Former Global Head of Commodities Research at Goldman Sachs, Jeff Currie, discusses the big picture in commodities markets, including reflections on market action and expectations, the impact of regulatory easing and ignored sanctions on commodity supply, the evolution of asset classes and globalization, and the future of markets with a focus on the importance of blockchain for market clearing.
Combining blockchain technology and artificial intelligence can track the history of commodities, determine their environmental impact, and facilitate carbon-to-green investing.
Geopolitical changes may mark the end of the era of free trade and low cost of capital, emphasizing the importance of investment in decarbonization and the potential opportunities in commodity investing.
Deep dives
Importance of Information in Solving Climate Change
Jeff Curry highlights the crucial role of information on commodities in tackling climate change. He emphasizes the need to determine if commodities are green or brown, which can be facilitated through smarter markets. Combining the use of blockchain technology and artificial intelligence, it becomes possible to track the history of commodities and distinguish their environmental impact. Jeff envisions a shift towards carbon-to-green investing, where carbon is transformed into sustainable cash flows, and emphasizes the necessity of controlling carbon to effectively reduce emissions.
The Anomalies of Globalization and the Changing Landscape
Jeff discusses the period of globalization from the late 1980s to 2020 as an anomaly in history, similar to the period of British Empire hegemony from 1870 to 1920. With geopolitical changes and challenges, he believes that this era of free trade and low cost of capital may be behind us. Jeff expresses excitement about blockchain technology, which can bring trustworthy information to markets and aid in solving climate change. He also emphasizes the importance of investment and infrastructure decarbonization, given that historical empires were built on carbon and modernizing infrastructure will be a major challenge.
Market Opportunities and Challenges in Commodity Investing
Jeff highlights the potential opportunities in commodity investing, particularly in metals like copper, which is essential for electrification and lacks sufficient supply. He also advocates for combining green and brown commodities, as they can hedge each other in different parts of the economic cycle. Additionally, Jeff reflects on the changes he witnessed in financial markets during his career, from the rise of macro markets in the 1990s to the current challenges faced by commodity businesses, given high regulatory and capital cost structures. He sees blockchain technology and exchanges like ABAC's as critical to the future of commodity markets.
Focus on Solving Climate Change and Participation in the Future
Jeff expresses his intention to focus on solving climate change, particularly through carbon-to-green investing. He believes that controlling carbon is vital for reducing emissions and envisions a role for blockchain technology in managing commodities' environmental impact. Jeff also discusses his excitement about joining the ABAC's board, as he sees the potential of blockchain technology and exchanges to revolutionize markets. He emphasizes the need for investment in infrastructure decarbonization and looks forward to actively participating in these areas.
We kick off the new year with our new series, Setting Course, in which our guests will help orient us on what they see coming – and where we’ll be going in the new year.
For the first installment of Setting Course, we welcome back into the SmarterMarkets™ studio Jeff Currie, Partner Alumnus, Goldman Sachs. Host David Greely sits down with Jeff to discuss his views on the big picture in commodities markets – and where he sees the opportunities and the challenges in the year ahead.
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