A Booster Shot for the Economy

Macro Perspectives: Fri 23 Jul 2021

It has been clear since the Georgia Senate run-off, that the Biden administration will get whatever spending package they want across the finish line.

With an aligned Congress, the administration has since rammed through $1.9 trillion in additional "covid relief." Last week, Biden announced a $3.5 trillion government spending plan (with the creative label of "budget agreement"), that will again be rammed through by an aligned Congress. And for some reason, in the face of all of this, yesterday the Republicans appear to have agreed to do another $579 billion - for "infrastructure."

So, here's what the spending looks like thus far...

As you can see in this graphic, there remains about $1.5 trillion unspent from existing covid relief bills. Add another $3.5 trillion for Biden's social and environmental bill, and roughly $600 billion that the Senate is near an agreement on, and we have over $5.5 trillion to be unleashed on the economy.

With that, let's take a look at the charts of two key industrial metals that will, no doubt, get yet another big boost from this onslaught of spending.

Copper has corrected from record highs recently. This is a buying opportunity, we could see $6+ copper.

Same can be said for iron ore - a buying opportunity. It's already near all-time highs, demand is already well outstripping supply, and yet more money is coming (more demand).