Benjamin Hoff – Commodity Futures Surfaces and the Cash-and-Carry Glue (S7E17)

Bullish:

• $GOLD - Gold is seen as a unique asset for hedging against policy uncertainty, financial system risks, and geopolitical instability in systematic macro trading.

  • “What other commodity, what other market really gives you sensitivity to policy uncertainty, to weaponization of financial systems, to systemic counterparty risk, to geopolitical instability? That is what's unique to gold.”

    Benjamin·1:02:08
• $COMMODITYCARRY - Commodity carry strategies have shown robustness over decades due to causal decorrelation across different commodities.

  • “Commodity carry strategies, and you can really see this play out over the past couple of decades really, is how robust that strategy is. And the reason it's robust is because you've really got causal decorrelation at play there.”

    Benjamin·1:04:43
• $ENERGYLIQUIDS - There are potential lead-lag effects in commodity markets, particularly in energy liquids, which can be exploited in trading strategies.

  • “When you look at commodities as a mass class, just from an intuitive from a fundamental perspective, it seems relatively apparent that there should be lead lag effects.”

    Benjamin·49:08

Bearish:

• $COMMODITYINDEX - The effectiveness of commodity index-based strategies may be diminishing as market structure evolves and liquidity provision reaches saturation.

  • “Congestion strategies, pre roll strategies are basically premised on providing liquidity to long only commodity index investors. And so you kinda end up in this situation where the issue really becomes what happens once the index has been provided all the liquidity it could possibly meet. Does the raw signature of the index start depreciating?”

    Benjamin·57:49