The Commodity Crisis Playbook: Position Before It’s Too Late (From A 20-Year Veteran) w/ Ole Hansen

So, if China can't get these one to two million barrels a day from Iran, then they will start to feel the squeeze as well. And that's potentially could be one of the the way that US thinks about it is that perhaps that could apply some additional pressure back on the Iranians to come to the negotiation table and find the solution. Vice President Vance went to Pakistan this weekend to negotiate a peace deal with Iran. Those talks have produced a blockade instead of an agreement. The global uncertainty and volatility seem poised to continue and even increase from here. Hello and welcome to Milk Road macro. The podcast that knows that when 21 hours of negotiation ends with a new blockade, things probably won't get better after 22 hours. I'm your host John Gill and today is Monday, April 13th and today we are joined by Ali Hanson. Ali is the head of commodity strategy at Saxo bank, a role he is held following a 20 year career in London's financial markets. He specializes in analysis and trading strategies for global commodity markets, which is something a lot of people are talking about these days. Ali is one of the most brilliant minds in global commodities. He's going to share a ton of great alpha insight with us today. So that all sounds good to you. Make sure you like and subscribe. Share this episode with somebody who needs to hear it. Today's episode is brought to you by Nexo. Earn interest, borrow and trade crypto and some turn crypto tax chaos into confidence and without further ado. Welcome to Milk Road macro. Ali, how are you sir? I'm very well. John. Thank you very much for the invite. I'm really happy to have you here. I've been trying to get you on the show for a little bit. So I'm glad we could finally connect. Ali, I want to start with the latest news on the straight of four moves, which is what everyone is talking about and seems to be unable to talk about anything else. But the piece talks have failed. Trump announced plans to blockade the straight, which is just as of time recording, just gone into a fact a few hours ago. It seems like this is just continuing to escalate, but he's finally tightening the screws on Iran economically. What is your outlook for what you expect to happen next and where do we go from here with this crisis? That is the million dollar question, isn't it? What we've seen, I would say in the last couple of weeks at least, is that any significant threat is being replaced by something slightly milder. And this is this kind of a give and take carrot and steak that we have now seen for quite a while. And most of that basically coming from the White House because Iran is not really doing anything apart from just keeping the straight locked, keeping the keys to the straight of a move close to the chest and not really prepared to give that up at this moment time. So yes, you're right, we had a weekend where there was a lot of optimism or at least hopes building up for some kind of a solution with the negotiations in Islamabad. But as you mentioned after many hours, it came to a abrupt end. And today we saw the response to that, especially after the this blockade was announced. That is a very interesting escalation and we can just come to that. But the initial response today was seeing prices opening up around 8% higher. We were back above 100 dollars. I say, we're because we, as we record, we're back below 100 dollars. And just looking at the headlines, Trump has been now saying that they're talking to the right people. And again, just basically trying to de-escalate because we once again saw energy prices move up and the stock market move down. So this is just a very confusing situation. But I think, apart from all the noise that we get from various insiders and from politicians, the fact on the ground is that we have a major supply disruption. The biggest in my lifetime, and it basically means that the market is is tightening up. We have been lucky in the sense that we started the year with an overhang of supply. There's always talk about a supply plot, the biggest ever, basically weighing on prices. And now, that basement, when this would blockade, the war started. We had a lot of excess inventories that could be brought down. That is now being brought down. And we are seeing the stress emerging, not only in Asia, but also moving towards Europe. Jet fuel today in Europe settled at a 200 dollars a barrel. It trades around 215 dollars a barrel in Asia. Diesel prices are way up as well. So the headlines are very quiet to quite a lot. But I think, the only thing that really can change this is the straight-up of a moose opening, not sending through three or four or five ships a day. But we need a hundred ships a day to go through. And even when that happens, I'm sorry, this is getting a bit of a long answer. But even when that happens, we still have the logistical nightmare of ships being in the wrong place. Refinaries have been hurt. Production needs to restart. So I just see this as a very prolonged, prolonged period. We're going through with higher prices, feeding through to inflation and to a higher cost of living. Quick pause here. If you like this show, you are going to love our Milk Road macro newsletter. It hits your inbox twice a week with everything we can't fit into these episodes. Charts, Fed moves, liquidity trends, recession signals, all the big forces that are shaping the markets. It's free. It's fast. It keeps you ahead of the next macro move. Hit up milk road dot com and subscribe. Long answers are totally fine, especially when they're full of alpha and insight like that. I want to kind of highlight something else. You said that I think the estimates I've seen is that we've seen a loss of 400 million barrels of oil that are not going to be produced as a result of the crisis so far. That number could go higher. A lot of people have been calling attention to the fact that we're now seeing increase of traffic of oil tankers coming to the Gulf of America to get access to crude from North America. I'm curious your thoughts on this because it seems like another desperate attempt by the rest of the world to source oil because they're not getting it from them at least. Do you think they're going to be able to make up some of this shortfall with this crude from the US? Is this going to just drive oil prices much higher in the United States? How do you see that playing out in that dynamic there? Both. It will drive prices. They will most certainly keep prices elevated in the States. It is now actually it is trading at a discount. I know it's not if you look at the screens on the price on the screen because you see double-tied trading above Brent but it's the main contract which is closer to deliver than the Dune contract in Brent and that means when you have a spot price we're trading a lot higher than the close you are so that spot price the higher the futures price will be. But if you compare Apple with Apple so the Dune contract with the Dune contract double-tied Brent is still trading quite a significant premium above double-tied. That premium will come down as demand for double-tied Icos. The only problem with getting it in the US it will obviously help but at the same time the timing the logistic of this if the barrels are needed in Asia just the transportation time getting back to Asia will take you in much well it will take weeks to get to the US and then several weeks to get the other direction. So it will over time help alleviate some of the pressure but it's nowhere near what is needed but it will we will undoubtedly see record export numbers from the US this month and there are inventory levels at this point in time that can cope with that demand but generally a higher price in the US will be the result of that a little bit of a help for the rest of the rest of the world. Okay you said a few things in the middle of that answer that I think are going to go over the heads of some of our audience. I hope you can elaborate on this a little bit about the difference between spot prices and commodities like oil trading at steep premiums to futures. Just walk us through a little bit more detail on what's driving this gap between spot prices futures prices and then just a basic question I'm hearing a lot from my community is why aren't oil prices higher if the shock is continuing to get worse and worse as we go along here explain a little bit of this to us. The first the last question first yeah that is that is a bit of a conundrum but if it if you look at the entire futures curve we might get a little bit of an answer. What I'm talking what I'm talking about spot prices imagine that you have a contract with a oil producer in the Middle East and you basically have taken that into account the refineries expecting barrels to come in from a refinery or either yeah crude oil coming in from from the Middle East. Suddenly that crude oil is not arriving and you have you have obligations you need to make sure that your refineries running what do you do well you as you as the the oil that you have bought on a perhaps on a long-term contract. Suddenly it can't be delivered because the straight of almost is closed you have to go out and find that oil somewhere else and that basically means that the spot market right now where where's basically where you're where you're buying it barrels for immediate delivery you're basically buying whatever barrels is coming out of the ground in the North Sea. That price has suddenly gone to an extreme premium relatively to if you were buying it on a futures contract in June so a couple of months down the line and it is simply a reflection of this this shock that we have had to the system in regards that you you had to contractually bought crude oil we suddenly can't be delivered you have to go out and find it somewhere else and you have to find it fast and you're prepared to pay up for that and that's the reason why Brent crude currently trading let's say around a hundred dollars round numbers but the spot market that's really where the where those desperate for for barrels they they answer they are currently paying at least the thirty dollars more than the futures price and that basically means the curve is really very backward it means the price is highest in the at the front end and then it tapers off as you go further out the curve and that basically means depending on where on the curve you are you're fixing your price that really that really the curves shape really determines a lot of whether prices are higher low and right now the may contract in WSI is closer to the the current spot market that's why the that price is higher than where it is in the June so it is a bit like we the gas situation in Europe in 22 this is basically the last time we've had a similar situation which we potentially could be moving towards there are reports at the weekend that the airlines or the European aviation industry as water. so that the repotentia could be running short on jet fuel within three weeks in Europe. Back in 22, Russia attacked Ukraine. The cut off the gas supplies to Europe. Suddenly, a lot of utilities that had the contractual bought gas from gas from suddenly was had to were not getting the gas and they had to go into the international market to get the gas. And that's why we saw this dramatic squeeze higher in prices. And that's really a similar situation we are starting to see in not only in crude oil, but for a while now in the diesel and the jet fuel and the petrol chemicals because the crude oil that is produced in the Middle East is what we call the middle district that is perfect for the refining of diesel and jet fuel. So not only are we missing the refineries that produce those kind of products in the region, but we also are missing the crude oil that is going to refineries which is then turned into diesel and jet fuel. Yes, yeah. Okay. That's very helpful in terms of breaking down the differences in some of the spot in futures markets and how this plays out into the oil derivatives products like gas, jet fuel, very helpful context on that. You talked about WTI which is West Texas intermediate, like price of crude oil in the United States, Brent, which is in the North Atlantic, European prices area. But talk to me about how this plays out in Asia because my understanding is that a lot of the major Asian economies source most of their oil from the Middle East right now and people are speculating that Pakistan has been sort of acting as a sort of a proxy for China trying to intermediate a piece here between the US and Iran specifically because China wants this opened up more than anybody and Trump and China are supposed to have another economic meeting at some point in the near future once this is resolved. Talk to me about how this is impacting Eastern or East Asian economies and what you see happening there. Well, in Asia we already seeing some of the poorer countries introducing means to curb demand simply because they are struggling to source the crude oil and the crude sources is a very high price. So we already seeing the beginning of that process where demand simply has to be killed in order to balance the find the balance between what has been produced and what is being consumed. China is a key player here as you mentioned, John. And what is interesting and also why this blockade really entered the or lifted the, I would say, the geopolitical risk aspect somewhat simply because China has been sitting on the fence for the last six weeks basically seeing this world this war unfolds. To a certain extent this based letting the US do a lot of self harm simply because this war was not planned properly. It was not, no one was taken into the discussion and the foundation for the war was really quite ill thought out. And then at the same time we had the impact on the Gulf state. So basically a war that did not go in the direction that the US administration had planned. So China is basically sitting on the fence, seeing the US doing a lot of self harm with this adventure into the Middle East. But right now with if the blockade is being carried out, which again as we speak there might just some doubt that it may not be because again, it's from saying we are talking to the right people that see whether that yields anything. But if it doesn't then the blockade is trying to be implemented then the one to two million barrels that Iran has been able to send through the whole straight every day for the last six weeks. Clearly they don't shoot after their own ship. So they have really been benefiting from both the higher prices and the fact that demand has been very strong even though the oil has been sanctioned up until recently which for now is being removed by the US to be because the US, we need all the barrels we can get. So if China can't get these one to two million barrels a day from Iran then they will start to feel the squeeze as well. And that's potentially could be one of the way that the US thinks about it is that perhaps that could apply some additional pressure back on the Iranians to come to the negotiation table and find the solution. But as no doubt the crisis started in Asia because as you said rightfully the bulk of the export out of the Middle East goes to Asia. Hard anything goes to the US a little bit goes to Europe but in Europe we are more dependent on the refined products. We are key buyers of diesel and jet fuel from the Middle East simply because we cannot buy it from Russia due to sanctions. So Middle East is really where the pain started but it is slowly spreading to the rest of the world. Ali I want to hear some more about the pain and how this is evolving. You wrote an article recently saying that this crisis is now shifting from just an inflation shock and prices towards now becoming a global economic growth risk. And I wonder if you could just elaborate on your thoughts on this for our audience. Why do you think this is getting so bad and when do we go from that tipping point from just an inflation shock to a global economic growth risk? Because every time you use energy whether it is filling up your car with diesel or gasoline you go on a travel, you buy an airline ticket or you go down into your local DIY store and buy some flamingo or PVC or plastic products you will find that the prices have risen in the last five weeks and probably will rise even further. And that means if you suddenly have to fuck up 10, 20, 30 percent more to fill up the tank on your car that is basically the money that you should otherwise spend elsewhere. And that means that the higher the energy costs because it is such an important part of our lives. We are living in a very energy hungry world and if the price of that goes up then obviously the money that you have for anything else goes down and that potentially could start to hurt the consumer spending in other areas. And that is why initially the focus was very much on inflation and that is why we saw gold suffering at the start. The reason because the move was so volatile and we saw liquidity shock and now as we move into this and we get a prolonged increase in energy cost then the market slowly is done to move towards what will have this going to impact the global economy and especially those that are very dependent on imports where they are paying much higher prices. So that is why the inflation shock has faded a bit and now we are moving more and focusing on the growth shock and that is why the economic data is critically important to what we have seen. We have seen some sentiment numbers in the US which has collapsed and the question is really whether that starts or translates to actual heart data but the risk is there and that is why central banks are also caught really in a bit of a pickle here because the inflation shock has started the war basically removed all the prospect for rate cuts in the US. We almost briefly tried to price in the rate hike. That has now been removed and we are back again focused on the potential for rate cuts simply because central banks they have a federal government and others as well. They have a dual mandate to ensure growth but also to keep inflation down and if we start to see growth being hurt, unemployment starts to rise then I am sure that will be that priority over fighting inflation simply because you cannot fight inflation when it is a supply shock. You can fight it when it is a demand shock. Back in after COVID we all went spending crazy because we got locked up in our house or our flats for a while we couldn't spend money on other things we spent money on and we just went out buying consumer goods, improving your house, your flat, buying a new car and that base is sent inflation sparring. That was a demand related shock we saw back then that was basically the economy overheating. You can contain that by hiking interest just making the cost of money more expensive. But when it is a supply shock we have right now where it is not because the growth is galloping simply because we cannot get the stuff and we have to pay a high price to get it. That is not a situation that central banks can do anything about and that is why the potential for a more stimulus or rate cuts I think is that risk is higher than the risk of interest rates being increased. So I think going forward the longer this crisis lasts the more the focus will be on the potential negative impact on growth and with that eventually probably also the stock market which has been extremely resilient. The way we build wealth is changing. Stocks, savings accounts real estate that playbook is getting rewritten in real time. Next so is the platform built for what's next. It's an all in one digital wealth platform where you can earn interest on your crypto, borrow against it without selling and trade a wide range of assets. All in one place with 24/7 support and institutional great security. Oh and by the way, next so is back in the US with new US clients getting 30 days of wealth club premier access. That means elevated interest rates lower borrowing costs and crypto cash back on trades. Benefits usually reserved for loyalty program members. Let's start it at milkgrove.com/nexo. Crypto taxes are a nightmare. 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We've talked a lot about oil, but you know, there's growth risk poise from a lot of things that are closed off in this straight closure. Obviously, the oil goes through the straight, but so does liquid natural gas, a lot of fertilizer products, a lot of other things move through the straight. Can you try to give us more of like an overview of what you think this impact is going to look like? Because like what you said, like this is not just a price stock, it's going to impact growth, but it's hard for most analysts or myself to even get our arms around how big is the impact? What does that look like? What are your thoughts on that from a macro view? Well, the thought is a bit like going back to the corona outbreak in 2020, where suddenly we were running out of basic appliances. We're not realizing it wasn't produced next door. It's actually produced on the other side of the world. It's a similar situation this time round that I think we were probably not, well, I think not that many were actually aware how big a production region in the Middle East has become for many, many high cost or many high energy intensive products. And that's really why I think it's come as such a surprise, the wider impact. We talked about energy, so not only are the Middle East and major producers of crude oil, 20% of roughly 20% of global demand comes through the state of Hamus, but they have also in the last decade or so massively increased their refinery production capacity, and which makes sense if you're sitting on a lot of oil coming out of the ground, that makes to nothing, you might as well want to refine the oil that you get out and make the extra, make the extra bulk on the refined products. So they become a major refinery, but that's again everything from your fuels to your petrochemicals and to your liquid stuff high-end and after and so on. That's one thing. Then we have the natural gas, which is primarily catar. Catar has been hit. Catar, as far as I am aware, has not sent through one single shipment of LNG since the war broke out. So they tried the last weekend, but were turned back, and that basically is again a significant part of the global gas supply that's coming out of Catar. What we can say, we have been a bit lucky, timing-wise at least because if you look at Europe, it's been a mild spring, so far, our mild-ended winter, it's been windy, it's been sunny, so we have a very, very high capacity to produce energy through renewables. So that has lowered the demand for gas in Europe. Asia, we're seeing a bit of a slowdown in China, which basically meant that they have bought too much gas, so they have been reselling a lot of gas back into the market at much higher prices, making a nice profit in the process, but as it helped alleviate some of the pressure in the gas market. But this is where it starts to get interesting, because that's where you didn't really think about it. Some of the secondary impacts of higher energy prices is really the biofuel. So basically, food prices have been going up as well, especially those that are edible oils. So we've seen soybean oil going up quite significantly in the US, the soybean oil futures contract. We've seen sugar prices recover from a major month-long sell-off due to the ethanol link in primarily in Brazil, where the divert more sugar came towards ethanol production because it comes relatively cheap compared to gasoline. And then we have something like cotton. Cotton is a natural fiber, but if cotton is too expensive, you use synthetic fiber, which is polyester. And right now, polyester is made out of energy, so that price is going up quite significantly. So suddenly cotton is back in demand. So cotton prices have also recovered from a multi-month low in the last few weeks. Adding to that, the energy-intensive materials, and that's really where some like fertilizers come in. I don't think that many people knew that the Middle East become a major producer of fertilizers because it was the main feedstock when you produce fertilizers, especially the liquid ones, that is natural gas. And what do we have in abundance and cheap natural gas? So not only are we missing the natural gas from the guitar, but we also missing the fertilizers that normally gets produced. And that's really where the fruit area is one that we need to keep a close eye on in the coming months because we are right at the start of the Northern Hemisphere planting season. And what are the farmers' biggest expenses at the time of year? It's diesel, and it's fertilizers. Diesel prices are high, but they are accessible. Fertilizer prices are high as well, and in some cases, they are reduced in terms of availability. So really, that is a key focus into the autumn months when we get that far. And just finally, helium, which I, well, you think about helium when you're having a party at home and you fill up the balloons and you've talked funny if you inhale it, but helium is actually used significantly in part of the chip's production because the requirement from very, very clean environments, and that's where helium comes in. So there's also been a lot of talk about chip producers struggling, potentially struggling because they're lacking supplies of helium. So it is just spanning a lot of areas and finally, obviously, all the petrochemicals going into plastics. Plastic, we use everywhere. The price of that is going up as well. Yeah, so the, again, very comprehensive answer there, but I think what I wanted the audience to take away is just like how many second and third-order impacts there are going to be from this economically and how this is going to take a long time to continue to play out in the market. And we still don't know what that's going to look like exactly. On the more positive constructive side, I want to get your thoughts on this. I've seen you writing about and calling attention to industrial metals here. Obviously, precious metals, you've written about a lot as well, but industrial metals, you said, led by copper, have been showing signs of resilience during this and strong demand. Do you think this is a sign that the economy outside of this crisis is still very strong or how are you interpreting this, interpreting the strength that we're seeing in industrial metals? A bit of both, John, what we're finding with several commodities is that we have tightness in supply. So you actually can have prices going up even though demand may not be particularly strong, but if supply is struggling as well, then you can then you see prices being underpinned. And that's what I wrote in the recent update. Just like if you look at gold chart, when the correction came last month, which was quite aggressive, we basically bounced off the 200-day moving average. If you look at the high-grade copper price trade in New York, that bounced off the 200-day moving average as well. So basically, as we approach those levels, there were buyers coming back into the market. And what we have seen weighing on prices in the last three months, we've seen quite a dramatic increase in stocks, in stockpiles and monitored by the three exchanges in New York, London and Shanghai. And the recently that has actually started to come down primarily in Shanghai. We're seeing the premium that buyers in Shanghai now paying above the London price has gone up as well. So it does indicate that there is an underlying perhaps pent up demand for copper. Copper is especially in the sense that it is part of the, I would say almost what we call the third commodity wave. We've had two major commodity waves in my lifetime. And I'm quite old actually. The first one is in the 70s, where we had the old shark, we had the end of Bretton Woods, we had a decade of high inflation. Back then, we saw commodity prices rally really strongly in that decade. The next major move only happened at the start of this millennium when China basically entered the world stage as a major force, buying up commodities like crazy over the next decade. And during those 10 years, we had I think 470 percent increase in some of the major commodities in the indices. And we actually think we are potentially at the beginning of the third wave. And they don't really come around that often. We can have decades almost where nothing happens. But since the low point in 2020, I know that's a bit cheeky because that's the depths of the recession we had just after the pandemic. But if you look at the bounce we had since then, it's been quite strong. And part of that strength, I believe, is the, let's not call it the green transformation because then a lot of people turn off the screen and then run away. But let's call it the energy transition because that is real. There is a massive move towards electrification right now. It's happening all over the world. It's primarily in China, but elsewhere as well. Just think about data centers, think about electrical vehicles, think about cooling and hot climates. And the demand for energy and especially power will continue to increase in the coming years. And there's a scramble not only to produce the power that can come from natural gas, from coal, from nuclear, from renewables, but also make sure that we have that power that is needed, that actually can be conducted. And that's why you need copper. And that's why the copper story is compelling, I would say, in the coming years. And that's also probably why the correction we've had has been relatively muted. Then on top of that, something like aluminium was the only metal that initially rose last month. Simply again, aluminium is the most energy intensive metal to produce, whether they have a lot of energy in the Middle East. So they have also become, it become major refiners of aluminium in the last decade. And suddenly again, aluminium was left in short supply with the straight-up moves closing down. Ollie, if you have any questions for you, everything you talk, I have so many more questions that come to mind. But I want to ask this, there's this sort of like narrative developing that all shortages of commodities are ultimately followed. by gluts. In other words, what you've described here are a lot of places where we're seeing shortfalls in oil, in agriculture, in various other agricultural commodities. But after this, producers are going to respond to these shortages and these price increases by increasing their production. And on the other side of this crisis, a lot of people are forecasting that we're going to have way over supplies of a lot of these different things. Talk to me about that scenario. Do you think that's what's going to happen here on the other side of this? Do you think that that won't happen? Like, what is your forecast for what happens once we get to the other side of this crisis for commodities? That is the historical way of looking at commodities. And it's absolutely right, John. The best cure for high price is a high price simply because it incentivizes production and it lowers the amount because some goods becomes too expensive. Going forward, I would argue that we have several commodities where this mechanism is simply not going to work simply because the low-hanging fruits in terms of production and in terms of mining has already been picked. And if you look at just coming back to the copper story, some of the major producers in the world in Chile and Peru, they are struggling to base and to increase production. And even though we know that there's most likely going to be an increase in demand in the coming years. So even that, so one thing that at least has to be the first one is that you have to need to have a higher price in order to incentivize. Mining companies are much there's much more red tape now, local governments are much more stringent when it comes to giving licenses. So a mining operation these days can easily take 10 years before you, from the time you find the discovery to you actually can start making money on the mining of these metals. In the energy, there is as long as we continue to see a global energy demand increase, then that will also continue to add pressure on oil companies. And I think we, again we've probably seen the low-hanging fruits. The reason why we talked about a lot at the start of the year was simply because the non-OPEC+ produced especially in the Americas also to a certain extent, a place like Norway had increased production and they have made a lot of investment that had made that possible. But that peak was in production increase. Growth was going to happen this year and the next. And then after that really we were back to the old the old established producers especially the OPEC, US oil production, even though we've had the double tide trading around a hundred we have not seen increase in oil rigs in the shell formation areas in the big these big prolific shell production regions. In the last six weeks no increase in oil rigs. What does that tell us? Well there's no appetite, or perhaps the again we are we getting closer to a plateau in terms of US production. We can most certainly not expect that production will rise by a million barrels a year that it did in the in the previous many years almost. So I would say to you to answer your question normally that is the way that the things work but that we are dealing with so many key commodities where where there is the scarcity of supply. If you look at other metals, silver has been very high on the agenda for for many traders and investors in the last couple of years simply because they're looking at a deficit they don't understand what price and not a lot higher. Clatman is the same. Food, aquaculture wise we are it's relatively stable growth in terms of how many mouths that mouths that need to be fed around the world. But again with the climate change again let's let's call it maybe not call it climate change again. I will not let one people turn off the screen even though that is what we're seeing but at least let's agree and we have much more volatile climate and volatile climate leads to production risks and we are we're seeing several those unfolding again so we are not more than we we're not more than a year of a year of weather crisis away from another spike in food prices. So normally yes the best cure for high price is a valid price but if you cannot deliver even at higher prices the extra the extra raw material that is required to to meet demand then obviously the prices will remain high. So this is helpful as well so you're saying that that normally is the the course that the market follows high prices and commodities lead to increased production but you're seeing that there are some barriers to increasing that production that may cause there to be struggles in the market to meet the rising demand. Ali I want you to kind of like give me some general wisdom on how to navigate a market like this because like you you're very experienced you've been through several commodity bull markets before most of our audience are savvy self-directed investors but they're not commodity market investors and they're not used to this much uncertainty volatility I think most investors are not generally but how are you thinking about navigating this market and getting through the rest of 2026 in the face of this uncertainty volatility what are your thoughts around this? Well I'm just going to look on my screen here because when I talk to people and when I travel around the meeting and meeting clients because there's no doubt that the commodity space has received a lot of additional attention in the last five years and the increasingly people are investors and traders are getting wants to have some kind of exposure and I think the first warning is is clearly that if you if you haven't watched commodities probably and you want to get involved then by all means get involved but but start off by a broad exposure simply because if if it is the long-term story that you like and you see these the lack of the strong demand potentially with the supply size struggling then the commodity sector as a whole will do and I'm just looking down because if I look at the friends the Bloomberg commodity index it's basically a basket of 26 major commodities spread evenly between energy agricultural and metals in the last year it's up 37 percent it's up 23 percent this year but what we have to remember is last year what brought the market last year that was the the metals by rally especially in precious metals this year has been in the it's been the energy site where the the metal has has run into a profit some profit taken and then just recently we've seen the agricultural space starts to just to pick up again so basically a 37 percent return in the last 12 months and if you look at over the last two years we're looking at 42 percent so it has almost been primarily in the last year that some of the things have unfolded but but looking down over the individual commodities somehow have done extremely well and somehow suffered quite significantly so I would advise people to to start with a broad exposure that could be through an ETF there are plenty of ETFs offering this kind of this kind of exposure at relative low cost and then if you if you do want to get more involved with individual commodities just do your homework first and just accept and and respond the kind of volatility it throws at you but I know you're involved with crypto as well and so volatility in that sense as you've not been new to to those who have been been trading in that that area so so just respect the volatility and and quite often as it's been in the past with gold as an example you almost have to fall out on love with it before you can fall back in love with it and that's how it's something it can really sometimes test you to the limits in terms of of how long a correction takes or how long it takes for an idea or the underlying fundamentals really to to start to to to generate the the direction that you were you were looking for so patience is also something that is is required for the if you have the longer long term view in on the market. Broad exposure patience and respect the volatility, respect the volatility is a great line I'm going to steal that Oli thank you so much for coming on NoCrode macro and sharing your wealth of wisdom and experience with our audience I know our audience is going to really appreciate this so thanks so much for being here where can we send people to find more of you and your work online? Well I think you've been kind enough to show my Twitter sorry my ex ex ex handle it's Oli on the score s on the score on the score Hansen otherwise it's as you mentioned at the beginning I work for Saxo bank we do not serve as clients in North America for various reasons but basically we have a we have a website where it's called home.saxle where you can go into the research page so not only what I produce but also my colleagues also have a sub stack which I'll try to get started a little bit in the last six months but generally ex is where I I try to where where I put everything but also sometimes just give up give short short updates on developers and then the deeper the bigger the bigger pieces is is always published first on our platform on our training platform and on our website but it will also be available on x. Well Oli thank you so much for the great worth did you do keep it up I hope we can talk again soon. Thank you very much. And thank you all for joining us I hope you all learned something today so until next time stay safe stay educated respect the volatility and we will see you all on the next episode of Milcrod macro thanks for being here everyone bye. One insight to what's really moving markets and how we're trading each event subscribe to our channel then join the Milcrod macro and macro pro newsletters this show is for educational purposes only nothing we say is financial advice investing is risky never invest more than you can afford to lose