With interest rates low, we have our doubts real interest rates are going to move high anytime soon. Click here to download our latest macro synopsis. Pundits suggest the U. If you believe this analysis might be of value to your friends, please share it with them.
Macro and Political Uncertainty Keeps a Lid on Commodities
If we maintain our desperate focus on growth, we will run out of everything and crash. We must substitute qualitative growth for quantitative growth. Market is helping, and right now she is sending us the Mother of all price signals. From until now, this entire decline was erased by a bigger price surge than occurred during World War II. Near term it will surely get less bad.
This will increasingly slow down the growth rate of the developed and developing world and put a severe burden on poor countries. There is little time to waste. Click here to read the most recent macro synopsis from Global Fund Exchange. Investing in Climate Change , investing in food , investing in water , Jeremy Grantham.
The warm weather in the winter months gave farmers hope for a great crop production this year, but a crippling U. The water shortage has killed crops, pushed corn prices higher, and is now starting to make its way to your local store shelves.
But according to famed analyst Jeremy Grantham, the looming U. Entering a long-term and politically dangerous food crisis. Grantham explained that rising U. Click here to download our latest macro synopsis. Another doubling in grain prices would be catastrophic. Through our research we continue to look into the effects of global population growth on our resources. The pattern Martenson identified affects the entire global economic system.
On the Road to Zero Growth. The latest research by Global Fund Exchange. There is plenty of scope for the money to be usefully invested. Farmland prices all around the world have soared in recent years. From to , the price of farmland in the UK has tripled due to the demand for agricultural commodities. In Canada, since , farmland prices have risen by an average of eight percent per year.
Is it a bubble? It is hard for me to comprehend that in the next 50 years we will need toproduce as much food as has been consumed over our entire human history. The UN Food and Agriculture Organisation says there is an urgent need for significant and long-term investment in farming technology and the infrastructure to support reliable food supplies.
Sustainable agriculture funds are there to supply that need. Anric Blatt , co-portfolio manager of the AquaTerra Fund , a multi manager fund, focused on imperative must-outcomes likes food, water and scarce resources feels that combining water and food investment themes allows for diversification, reduction in volatility and provides a deeper scope for his portfolios.
The currently approved and already earmarked spending by government and private sector institutions into food and water sectors alone will make these investments one of the most attractive sectors going forward. Anric Blatt , food security , investing in food , investing in water. Corn futures surged 58 percent since mid-June, soybeans were up 31 percent and wheat 41 percent.
It really hurt global grain output. I suggested then that surely the following season had to be at least less bad, and what did we get? Thailand, the largest rice exporter was knee-deep in floods overhalf the country, year floods occurred in the Mississippi, Texas sweltered in way-above record heat, and quite severe droughts gripped many other places. Perhaps in total a 1-inyear event globally.
And now, quite suddenly, even while I was thinking about this letter, 1-inyear drought and heat have hit our major growing areas. Any statistician starts to getjumpy when looking at 1-in, 1-in, and 1-in back to back. Long-term weather records are poor and a lot ofthis is judgmental, but this three-year stretch is, shall we say, very unusual. Other sources have used much punier odds, such as 1 in , Create a free website or blog at WordPress.
And that is the secret to success. The more you help others, the more prosperous you will be personally. Macro update 13 Dec. Click here to view. Click here to read the most recent macro synopsis from Global Fund Exchange Share this: Jeremy Grantham's November Letter: Click here to download our latest macro synopsis U.
Turns out, Grantham is dead on. The chart below shows that when using the headline consumer price index as a reference point, financial repression has been rampant for some time. Below are real interest rates in the U. However, investors need to be aware of what it is: Critics decry it as an unproductive, barbarous relic.
Gold may be a formidable competitor when real interest rates are negative, i. Now, clearly, the risk profile of gold is different from that of cash. Most have their daily expenses priced in their local currency rather than ounces of gold, making the value of cash more predictable for short-term expenses. A business can be valued based on various models taking future earnings into account e. Similarly, when looking at gold, investors may want to consider what the future may bear. If we chose to look at the past years, we would also get attractive returns, although U.
Most investors appreciate an 8. Central banks have various ways to gauge future inflation expectations. Without getting into technical details, the charts below, one for the U. So while the ECB turns on the printing press, the Fed, looking at similar trends, shrugs them off, blaming low oil prices for distortions in this way of looking at the data. Never mind that this way of looking at the data is supposed to filter out the short-term effects of oil.
First, central bankers are prone to interpret the data to serve their agenda. We can make lots of arguments why QE in the Eurozone is inappropriate; and, conversely, the Fed appears to engage in a make believe assessment of the economy. The future policy course may increasingly be driven by ideology. With interest rates low, we have our doubts real interest rates are going to move high anytime soon.
In the context of this discussion, it is high real interest rates that pose a threat to the price of gold. Many criticize CBO numbers as being notoriously inaccurate. But in our analysis, in a decade from now, the U.
There may not be money for other government programs left; one way of looking at the challenge is that the biggest threat to national security may be the deficit because there may not be any money left for the defense budget. To us, this avalanche of expenses may provide an incentive to keeping real interest rates low to help the government finance itself. Indeed, we think it may be difficult to have positive real interest rates for an extended period of time over the next decade.
I never suggested this would be stable. We can avoid the explosion of deficits with major entitlement reform. We could introduce means testing to receive benefits; we could increase the age at which social security gets paid. There are solutions to these problems, but they are politically very difficult to implement, no matter who controls Congress.
The Europeans have tried austerity. S, we may favor the magic wand of the Fed. Having said that, many U. Another way to look at this is that this is the first time in U.