ISRI’s Commodity Roundtables Forum will take place Sept. 22-24 at the Hyatt Regency Hotel in Chicago. The annual event attracts processors, brokers, traders, and other recycling professionals from around the world. Register here.
Jason Schenker is considered one of the most accurate financial forecasters and futurists in the world, but believe it or not, his love for all things financial began by chance. A history major as an undergraduate in college, Schenker began taking economic courses at the suggestion of a friend. Once he started learning about all the moving parts that made up the economy, he became hooked, thus beginning a distinguished career. A regular speaker at ISRI events, Schenker is one of the panelists on both the aluminum panel and the general session on financial risks and asset management during ISRI’s Commodity Roundtables Forum.
Where did you interest in economics, commodities and all things financial come from?
I was a history major as an undergraduate in college. One of my best friends suggested I take some economics courses. I did and it was an eye-opening experience. Most people don’t think of economics, financial markets, and commodities as being critical pieces to how the world operates, but they are. After earning a few different graduate degrees, including one in applied economics, I worked at a bank and started covering inflation and commodities. It was really interesting. Commodities are important, fundamental building blocks in economic activity, growth, and the over health of the economy. They’re also important for the stability of society. They play a major role in our everyday lives, so that’s what really captures my interest.
As one of the most accurate financial forecasters and futurists in the world, how have you gone about perfecting your craft?
Like all things, being good at something requires a lot of time and effort. You also have to be willing to learn new things and see things from new perspectives. That means putting in the time and effort to gain exposure to different data, methods of analysis, modes of research, etc. I had a unique view of the fundamentals of economics, especially around commodity markets, that some of my colleagues didn’t look at the same way. So having that different perspective has been helpful, and I think some of that perspective comes from my fundamental view of markets and the economy. Commodities are a fundamental building block of economic growth. If the economy is strong, that means that the demand on physical commodities is going to be high.
If I were to talk to someone today who was interested in a career in economics and commodities, I’d tell them to look at as much data as they can and try to identify the difference between the headlines and the trendlines. I’d also tell them to look at the macro factors behind things. If they do that for a while, they’ll be in a good position to gauge the drivers of trendlines as well as headlines.
What are some topics and issues you’re looking forward to discussing during both the aluminum session and the general session on financial risks and asset management?
I’m really interested in discussing the health and strength of global manufacturing, the importance of interest rates, and accommodative fiscal and monetary policies. These are all fundamental, so I’d like to spend some time on each of these topics and take a deep dive where possible.
We’ll also talk about what it’s like emerging from the pandemic. Remote work is a difficult concept to implement in the recycling industry. This is an industry that’s really critical for the economy, which is why it was labeled as essential. It’s an important building block for the economy and the global supply chain, and most of these roles must be done in person. Fortunately, this industry has been less disrupted by the pandemic. And it has also been impacted less by the push for remote work since this is a physical industry.
We’ll also talk about some of the global supply chain disruptions, which I think are really important right now.
What do you hope people take away from your sessions?
The economy has exceeded escape velocity, which means we’re seeing a virtuous circle of rising Gross Domestic Product (GDP), rising tax revenues, rising confidence and rising investment. Q2 GDP, which excludes inflation, was at an all-time record in the U.S. We are past pre-COVID-19 GDP levels. Nominal GDP, which includes inflation, was at an all-time record already in Q1 of this year. This was one of the shortest recessions in U.S. history. Looking ahead to the next recession or crisis, the Paycheck Protection Program (PPP) loans were highly effective, so I think we’ll see those again. The Quantitative Easing (QE) program was also highly effective, so I think we’ll see that again as well. But there are some risks. The inflation genie is halfway out of the bottle, and the Federal Reserve is going to have a tough balancing act trying to avoid inflation from becoming rampant. That, combined with a weak job market and the risks associated with the Delta variant of COVID-19, presents some immediate challenges. But the positive is we’ve exceeded escape velocity, and I see positive growth for the next couple of years and good tailwinds for the economy. The labor market is strong and many aspects of life like remote work, online education, telemedicine, e-commerce, and online dating have reached new levels of acceptance, and will be permanent fixtures of the economy and society. I don’t any of these things will go back to how they were pre-COVID-19. But while we’ve got these good tailwinds, the outlook is not without risk.
For the aluminum side of things, there’s a very strong market. Demand is strong. Commodities are bought, not sold, and at the end of the day, almost everyone in the room is a price taker. The global economy is the price maker. The global economy is growing, and I think it’s going to grow next year and the year after. So, I’d be optimistic about that.
I am also optimistic about the focus on environmental, social, and governance (ESG) criteria, which are a set of standards for a company’s operations that many investors use to screen potential investments. Many companies began embracing ESGs during the pandemic. ESGs may present opportunities for closer working relationships in the recycling industry between companies and their customers.
Aside from your sessions, what are you most looking forward to at this year’s Commodity Roundtables?
I’m looking forward to seeing people. Much of the work in the recycling industry is conducted in person, but for someone like me that interacts with a lot of people in the industry but doesn’t work in it, I haven’t seen a lot of my scrap friends in a while. So, it’ll be nice to see them.
Photos courtesy of Jason Schenker.