Monday, February 13, 2017

Is copper signaling higher inflation is coming?



Copper prices surged dramatically higher this week. Three main factors are bolstering copper prices.

A strike at the world's largest copper mine in Chile.

Better-than-expected economic data out of China, the world's largest copper consumer, is supporting the price of the red metal. January data for Chinese import and export levels were higher than expected, with exports climbing 7.9% and imports up 16.7%.

Pro-growth policy expectations in the U.S. Copper prices received a boost this week from news that President Trump said his tax cut plans are moving ahead of schedule and that an outline will be delivered to Congress by month's end.

Global PMI's (Purchasing Managers Index) are all pointing to global synchronous growth for the first time in years. I believe it goes without saying that commodities will benefit from this economic growth. Inflation will begin to raise its head and be the story of 2017. The direction of the stock market will be incumbent on how many times the FED decides to raise rates this year.

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