Dr Copper

Macro Perspectives: Thu 24 Sep 2020

We've been watching Apple the past couple of days as a proxy on global risk appetite. With a broad risk-off day in markets, let's take another look...

Apple finished the day testing this big line again, a line representing the recovery from the pandemic-induced lows.

Here's a look at Copper.

Copper is an industrial metal that tends to be an early signal on a turning point in the economy, and a good inflation hedge. With that, copper put in a bottom on March 19th, just two trading days before the Fed announced it would backstop the corporate bond market. It has since climbed 50%.  But we get a break of this big trendline today (similar to the line being tested in Apple).

Is copper predicting a slowdown in the economic recovery? Maybe.

That would align with what's happening in gold - now down 10% from early August.

As discussed earlier this month, we approach a very high stakes election and we have a vacuum to be filled with uncertainty and speculation. We're beginning to see that play out in markets through some "de-risking" and some profit taking on inflation bets.

As for uncertainty, there is plenty. Adding to the mix, Trump said yesterday that he expects the election "will end up at the Supreme Court" (i.e. a contested election). We also have an uptick in virus concerns. The UK stepped up "slow the spread" guidelines yesterday. Israel has become the first developed country to go into a second lockdown. And the head of the CDC said yesterday that less than 10% of the U.S. has been infected by the virus.