When it comes to buying or selling commodities, a lot of people begin by analyzing supply and demand. We take a different approach. We begin by determining which Quad the economy is in.
On that note, Hedgeye CEO Keith McCullough explains in the clip above why we went from long commodities in 4Q19 to short them in 1Q20.
“Something like sugar had horrendous supply dynamics, but I bought it anyways because I like commodities [in Quad 3 where growth is slowing and inflation is accelerating]. I liked the asset class and the signal said buy commodities,” McCullough explains.
“Commodities also settle and trade in dollars. So, if my view is that the dollar is going to go up, my view is that commodities continue to go down.”
Watch the full clip above for more.