Housekeeping: Good Morning.
Bretton Woods Three is a Process, Not an Event.
Today:
Premium: Copper
Commentary: Goldman, BOA Nail Copper Comex Squeeze
Markets Yesterday:
US equities rallied on Tuesday ahead of April's consumer price index report out on Wednesday.
Premium/Markets: What is Going on With Copper?
Podcast Topics:
Fundamentals Assert
AI Catalyst
Comex Squeeze
Goldman/Boa Nailed This
What to expect
Goldman:
A Tight physical market: Structural supply shock combined with an improving global demand environment is set to put the copper market in its tightest state since 2021. A combination of mine supply disruptions, already low inventories and seasonality should put the market in a deficit phase from Q2 onwards ll year-end. Globally, GS sees the copper demand increasing by +2.4% in 24 and our economists continue to target $10,000/t by year-end and $12,000/t by end of Q1-25’ as scarcity pressures increase.
Much more below…
BOA: The copper supply crisis is here
Tight copper mine supply is increasingly constraining refined production: the much-discussed lack of mine projects is finally starting to bite. Similarly, aluminium production growth has halved. Keeping in mind the steady demand backdrop, we are therefore bullish both metals and see copper and aluminium rising to an average US$12,000/t (US$5,44/lb) and US$3,250/t (US$1.47/lb) by 2026.
Much more below…
News:
"Anglo American plans to break itself up to win over shareholders as the mining group seeks to fend off a £34bn takeover approach from rival BHP. Anglo said on Tuesday that it would sell or demerge its De Beers diamond business, its South Africa-based Anglo American Platinum (Amplats) operation as well as its coking coal assets. The London-listed group will instead focus on its copper, iron ore and crop nutrients businesses. BHP, the world’s biggest miner, has set its sights on securing Anglo’s copper business which is expected to boom as the world decarbonises." Source: FT
"Federal Reserve Chair Jerome Powell affirmed the central bank’s plans to hold interest rates at the highest level in more than two decades as it awaits evidence that a slowdown in inflation will resume after setbacks this year. Powell said he expected inflation to continue heading lower but that he was less confident than he had previously been about that outlook, leaving the Fed unable to say whether or when it might be able to lower interest rates." Source: WSJ
"President Joe Biden is sharply raising tariffs on Chinese imports, ranging from electric vehicles to solar cells, in a pre-election effort to protect US jobs. The White House said $18bn of Chinese goods would be hit by the rises, which were “carefully targeted at strategic sectors” and designed to buy time for US companies to catch up with Chinese rivals in green technology. In one of the biggest moves, the US will quadruple the tariff on Chinese EVs to 100 per cent this year." Source: FT
"Walmart is cutting hundreds of corporate jobs and asking most remote workers to move to offices. In addition, workers in small tech-focused offices in Dallas, Atlanta and Toronto are being asked to relocate to other central hubs like Walmart’s corporate headquarters in Bentonville, Ark., as well as Hoboken, N.J., and Northern California... Walmart will still allow staff to work remotely part of the time, as long as they are in offices the majority of the time." Source: WSJ
"Boeing has violated a deferred-prosecution agreement with the US Justice Department related to the crashes of two 737 Max airplanes, the department said in a court filing. The company breached the accord “by failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws throughout its operations,” according to the filing Tuesday." Source: Bloomberg
Geopolitics:
Some headlines via NewSquawk or DataTrek
Data on Deck: PPI then CPI
MONDAY, MAY 13speakersTUESDAY, MAY 148:30 am Producer price index AprilWEDNESDAY, MAY 15 8:30 am Consumer price index
THURSDAY, MAY 16 Initial jobless claims May 11 219,000 231,000 8:30 am Philadelphia Fed
FRIDAY, MAY 17 10:00 am U.S. leading economic indicators April1
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