Lex Hits and Misses: Making Massive Gaffes in Commodities

Like pigeons, Lex lighters only have a 340 degree field of view. There is a small blind spot for objects approaching from behind. Earlier this year, Rex chose to ignore the possibility of Russia launching an all-out invasion of Ukraine. In the immediate aftermath, all energy prices skyrocketed even more. But economically sensitive industrial metals such as aluminum eventually plummeted.

At the time of writing in February, Rex may have looked back and noted that since May 2020, the price of antirust metal has more than doubled to nearly £3,200 per tonne. digitIt concluded that readers should “expect bids to hold up in the coming months.” Instead, aluminum prices on the London Metal Exchange teetered after the invasion, then fell by a third.

I also questioned the advice to stick with the wind turbine manufacturer. In January made fun of hedge funds Short groups such as Vestas mistakenly assumed that the worst had passed. Instead, disruptions to his chain of supply resulted in additional costs. His earnings per share in 2022 went from positive to negative in the space of a few months. By October, the stock had fallen to one-fifth of his price, but has since risen.

Higher energy prices after the invasion set up bearishness among some commodity pigeons, but many did not believe oil prices could fall. . But frankly, our credibility was low as we questioned last year’s oil bull market.

Still, we hit many times. From late February, Rex pointed out the risk High gasoline prices are hitting consumer wallets everywhere, but especially in the United States. After all, it is the largest consumer of oil. Oil traders grapple with declining crude inventories and an imminent slowdown in gasoline consumption, the biggest driver of demand. Ultimately, oil prices fell by nearly a third after he peaked in early June.

Rex is not afraid to defend his position. But he is wrong, he admits. This year, commodities have given us a lot of that opportunity.