Resource Supercycle, Scottish Independence and Rich Environment

17 בפבר׳ 2021

Recently, talks about the emergence of a new raw materials super cycle have intensified. It’s actually against the background of rising prices for main commodity items. The reasons seem clear—the rise in prices amid an abundance of cheap money. But it is somewhat strange that at the same time the analysts voicing the idea of ​​this very supercycle don’t touch its fundamental foundations.

In the late 90s and early 2000s, the Chinese economy growth rate and its unrestrained demand for everything in the commodity markets provided the previous super cycle.

But who will provide it now? Japan and the Eurozone having minus 5% of GDP at the end of 2020, or the United States staying in the minus? Or China with a 2% rate after 10% in the late 90s and early 2000s? In general, it is worth taking a closer look at the commodity markets for the presence of a price bubble there.

The minibubble has inflated in pound pairs. Yes, the deal is a reason to exhale in relief. And in general, initially we talked about 1,40 as a growth target for working out this news. But what is happening now in Britain and its economy by no means corresponds to the behavior of the British currency. We’ve already written about chaos at the border, the loss of exporters and a sharp decline in exports to the EU. But an even bigger problem looms on the horizon.

The threat from a hypothetical day is getting closer to the title of fact. It's about Scotland and its independence. The case is moving towards a referendum. According to the Scottish Government, the second referendum questions’ specific timing and wording on the country’s independence from Great Britain will become known in the next few weeks.

It’ll be a severe blow to the UK in general and its economy in particular. So, the current price of the pound is a great opportunity to sell it both against the dollar and against the euro.

Today is interesting primarily due to the data on January retail sales in the US. Analysts are quite optimistic and expect growth. But it should be recalled that January was still a record month in terms of a pandemic. So, surprises are quite possible. They are less likely on the part of the Fed. The Central Bank will publish the minutes of the last FOMC meeting. But given the importance of the document, it is worth paying attention to this news anyway.