Iain Little's Fund Manager's Diary: "Cheap Tin Trays"
Comment of the Day

October 04 2013

Commentary by David Fuller

Iain Little's Fund Manager's Diary: "Cheap Tin Trays"

My thanks to the author for his interesting and often contrarian thinking in this Diary published by Global Thematic Investors. It is posted in the Subscriber's Area, along with my view, but here is the opening comment
Everyone knows that Heaven is where the police are British, the cooks are French, the mechanics German, the lovers Italian, and the government Swiss. But what is Commodity Heaven? It is a world of economic compromise, where demand is solid but inflation is at bay. It is a world where Big Oil is high enough to feed OPEC's troublesome populations but low enough to keep the indebted Western consumer pecunious (just below USD 100 a barrel feels about right). It is a world where soft commodities (corn, soya and, particularly, Big Rice) are low enough to keep food riots to a minimum (the Arab Spring gave us a visual refresher course) but high enough to keep agro-sectors in the pink and farm subsidies to a minimum. It is a world where industrial metals trend gently higher to reflect modest global GDP growth but contribute no inflationary "push". By and large, this is the world we live in.

David Fuller's view This recovery in the Baltic Dry Index, which the alert Iain Little points out, is very interesting. It may have commenced a temporary consolidation near 2000 and the October 2011 high, but the base formation extension activity is impressive and certainly capable of supporting higher levels over the medium term. Iain's comments on China make sense to me.

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