Tyler Richey, co-editor of the Sevens Report Research, had a great interview with TD Ameritrade’s Ben Lichtenstein on August 6, discussing copper trading near 2019 lows, correlation with tenure yields, what comes next for copper, possible influencers, catalysts for copper, stocks and more…Click here to watch the full interview
Copper, a barometer for the global economy, drops to a 2-year low on trade war fears
“The combination of a disappointing Fed and an escalating trade war appears to be too much for this fragile global economy. The summer breakdown in copper…” said the Sevens Report’s Tom Essaye. Click here to read the full article.
What’s in Today’s Report:
- Dr. Copper Update
- CPI – The Case for a July Rate Cut Got A Bit Stronger Yesterday
- China & Treasuries: No Signs of a Buyers Strike (Yet)
- Oil Outlook – Supplies Keep Rising.
Futures are marginally higher following a busy night of news, but none of it shifted the current market outlook.
If there is a “reason” for the gains this morning it’s hopes for more Chinese stimulus as Chinese Vice Premier Hu called for more stimulus to help the economy, although no specifics were given and China’s already been aggressively stimulating the economy for months – so this isn’t exactly incremental news.
Geo-politically, Brent crude oil surged 3% after two tankers were attacked via a torpedo and mine strike overnight in the Gulf of Oman (near the mouth of the Strait of Hormuz). It’s unclear who is responsible at this point but that’s obviously increasing tensions in an already unstable part of the globe.
The remaining big event for the week comes tonight via the Chinese economic data, so today will be spent watching the headlines for any trade updates, while on the economic front we get Jobless Claims (E: 216K) and Import & Export Prices (E: -0.3%, 0.1%), but neither should move markets materially. Finally, there is a 30 Yr. T-Bond Auction at 1:00 p.m. ET and we’ll be watching to see if there are any signs of a Chinese “buyers strike” for Treasuries (so far, it’s not happening).
Tom Essaye was quoted in Markets Insider on May 15, 2019. The red metal has been the “single-best leading indicator for stocks over the past 18 months,” and is flashing a warning sign for…” Click here to read the full article.
What’s in Today’s Report:
- Another Update From Dr. Copper (It’s Been Right)
Futures are modestly weaker following disappointing Chinese economic data. Nothing new happened over night with U.S./China trade.
Chinese Retail Sales (7.2% vs. (E) 8.6%), Fixed Asset Investment (6.1% vs. (E) 6.4%) and Industrial Production (5.4% vs. (E) 6.3%) all missed estimates, implying the Chinese economic recovery might not be as solid as thought.
Today focus will shift back to economic data. The Chinese data was underwhelming and that will put more pressure on today’s U.S. data to reassure markets about growth.
The key reports today (in order of importance) are: Retail Sales (E: 0.2%), Empire State Manufacturing Survey (E: 9.0), Industrial Production (E: 0.0%), Housing Market Index (E: 64). Again, “bad” numbers from these reports that makes the Fed more dovish may cause a temporary bounce in stocks, but that’s not good for stocks in the medium/longer term.
Finally, there are two Fed Speakers, Quarles (9:30 a.m. ET) and Barkin (1:00 p.m. ET) but neither should move markets.
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