For commodities to benefit from reflation, rising inflation alone is not sufficient. It must be accompanied by a genuine economic and industrial rebound, indicated by rising Purchasing Managers' Indexes (PMIs). This combination dramatically improves commodity returns, especially for energy and industrial metals.

Metals are uniquely positioned to perform across multiple economic regimes. They serve as a hedge against national debt and central bank irresponsibility, benefit from potential rate cuts and sticky inflation, and face a massive supply-demand shock from the AI and energy infrastructure build-out.

A significant disconnect exists between soaring precious and industrial metal prices and the currencies of the exporting EM countries. Despite nations like Chile, Peru, and South Africa seeing a major terms-of-trade boost, their FX markets have not priced in this fundamental improvement. This suggests a potential investment opportunity, as fundamentals are expected to eventually impact asset prices more directly.

The link between emerging market currencies (EMFX) and US tech stocks is not about the tech sector itself. Global equity markets have become a unified signal for the global economic cycle. A sell-off worries investors about global growth, impacting risk-on EM currencies regardless of their direct tech exposure.

A wide range of historically reliable leading indicators—including copper prices, non-traded commodities, Korean equities, and small-cap stocks—are all simultaneously pointing towards a strengthening global cyclical outlook. This alignment across different assets and regions provides a more substantive and reliable signal than any single indicator could.

Asset allocation should be based on liquidity cycles, not economic cycles like GDP growth, as they are out of sync. An increase in liquidity precedes economic acceleration by 12-15 months. Strong economic data can even be a negative signal for asset markets as it means money is leaving financials for the real economy.

An index of non-traded industrial commodities like glass and tin provides a clearer view of true economic activity. Because these materials are not easily traded by financial investors, their price movements are less likely to be influenced by speculative activity and more directly reflect genuine industrial demand, making them a purer leading indicator.

While any individual economic indicator can be misleading or explained away by unique factors, a collective alignment of multiple, diverse signals (like commodities, specific equities, and bond yields) creates a powerful, trustworthy forecast for stronger global growth.

Despite strong price performance in commodities like copper and precious metals, the currencies of key EM exporting countries have not reacted as strongly as they should. This disconnect suggests that the 'terms of trade' theme is underpriced in the FX market, indicating potential valuation upside for these currencies.