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Commodity prices don’t actually need global economic growth, although, should that occur, then an increased tailwind would push prices higher and faster.

Simply reduced supply and inflation can and will push nominal prices higher. This combination is already present and it is only a matter of time before commodities bottom, base, and break higher.

Higher commodity prices are bad for stocks like taxes are bad for stocks, it reduces margins. With US stocks at nominal highs, this will pose a risk, not today, but moving into 2015.

There are lots of individual commodities that are probably near their lows. Coffee is one example, but there are others. Building positions in select commodities, while the global growth story is in tatters, is a value trade, it’s only that calculating the value in commodities is not straightforward if even possible.

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