What Happens Next After Fed's Hawkish Jackson Hole Speech? Goldman Says 'buy Commodities Now.'
Federal Reserve Chairman Jerome Powell delivered his speech at Jackson Hole, sending the $Dow Jones Industrial Average (.DJI.US)$ down by 1,008.38 points on Friday. Investors finally began to take him at his word: The central bank would maintain a hawkish stance to control the highest inflation in four decades. Here is how Goldman suggests what can protect your portfolio in the incoming financial winter.
$Goldman Sachs (GS.US)$ underlines the outlook for commodities is improving as it has been oversold due to fear of recession over the last month. The firm argues that raw materials stand to rebound amid a profound energy crisis and tight physical fundamentals.![]()
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From a cross-asset perspective, equities could suffer as inflation stays elevated and the Fed is more likely to surprise on the hawkish side.
Commodities, on the other hand, are the best asset class to own during a late-cycle phase where demand remains above supply.
-Goldman said in the note, which was entitled 'Buy commodities now, worry about the recession later'.
Goldman Sachs did notice there might be more volatility for commodities ahead, especially if the US dollar extends gains, which could make commodities more expensive for holders of other currencies. "We do acknowledge that the macro landscape remains challenging and the US dollar could rise further short term," it said.
Opinions on the outlook for commodities are mixed. Other industry peers have been more cautious in recent months.
$Citigroup (C.US)$ warned in July that crude oil could collapse to $65 a barrel by the end of this year if a demand-crippling recession hits. ![]()
For Ben Emons, managing director of global macro strategy at Medley Global Advisors in New York, who shares the same idea with Goldman Sachs, the best combination of plays that investors could take in response to Powell's Jackson Hole speech are "to be offense in materials/energy/banks/select EM and defense in dividends/low vol stocks (think healthcare)/long the dollar."![]()
Source: Bloomberg
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intellectual Mink_74 : Commodity harvesting has begun
kind Reindeer_4219 : what is commodities
BullRunner kind Reindeer_4219 : Wow!
50 cent : What are good commodity stocks?
Detachment-Delta kind Reindeer_4219 : A commodity thus usually refers to a raw material used to manufacture finished goods, such as beef, oil, natural gas, iron ore etc.
Detachment-Delta 50 cent : maybe ETFs are better, you can check USO, DBC, PDBC![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
kind Reindeer_4219 : thanks