Nobody Wants Commodities: Part 6

The Silent Bullet Market

Joking - it’s not actually part 6. But we have been writing about commodities throughout 2024. This is the silent bull market that nobody is talking about...

Commodities are leading ALL assets YTD.

Nvidia: An Amazing Crowding of Capital

Why is the commodity bull market going unnoticed? Nvidia and the AI hype.

For some perspective: All German stocks are now worth less than Nvidia. Germany's stock market value is around $2.5T, Nvidia's value is now over $2.62T. Last week, Nvidia gained near $350bn in value, the combined value of Siemens, Deutsche Telekom, and Mercedes. In 1 week.

At $2.6 trillion, Nvidia's market cap is now over $900 billion higher than all of the companies in the S&P 500 Energy sector... combined.

Not only is Nvidia crowded, but equities as a whole. The S&P 500 risk premium (earnings yields less 10 year Treasury yields) is nearing zero for the first time since 2002.

The crowding in equities point to long-term upside in the commodity bull run. However, we must think about the risks to the commodity bull case. The big risk is the US labor market cracking and leading to a recession scare. Right now, small businesses are clearly struggling (availability of loans in dark blue) and jobless claims (light blue) are likely to rise in the near-term. We must keep an eye here.