Commodities markets have been major underdogs relative to record-breaking U.S. equities for much of the past six years. But the tides are now turning, S&P Dow Jones Indices’s global head of commodities Jodie Gunzberg says.
Amid supply shocks around the globe, tapering of quantitative easing in the U.S. and a rising-interest-rate outlook, commodities from corn to hogs to oil seem bound to shine in 2014, leaving equities in their shadows, Gunzberg told ETF.com in a recent interview.
ETF.com: You believe commodities will outperform equities this year as the commodity/equity cycle switches over in favor of commodities. Why?
Jodie Gunzberg: Commodities and stocks have had a long relationship of switching off performance because of the underlying cycle of what’s happening in the companies and the goods that they produce. Equities are forward-looking, and now they’ve been ahead of commodities for six years straight. That’s the second-longest stretch of outperformance over commodities since 1980 to 1987.
What happens is that once companies start doing well, and they’re raising capital, and equities are performing well, they then have the resources to spend on commodities to make more products.
That might be where we’re at now, with companies buying more and more commodities to produce their goods. Through … to read the rest of the interview, please click here.