C&B Notes

Commodity Correlation in LatAm

One of our favorite and most informative sources of information are the charts delivered by The Daily Shot; we would recommend it to you. This chart caught our eye – Gavekal Research shows a strong positive relationship between commodity price changes and GDP growth in Latin America.  This correlation matches with our experience investing on the continent.  The better-run economies are more dynamic and diversified, however, which makes them relatively less susceptible to commodity price changes.  The recent rally in commodity prices should support growth and asset prices in the medium term.