Dr. Copper continues to forecast a recovery. Despite being about 10% off its highs the economically sensitive metal continues to perform well. I have my doubts about the medium-term viability of copper strength, but for now money printing is certainly driving demand. The Chinese stimulus plan is more powerful than I ever could have assumed….
Crude oil surged today after an attack on a Nigerian pipeline. The huge global rally bolstered prices as well. Crude is making its usual seasonal move higher into the summer driving season. Whether it can maintain its gains after July 4th is a whole different story.
We’re seeing a similar move in the gasoline markets. Seasonal strength appears to be the primary driver here. It will be interesting to see if the U.S. consumer drives more or less in June as they avoid more expensive forms of transportation. Of course, the tax of higher gasoline prices will do nothing to help the already struggling consumer. This green shoot is certainly a Venus Fly Trap….
The big winner on the day was….drum roll please….LUMBER. That’s right, lumber. The strength in Lowes gave the entire housing market and anything housing related a jolt. It will be interesting to see whether the gains can hold. Every major spike in lumber in the last year has been a major selling opportunity. This again appears to be a major seasonal trend. The spring buying season and excellent weather across the country has give the housing market a false dawn. I don’t think prices are done going down and dreams of a sharp recovery are just that – a dream.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.