shortage Is Here“
- “Copper “Is Having A Cocoa Moment””
- Goldbugs Waited Years For A Massive Comex Short Squeeze, And Finally Got It… Just In The Wrong Metal
And most notably in the “the Next AI Trade“…
Back to Currie’s Odd Lots interview. He pointed the acronym “RED” summarizes the three major structural tailwinds driving copper demand forward (summarized by Bloomberg);
The ‘R’ stands for redistribution policies: As he argues, lower-income groups have been consuming “a greater share of commodities than the higher-income groups. That’s very much alive and kicking. You look at the low unemployment rate, who’s the biggest benefactor of that? It is the lower-income groups, and policies still very much in play all over the world right now reinforcing these lower-income groups in the consumption of commodities.”
The ‘E’ stands for environment policy, which Currie describes as having been “turbocharged” in recent years.
“You have the IRA, the REPowerEU, China,” he says. “Now, part of the reason why copper’s rallied recently [is that] China’s growth was over 100% in green CapEx last year, 30% this year. So everywhere you look in the world, we see environmental policy through green CapEx stimulating demand for commodities.”
And finally, the ‘D’ stands for deglobilization, though it could also stand for defense.
“Look at the potential military spend in the US — $95 billion on munitions,” he says. “We look at what’s going on in places like Germany, $100 billion dollars of military spend. So you’ve got all three going much stronger than what we would’ve thought two-to-three years ago.”
