This week on the podcast we speak to Nitesh Shah, head of commodities and macroeconomic research at fund manager WisdomTree.
We thought it was a timely point to have Nitesh on the podcast, as commodities markets have been very much in the driving seat so far this year, and have been a major contributor to the massive inflation we have seen across global economies.
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Commodities in focus
On the podcast we talk about the oil market in the wake of the last OPEC meeting, and the impact of the conflict in Ukraine and subsequent sanctions on Russia. The natural gas market is also looking extremely tight, but one of the key questions is going to be the role OPEC is going to play. The recent moves from OPEC have been very meaningful for oil prices. Will energy prices continue to play a role in global inflation in 2023 as well as food prices?
We also got a chance to ask Nitesh about some of the major macroeconomic questions of the day, including the risk of recession and the policy of the major central banks. Will the Fed and the European Central Bank continue raising rates into Q1 next year? And how stubborn will inflation be in 2023?
The elephant in the room of course is China. Will China’s economy continue to play the same role as it traditionally did before the pandemic, keeping inflation down thanks to its cheaper manufacturing capability?
One of the big questions is where to put your money when inflation is out-pacing traditional assets like equities and bonds. For example, bond yields have shot through the roof, especially in the UK government debt market. Can commodities act as an inflation hedge and is this now the time to consider diversifying portfolios into commodity-related investments?
Dealing with inflation
We also get a chance to talk about expected inflation versus unexpected inflation and how commodities can help to protect investors from unpleasant surprises. We look at the gold market and whether that can still act as a traditional value reserve during these current trying times for investors. Are we poised for a gold bull market in the near future? Nitesh sheds some light on WisdomTree’s own internal model on gold price behaviour and why gold is actually performing better than the model suggests.
We wrap up the podcast by discussing the energy transition, with many of the big energy giants investing more heavily into the technology that will facilitate the move to cleaner sources of power. Can government policy live up to the climate ambitions that have been outlined at major international conferences? Is this sector poised for a once in a generation boom, like the railways were in the 1800s? Where will the profits lie for investors? Metals markets, for example, could be an interesting place to explore. And could the climate crisis create the new technology and energy giants of the future?
