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We believe 2018 will prove to be a very important year for investors, not only because of the unprecedented level of euphoria surrounding the U.S. equity market, but more so due to the ongoing global reflation trade that both speculators and investors are piling into.

This reflation trade is having a tremendous impact on global equity markets, commodity prices and, most importantly, currencies.

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The thesis is that the global economy has shifted into high-growth mode and therefore the demand for commodities will rebound as inflation finally begins to take hold and central banks accelerate interest rate hikes.

So far, this has been an excellent trade, with commodities such as crude oil rallying more than 50 per cent from their mid-2017 lows. Long positions in oil have also been building to new record highs, with speculators clearly betting on this momentum to continue into 2018.

To add some perspective on the magnitude, net long positions are currently 40 per cent higher than their mid-2014 highs, and an astounding 4 times higher than their 2016 lows.