CICC has reported that structural changes are taking place in the global supply and demand landscape, which will greatly weaken or even reverse the decisive factors that contributed to the "great moderation" in the past few decades, which in turn will once again push up the inflation hub, exacerbate macro volatility and push up the deterministic premium of physical assets, according to the Zhitong Financial APP. The new macro paradigm is good for three types of assets for a long time.SkinnytigerfattydragonPhysical assets, assets that generate stable cash flow, and efficient productive assets. At the same time, the fifth commodity supercycle is expected to start, which is often a cycle of technological progress, starting with a bigger and stronger manufacturing sector, resulting in more efficient capacity. When the new macro paradigm meets the supercycle, the productive new and old economies will fly on both wings.
The main points of CICC are as followsSkinnytigerfattydragon:
The rising trend at the center of commodity prices is the only way for the world to extricate itself from deficiency to reality. Getting rid of deficiency to reality is conceived from the transformation of macro paradigm. CICC pointed out that since the mid-1980s, under the combined action of a series of structural changes in the global economic sector, the optimization of the monetary policy framework, and "good luck", major developed countries have entered a long-term stage of "great relaxation" growth. Physical supply is relatively excess, the economic cycle is mainly driven by endogenous demand, and financial assets enjoy a higher certainty premium.
Looking forward, however, CICC expects structural changes in the global supply and demand landscape, which will greatly weaken or even reverse the decisive factors that have contributed to the "great moderation" in the past few decades, which in turn will once again push up the inflation hub and exacerbate macro volatility. Push up the deterministic premium of physical assets. The new macro paradigm is long-term positive for three types of assets: physical assets, assets that can generate stable cash flow, and efficient productive assets.
To get rid of deficiency and to be stable and far away. CICC pointed out that the fifth commodity supercycle since 1900 is expected to begin. Large-scale industrial chain reconstruction and transfer, which leads to urbanization and (re) industrialization in some regions and countries, superimposed tight supply constraints, together created the first four rounds of supercycle. The supercycle is often the cycle of technological progress, and the starting point is to make the manufacturing industry bigger and stronger, thus forming more efficient production capacity. When the new macro paradigm meets the supercycle, the productive new and old economies may fly on both wings of the trend.
The commodity supercycle needs catalysts. At the end of last year, CICC pointed out that in the first half of the financial real estate cycle, US demand resilience could span the normal economic cycle. The US manufacturing cycle is expected to restart in 2024, driving the global manufacturing cycle to recover after two years, sounding the bugle of the copper oil market from the demand side.
According to the judgment of CICC, the global manufacturing cycle is beginning to restart; combined with the qualitative and quantitative analysis of the capacity dynamics of copper oil, the balance between supply and demand, and the industry meso-view, it is estimated that the Brent oil price center is expected to reach 90 US dollars per barrel in 2024. With regard to Lun copper, CICC raised its 2024 target price to $11000 a tonne.
In the medium to long term, with the continuous upgrading of China's manufacturing industry, the re-industrialization of developed countries and some emerging markets, the reconstruction and transfer of the global industrial chain, and the long-term existence of multiple supply constraints, superimposed on the trend of global head asset management agencies to increase the allocation demand for copper oil and other resource products with good anti-inflation and anti-fluctuation properties in recent years, CICC expects the copper oil price center to remain high in the medium to long term. It is helpful for the traditional periodic products to pass through the general economic cycle, and then change its pricing logic in the process of getting rid of reality to deficiency in the world over the past decade.
Risk tips: short-term risks focus on US financial or recession risks; long-term risks focus on whether the US will slide into deflation.