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Adam Patti, CEO of IndexIQ, on the drought of 2012 and its impact on agriculture stocks.
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Our culture joining -- -- -- Adam Patti CEO of index IQ -- -- great to have you thanks for having me.
And they aren't so what's the strategy when you look at the drought when you look -- now this hurricane hurricane eyes it coming in in oil prices to -- -- I -- Department of Agriculture -- let's start there before bring in the oil commodities.
Well I think it's a scary situation we have the droughts now you have the -- last year yet to freeze last year and you have a very.
Unpleasant supply and demand equation global agribusiness with a rising middle class in the emerging markets.
Rising population and reduction in farmland investors really need to be looking at at agribusiness stops -- didn't and not make money but also -- the portfolio.
CDs devastating stories that with the corn crop and how it -- this is to the feeder cattle we sought Jeff Flock on the Mississippi and it's -- levels infecting.
That industry -- well but you know CC wanna be sensitive do you see these types of investments and rising because of these troubles.
Well absolutely and you need to -- the futures that are based on those on those crops or have already come -- -- about 20%.
Led by surging grain prices since June -- -- already a bull market.
The agribusiness stocks though are delayed and already moving up now because it takes little time for those prices to get through their supply chain and hit the consumer.
Is it too late to get and how much higher keeping these are going to rise well I I think it's at actually now's the time you wanna be getting -- agribusiness stocks because -- movies just starting now.
They can go quite a bit higher and you recommend ETFs in particular white -- this -- -- ETFs is a very efficient way to didn't.
Investing a lot of different sectors and that I of course have my favorites in the sector go on -- -- mean crops -- ROP very easy to understand given what we're talking about is the only way to get access to pure -- small cap agribusiness stocks.
-- around the world.
It's a very efficient way to gain access and also drive alpha in your portfolio I also -- you've got interest in -- ETF and CRO as well as QAI well now's the time you wanna be hedging your portfolio overall because will be uncertainty -- QAI macro -- hedge.
Hedge fund like ETFs that are designed to dampen portfolio volatility while retaining upside potential so.
You're making -- recommendations against the backdrop of all of this other risk out there so you believe that there are some important areas to remain bullish on to -- out all of these waves actually need to be cautious because all the macro overhang should be need to be were remain invested because if you don't you might miss the upside.
And that's very difficult to make up mid cap emerging markets I was also on your list I think that's interesting because reminiscent of global slowdown here we'll absolutely go look in the EM ER is the only way you'll -- -- in the market for mid cap emerging market stocks.
You don't want the large caps to large caps -- plays on the US and to and and Europe they're exporters you want stocks that are capitalizing on the home economies of the emerging markets and those still growing very robustly if not as quickly as before and -- inflows on these mid -- still outpacing outflows.
Well absolutely people have been moving back into emerging market stocks are about sixty days.
And I wanna get -- take on oil mention and the introduction I oil's a small cap oil ETF.
Do you think that this hurricane or whatever becomes the storm could actually give a -- a quick and dirty increase.
That's already happening.
It's very moving up and you've got all the unsettled this in the in the Middle East -- Syria and Iran with their new missiles and whenever something like had happens you see an increase in oil prices and small cap.
Equities are the best way to play that.
It's interesting that you she's that asset class I think you so much out of -- great to have you with us thanks for having me.
