Yes you read that right I am tentatively ultra bullish. Please remember I mean this for a 3 to 5 year time horizon.
Let me explain why I am so bullish. Did you catch how oil hit 58 USD per barrel? That makes me ultra-bullish. Yesterday I had a get together with Indians who have lived in Switzerland for about 8 years, but have relatives and friends in India. And the stories that they are telling me makes me bullish.
How does all of this tie together? Simple, commodities = wealth. I don’t deny that America can’t get us out of this world recession. Neither can the Western world. In fact the Western World is a lame duck economically. The only thing that can get us out of this mess are the “emerging” countries. Countries like Russia, China, India, Ecuador, Brazil, and so on are the countries that will fix all of this.
But to fix all of this those countries needs money, and the only way they can get money is through commodities. Lets call it a redistribution tax shall we. Did you notice the wealth of those nations before the complete melt-down? It was unreal, and the result is that exports by Western countries was strong. This in turn caused a cycle of growth unlike anything we had seen before.
With oil at 58 dollars a barrel that wealth will begin reaching those “other” nations again. And that means those “other” nations will start spending.
But I can hear this argument, “oh we will have hyper-inflation”, and indebtedness, etc. Well you should have been concerned about hyper-inflation earlier since countries like India, China, and South America were hovering really close to it. I think an argument can be made that it is necessary so that the emerging countries can have the same standard of living as the Western countries.
Though what I think is more important in all of this is that there is a rebalancing. Did you notice the G20? This is a fundamental shift from the Western world to the remainder of the world. And that makes me ultra bullish.
As commodities increase, and the wealth is spread among the “emerging” countries they will consume, and kick start the global economy again. Of course this means the Western World will never be the same again.
The investment play is, and has been global players. Those companies that are well suited to exploit the “emerging” markets will be the ones that will survive and be the growth stories.
BTW Obama is the solution and and you will see 3 to 5 years down the road his policies kick started the global economy. Namely by allowing commodities to rise again…