On Friday I gave you a generally bullish outlook for commodities from Barclays Capital.
To stick with wonderful things British, today I bring you the thoughts of Niall Ferguson, the British historian, as voiced on this week’s episode of Consuelo Mack’s WealthTrack. (Go watch it at http://wealthtrack.com)
Ferguson is a man I have often written about because he actually understands markets, which isn’t generally true of economists. But then, he isn’t actually an economist, but rather a historian who studies economic and financial history. So his being British, a historian rather than an economist, and a red Tory type makes his outlook similar to mine, even though I disagree with quite a few of his ideas. The main differences between us are 1) he is a historian and I merely have a degree in the area; 2) he writes books and I merely read them; 3) he has a wonderful British accent and I dropped my residual accent in Grade Two, when the other kids at Davin elementary school made fun of me for saying “rawsberry” instead of “raspberry” and things like that.
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With that aside here is his bearish view on commodities. My words don’t have quotation marks around them. His do.
“My trade right now is short commodities . . . That is the trade I would put on today, this year.”
Ferguson thinks commodity strength is based on the money flushed into the markets by the U.S. Fed going into commodities.
“It’s close to being bubble.”
If, as he expects, China’s government moves aggressively to control inflation this year, that could cause a medium term commodity price slump.
“I think that they hit the brakes, and that’s the point at which commodities start to cool down.”
“I would say we might be quite close to an inflection point for that.”
So if you needed a downer to start the week, thereof is. Go watch the video. Fantastic interview.
