I have great news — I am now the proud owner of a new crystal ball! After hearing me lament to everyone I know about not owning one, my son bought me a shiny clairvoyant orb for Father’s Day.
The problem is, I don’t know how to use it. Instead, I just stare into the sphere while asking grand questions like:
- “Who will win the next World Series? Super Bowl?”
- “How do I get my youngest son to put his dishes in the dishwasher?”
- “How will the economy do over the next three years?”
Alas, I receive no response. In a situation like this, a Magic Eight Ball would have been more useful, so I guess I will have to default back to more traditional analysis.
One indicator that investors can observe to judge future economic activity somewhat reliably is the price of copper. Copper is said to have a PhD in economics since the metal has many industrial uses.
The chart below shows a quick recovery from the 2020 COVID sell-off until May 2021 before moving sideways and ultimately peaking in February 2022. Since then, the metal’s price has been dropping, possibly reflecting weaker economic growth in the future.
As a reminder, the economy contracted by 1.6% in the first quarter of this year, tracking with copper’s performance.
Of course, this is just one moment in time. The price could rebound, changing the entire narrative. As always, we can only work with the data we have.
Right now, falling stock and commodity prices like copper are telling us there are worse things ahead for the economy. We are leaving portfolios conservatively positioned during these volatile times.
Given the data above and fears of a global recession swirling, economists and investors will continue to keep a close eye on Dr. Copper’s diagnosis of the health of the global economy.
If you have any questions, please do not hesitate to contact your Impact Capital advisor.