By Chris Berry (@cberry1)

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How Humility, Skepticism, and Opportunism are Leading to a New Playbook in Commodity Investing

COVID-19 has forced a huge dose of humility on the investing public after so much continuous wealth creation. Many are skeptical that all is lost. The there is, however, a huge opportunity in the new economic future and particularly the commodity sector.

The best-case scenario of a V-shaped economic recovery could be looking more U or L-shaped with no identifiable end in sight to COVID-related impacts to the global economy. While a recession of some length and tenacity is all but certain, the duration is subject to an increasingly vociferous debate.

With upwards of 11 trillion dollars pledged by global central banks to stimulate demand and global interest rates near or below the zero lower bound, this may not be enough firepower needed to bring a global economy at a standstill back on its feet (if equity returns are any indication). Additionally, demographic and debt-fueled headwinds are stark impediments to generating the inflation global central banks are intent on desperate for.

This disinflationary shock spells trouble for producers of all goods along supply chains as margins will be tighter owing to diminished pricing power.