Copper Crumbles Amid Recession Fears

If you’ve been consuming financial market-related content for a while, you’ve probably heard the phrase “Dr. Copper” at some point. Well, the doctor was in today, so let’s hear what he had to say. 👂

For those of you confused, market participants often refer to copper futures as “Dr. Copper.” The reasoning is that copper is an industrial metal critical for most aspects of global economic growth. As a result, investors and traders will often use copper futures as a liquid market to express their views of the economy. And for those that don’t trade it directly, they look at it as a barometer for the overall market’s economic outlook. 🧭

So why is it relevant today? Well, since the Covid low, Copper prices have been trending higher, making higher lows and higher highs in price. That ended in 2022 when prices failed to sustain their new highs in March and then made a “lower low” throughout the summer. That action essentially signaled that the longer-term trend in copper had shifted to sideways…signaling uncertainty about the global economy. 😬

Since bottoming last July, prices have been slowly ticking higher, picking up steam in October along with the stock market. However, prices stalled in January and have been sitting in a range since….at least until today.

Prices just broke down to fresh year-to-date lows. And bearish market participants suggest that’s not a great sign for the global economy. They argue that the January price peak marked copper’s first official “lower high” in price and that it’s headed for a retest (and break) of last year’s lows. And if prices of copper are trending lower…then that means the market is not super optimistic about the economy. 🐻

Obviously, this is not a surefire sign of anything. We all know markets move for a variety of reasons. And we also know financial markets don’t always accurately reflect economic reality. With that said, it is currently on many folks’ radars…so we figured we’d explain why.

For now, we’ll have to wait and see whether Dr. Copper’s bearish diagnosis is accurate. Or if the economy can shake off these worries like it has many others. Stay tuned… 🤷

A Crude Two Weeks For Energy

The recent carnage in the energy sector has been lost in the shuffle, so let’s take a quick look.

Below is a chart of crude oil’s weekly chart dating back three years. With this week’s decline, prices fell to their lowest level since December 2021. And the one-week rate of change shows this is the largest one-week decline since early 2020. 😬

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Cocoa Prices Go Loco

With Halloween coming up next week, some consumers will likely be shocked at the price of candy due to the elevated price of cocoa.  😱

The vital ingredient in chocolate is hitting its highest levels since 1979 as hotter and drier weather patterns stunt this year’s crop. Roughly 75% of global cocoa beans come from the Ivory Coast, Ghana, Cameroon, and Nigeria, where consistent temperatures, high humidity, abundant rain, and nitrogen-rich soil allow it to thrive. 

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Gold Shimmers Around $2,000/Oz

Precious metals have not gotten much fanfare lately, especially with palladium in a downtrend and platinum and silver stuck in messy ranges. 💤

However, one that continues to pop up on investor and trader radars is gold, which is once again trying to break above $2,000/oz. Below is a chart showing prices stuck in a range for the last 2.5 years, each time failing to sustain a break above resistance. 🔐

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