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Today’s global economy has created the best backdrop in “decades” for owning commodities, says Jeffrey Currie, global head of commodities for Goldman Sachs.
In Currie’s view, the market’s love affair with technology equities, especially the FANG stocks, is unjustly drawing capital away from commodities.
“I think it has a lot to do with the fact that the equity market has the wind in its sails. It had a great year last year,” he told CNBC’s “Power Lunch” on Tuesday. “Commodities had a miserable year. History says commodities will outperform equities this year.”
Currie went so far as to disagree with Goldman’s ranking of asset classes for 2018, which places stocks above commodities.
“History says it’s commodities, equities, bonds and cash,” he said.
Currie’s outlook for commodities boils down to three R’s: reflation, reconvergence of global growth and releveraging. In other words, inflation is expected to rise, global economies are growing in unison and the world is borrowing more money.
“You put those three together, they create a really strong macro backdrop — the best, again, we’ve seen since maybe 2004,” Currie said.
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