The Ghost in the Machine Q2 2021: Recovery, Pandemic, Supply Chains, Weather, Sugar, Grains, Super Cycle, Bitcoin

Welcome to July 2021 edition of the Ghost In The Machine. 

Welcome to the June 2021 edition of the Ghost In The Machine, as ever encompassing a broad spectrum of issues from supply chain disruptions, ESG, central bank liquidity to commodity supply and demand outlooks, and the fluid and uneven economic impact of the pandemic. While China is at the vanguard of regulatory interventions to rein in Bitcoin and crypto trading, ESG considerations are also getting much airtime, though as our article highlights the Social and Governance issues are as significant as often misleading discussions about the Environmental impact. China’s voracious appetite for commodities, above all in the past year, is always a key element in terms of S&D prospects, but as Sugar, Grains and oilseeds markets have shown, weather effects remain key and all too often not quite in the way that is assumed, we take a deep dive into current outlooks. We also look at the lessons from previous commodity super-cycles, and what can be learnt. For many the assumption is that central banks tapering QE programmes will likely have a major impact on risk assets, and rate hikes even more, but perspective is needed. Supply chain disruptions and bottlenecks were always a likely phenomenon as the global economy gets on an uneven road to recovery. However there is little discussion about their pre-pandemic antecedents, what role these will have in determining how long it will take to resolve them, and little consideration about the longer-term fall-out in terms of changing demand, productive capacity or the impact of climate change initiatives. The attempt to form a break away European football Super League (ESL) crashed on the rocks of public outrage, but the legal ramifications are a good deal more profound, and will likely rear their head again in the not too distant future, as we discuss.

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