The last decade of easy monetary policy
has led to an infamous bubble in everything.
So what's still cheap out there in the market today?
Commodities.
While stocks are at their most expensive level
in 150 years in the US, commodities
are as cheap as they've been by a number of measures
for the last 100.
Some of that is natural and structural.
Over the last 200 years, inflation adjusted commodity
prices have actually been trending downwards
because every time they get too high and you see a spike,
people switch to a different, cheaper technology
- there are more energy efficiencies that kick in,
and we might actually start to save energy.
So are we at that kind of tipping point today?
We've already seen some commodities
- like gold, for example - go up as investors look for a safety
asset amidst all the quantitative easing
and easy money that's still out there.
What would it take for commodities
in other areas - industrial commodities, oil -
to start to spike?
Well, if you start to see the dollar go down,
which many people think it will in the next year,
for a variety of reasons - the deficit, political risk -
you would start to see commodities
move the other direction.
They always move inversely to the dollar.
If that happened, you could see more political turbulence.
Petro czars would be emboldened, and you
might see more nationalism in emerging markets
where the poor spend the majority of their income
on food and fuel.
Now, things could go the opposite direction in the years
ahead as the US becomes more energy independent.
But I doubt we're in a permanent bear market for commodities
yet.
Watch this space.