As US and other markets decouple in terms of recovery trajectories, should investors adjust their portfolio? BFM spoke to Tony Nash, CEO of Complete Intelligence, on the major selldown of cryptocurrencies, as well as his thoughts on oil, gold, and inflation.
This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/whats-next-for-crude-oil-gold-and-cryptos on May 21, 2021.
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RK: Well, choppy waters, to say the least. There is a little bit of a mixed day yesterday over in Asia. But right now, to talk more about global markets, we have Tony Nash CEO for Complete Intelligence for more insights here. Tony, good morning and thank you for joining us on the line. Now, it looks like the U.S. and other markets are beginning to decouple in terms of recovery trajectories. How do you think investors should allocate their portfolios according to this scenario?
TN: Well, obviously depends on the time, but I think that some action was taken yesterday in the U.S. around Fed comments as people were trying to decipher whether those comments were positive or negative. And today, I think they realized they were actually fairly dovish comments. So the U.S. is positioning itself to grow and other parts of the world say Europe and parts of Asia are still very conservative about opening until, you know, I think with the places that are being fairly conservative about opening, it really depends on investment, really depends on government assistance, monetary policy, you know, these sorts of things.
So investing in those markets depends on support that those companies are going to get and how how those investments will perform.
LM: Yeah, I’m just wondering, there has been increasing fears about inflation. Is that influencing or changing your views right now?
TN: Well, so, you know, we’re realizing that things like like lumber prices, which a lot of people talk about, that’s been a processing issue in sawmills. There’s a lot of raw lumber out there. Those prices in many cases are the same as they were like, say, 10 years ago. OK, it’s the process into their bottom and making issues in a number of other areas. One area that we’re keeping an eye on is crude oil, which I know is important later, of course.
And we’re not we don’t expect a dramatic rise in crude oil prices, partly because I still have six million barrels a day on the sidelines right now. So even if we saw a dramatic uptick in travel and other activity, power generation and so on, there’s spare capacity on the sidelines for a lot of countries to be holding down. So we don’t expect to see and short of having production cuts, we don’t expect to see dramatic oil price rises because that that supply will come on the market as needed.
RK: Right. And beyond crude, Tony, do you know crude oil in general is quite correlated to inflationary pressures and prices, but beyond crude oil, are you paying attention to any other commodities out there? Because, you know, we’re seeing a surge in all of them. Which ones particularly catch your eye?
TN: For industrial metals are the ones that have really rallied from, say, November or December through this month? What we expect is not pricing to continue to stay strong, but the rate of rise will will slow down.
OK, so we’ll continue, for example, to see high copper prices, but we don’t expect copper prices to rise at the same rate as they had been for the past five or six months. We see that across the board in a lot of commodities where we have seen really dramatic rises based on, you know, government spending, monetary policy and also uncertainty about the direction of the dollar when these things are positioned in or denominated in U.S. dollars. We’ve also seen over that same time, because it’s so going that in China we saw the Chinese renminbi appreciate pretty dramatically, which made the dollar denominated commodities really cheap.
And so there’s been accumulation of those commodities in China, whether it’s food or whether it’s industrial or metals. And we’ve seen that stuff accumulated in China because these things are really kind of pretty cheap for them in China in terms.
RK: And one more commodities. Want to get your views on here, Tony, is gold because it’s seen some strengthening over the last few weeks. In fact, you know, it was more towards the high single digits. Now it’s at the one percent range. Do you expect it to break into the green? And what kind of range do you expect for the year?
TN: You know, we do expect gold to continue to rise at least through August, August, September. We think that there’s kind of a sweet spot and people take a pause on, say, cryptocurrency. And as people look at some of these other metals and other commodities where the growth opportunity has slowed, we do expect attention to gold as well as kind of other inflation and currency risk type of focus will turn to gold as well. We expect there to rise through those then kind of a pause late Q3 and then we expect that to continue toward the end of the year.
So we’re not looking at a doubling of prices or looking at a know, low double digit type of price rises in.
LM: And Tony, twenty twenty one was supposed to be a bumper year for U.S. IPOs. Is it still buoyant or has sentiment turned more south?
TN: No, no, even seems like like Robin Hood starting to offer fractional IPO shares on their platform. So where IPO are typically restricted to a select few? We’re starting to see some things happen where where smaller investors are given opportunities in some of these IPO. So we do expect that to continue as long as investors are there to invest in IPO. And we don’t necessarily expect that that will taper off dramatically. We may see some hesitation if we see markets turn south in June, July, but we won’t necessarily see a dramatic taper off to the end of the year.
NL: So we have seen the major sell down of crypto currencies. How is the volatility affecting crypto companies like Coinbase and market confidence to gain legitimacy with institutional investors?
TN: Yeah, no doubt it’s hurting their credibility because cryptocurrency has kind of become a bit of a mockery over the past week or so, we assume on tweets and a number of other things. But I don’t necessarily believe that crypto currencies are a thing of the past. They haven’t been retired yet, but we do expect to see cryptocurrency is more regulation, more explicit regulation and kind of soft infrastructure around cryptocurrency like Coinbase that goes along with it. They’ll have the infrastructure to be able to help in that crypto investors who along with regulation and do just fine.
TN: So I don’t think crypto her dad the new not necessarily realize that they thought they may, but but I do think it’s still something that’s viable within the broad based interests.
RK: Thank you so much for your time this morning. That was Tony Nash, CEO of Complete Intelligence. And let’s take a quick look over at the coin prices right now. Bitcoin thing, a little bit of a recovery. It’s up two point six per cent now, forty one thousand dollars and on a year to date basis, up to forty one point six percent year to date, still far off from the 100 percent or 90 percent year to date gains we saw earlier this this year.
We take a look at Etha. It is now two thousand seven hundred and seventeen dollars, or seventy two thousand two hundred eighty dollars a coin up a little bit, point four percent year to date, up 275 percent.
NL: Yeah, very quickly as well. Taking a look at a piece of news, the first quarter of 2021 doesn’t appear to be working out in a week’s favor. According to the F.T., Quarterly losses almost quadrupled on year to over two billion dollars.
RK: We work not working. Yeah, that’s a headline in the making right there. The losses incurred as so far this year, three point two billion dollars in 2020. Revenue fell almost 50 percent on year from one point one billion to six hundred million dollars. And the company lost around 200000 customers from a year ago. And this, of course, all information, according to the Financial Times, because this is not a public listed company just yet. In fact, they’re looking to try and go public again later this year after their first failed attempt a year to be eighty nine point nine.