US Bank Asset Management Group CIO Eric Freedman joins Market Domination to break down three catalysts that could drive US commodities growth.

He points to ongoing "human tragedies" that will continue to rely on commodities. “Our hearts are with those affected. That’s certainly more important than financial matters. But that’s an area we think will not be solved immediately or necessarily quickly,” Freedman says.

Freedman's second potential commodities catalyst is the economic growth of foreign countries. “If you look at what’s happening in Europe, if you look what’s happening even in non-Japan Asia, there’s some real strength and momentum,” he explains, adding that international growth could increase demand for US commodities.

He adds that China could also be a major player, as the nation is “really trying to export their way to growth. They need commodities to make that happen.”

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Melanie Riehl

Video Transcript

Something else you guys are doing that I thought was interesting is buying commodities.

And again, just like with stocks you're looking at, I believe a broad basket of commodities that could rally going into the election.

What are some of the dynamics there that could push them higher?

Yeah, I think a couple of things, you know, one and Julie your point, we looked really hard at being more discreet within energy related equities.

That's still a sector.

We like quite a bit.

We thought that having more of a broad based approach to inflation hedging was the right approach.

And I think there's a couple of things that going on.

Number one is that, of course, we're seeing given the human tragedies across the world right now, some supply chain disruption and, and that could certainly continue.

Again, our hearts are with those affected, that's certainly more important than financial matters.

But that's an area that we think will not be resolved, you know, immediately or necessarily quickly.

The second thing that you're seeing is actually a broadening out of participation by outside of these, these uh these borders if you will.

So if you look at what's happening in Europe.

If you look at what's happening, even in Nan Japan, Asia, there is some real strength and momentum.

Again, everybody knows about China.

China is really trying to export their way to growth, they need commodities to make that happen.

So that shining story, we don't think it is going to reverse any time soon.

So if you factor in some broadening participation by Europe, but also some throughput by China, especially liquidity driven throughput by China that makes commodities a decent place to have some capital eric for fixed income.

This investors who are listening right now as well.

What would be your guidance?

Yeah, I think a couple of things, one is, is it's hard to uh to move out uh beyond the first couple of years of the the maturity cycle.

We know just psychologically if you're getting, you know, 5 5.5% on short term fixed income, that's a tough place to move out of.

We actually would still emphasize for those clients who are taxable municipal bonds.

It's actually a more normally shaped curve.

You know, typically the the longer maturities yield more than the shorter maturities.

That's actually not happening within government bonds or within corporate bonds, but within municipal bonds across most of this country that is happening.

So it'd actually be extending duration, buying longer maturities with mu but still hanging out more market weight if you will within uh you know, tax exempt bonds.

So those are elements that we think will be, will be persistent.

So we wouldn't give up on fixed income.

We actually really like credit as well.

That's a space that we think has been underappreciated and a lot of emphasis on the front end of the government curve, which is appropriate.

But we think corporate credit is a great place to be right now.

You're getting some incremental yield, uh, default rates are very, very low.

And, and again, that's a spot that we think, uh you know, with broadening participation in earnings that obviously helps uh bondholders as well.

So those are very, very important areas for us with clients in the uh in the current environment.

Lots of ideas for investors, Eric Friedman.

Thank you so much.

Appreciate it.

Thanks so much.

Great to be here.