Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / Why Commodity Prices Are Surfing the Bull Market Wave in 2026
Transcript
- Lucas: The S&P 500 is sitting at seventy-five hundred and one — basically flat over the last five trading days. The Dow is at fifty-one thousand five hundred and sixty-five. The Nasdaq at twenty-six thousand five hundred and eighteen. Broadly speaking, this bull market is intact, but the leadership is getting narrower by the week. Luna: Right — and that narrowing is what makes the commodity rally so interesting right now. Because while tech stocks are kind of churning, a lot of the real price action this quarter has been in raw materials. Lucas: Exactly. Copper is up 34 percent year-over-year. Gold just punched through thirty-one hundred dollars an ounce for the first time ever in June. Even lumber, which had been in a two-year funk, is up 18 percent since April. This is not the same commodity story we saw in 2021 and 2022. Luna: Yeah, that post-pandemic boom was all about demand catching up after lockdowns, plus a ton of fiscal stimulus. This time the drivers are more structural — and maybe more durable. Lucas: Let's start with copper. The case is pretty straightforward: electrification, AI data centers, and renewable energy infrastructure all require enormous amounts of copper wiring and components. According to the International Copper Study Group, global refined copper demand is expected to grow 3.2 percent this year, but supply is only growing about 2 percent. That deficit is widening. Luna: And it's not just demand — there are real supply bottlenecks. The big copper mines in Chile and Peru have been dealing with grade declines and labor disputes. New mines take a decade to permit and build. So the market is pricing in a persistent shortage. Lucas: Gold is a different story. It's driven more by macro factors: a weaker dollar, central bank buying, and real rates that are still relatively low even after the Fed held rates at three point six three percent last month. The Fed under Chairman Warsh is seen as more hawkish than expected, but the market seems to be looking through that. Luna: Central banks bought over a thousand tonnes of gold last year. That's been a huge underlying bid. And while retail investors have piled into gold ETFs again, it's really the sovereign buyers — especially China and Turkey — that are setting the floor. Lucas: Right. And then there's lumber, which is the most cyclical of the three. Housing starts have been surprisingly resilient given mortgage rates above 6 percent. But lumber prices are also being supported by supply constraints — British Columbia's pine beetle damage and Canadian wildfire risks have reduced mill capacity. Luna: So is this the start of a new commodity supercycle? I know that term gets thrown around a lot, but the setup does feel different from the 2000s China-driven boom. Lucas: It's worth being careful with that word. A true supercycle typically lasts a decade or more and is driven by a fundamental shift in the global economy. The China industrialization boom of the 2000s was one. This time, the themes are decarbonization, reshoring, and AI infrastructure — but they're more capital-intensive and slower to play out. I'd call it a structural upcycle rather than a supercycle, at least for now. Luna: That's a useful distinction. And I think it matters for how you invest. If you believe it's a supercycle, you go all-in on miners and materials stocks. If it's an upcycle, you need to be more tactical — watching for when demand peaks or when supply finally catches up. Lucas: Speaking of investing — if today's conversation helped you think about commodity exposure in your own portfolio, this show stays ad-free because of listener support. If you find value in what we do, you can buy me a coffee dot com slash fexingo. That's buy me a coffee dot com slash fexingo. Luna: Yeah, it genuinely makes a difference. We don't run ads, and that's only possible because of people who chip in. Appreciate it. Lucas: Back to the commodities. One risk I want to flag is that this rally is happening alongside a very narrow stock market. The S&P 500's gains in 2026 have been concentrated in a handful of mega-cap tech and ai related names. If that concentration unwinds — if those leaders start to decline — commodities could get caught up in a broader risk-off move, at least temporarily. Luna: And there's the inflation risk too. If commodity prices keep rising, it could force the Fed to stay tighter for longer, which would slow economic growth and eventually hurt demand for those same commodities. So there's a bit of a circular logic. Lucas: Exactly. That's the tricky part. In the short term, a weak dollar and supply constraints can keep pushing prices higher. But if the Fed has to hike again — or even just hold at three point six three percent while inflation stays sticky — the dollar could strengthen, and that would be a headwind for commodities priced in dollars. Luna: Right. So for listeners thinking about adding a commodity ETF or miner stocks, the key is to watch real rates and the dollar. If the dollar index starts trending higher, you probably want to take some profits. Lucas: And pay attention to individual commodity fundamentals, not just the broad basket. Copper's story is much stronger than, say, agricultural commodities right now. The supply-demand math is simply more compelling for industrial metals than for softs. Luna: What about energy? Oil has been range-bound between seventy and eighty dollars a barrel for months. Is that part of the commodity story or separate? Lucas: I'd say it's separate for now. Oil has its own dynamics — OPEC+ discipline, U.S. shale production, and demand uncertainty from a potential global slowdown. The bull case for energy is more about valuations and dividends than price momentum. Many energy stocks pay attractive yields and trade at single-digit price to earnings ratios, but that's a different kind of trade than the momentum-driven copper or gold rally. Luna: So what's your takeaway for someone managing their own portfolio right now? Lucas: I think having a modest allocation to commodities — maybe 5 to 10 percent — makes sense as both an inflation hedge and a diversification tool. But I'd tilt toward industrial metals and gold, and I'd be ready to trim if the dollar strengthens or if we see a clear peak in infrastructure spending. This is not a 'set it and forget it' trade. Luna: And given the narrow market leadership, commodities might actually be a better diversifier than bonds right now. The classic sixty-forty portfolio has had a rough few years because bonds and stocks have been correlated. Commodities have a lower correlation to both. Lucas: That's a great point. Copper and gold have zero or negative correlation to the S&P 500 over the past twelve months. That's exactly what you want in a portfolio that's top-heavy on tech. So even if you're skeptical of a supercycle, there's a portfolio construction argument for owning some. Luna: I think the bottom line is: this commodity rally has legs, but it's not the same as 2021. Investors need to be more selective and more focused on supply constraints than on demand euphoria. Lucas: And that's a good note to end on. Next episode, we'll look at one specific commodity — maybe lithium or uranium — and dig into why it's behaving differently from the rest of the pack. Luna: Looking forward to it. Thanks for listening.