Doctor Copper

Copper is an important base metal in the global economy.  It’s one of the most ductile materials the earth provides, making it perfect for wiring because it is an efficient conductor of electricity. Copper is also used in industrial machines like heat exchangers because of its temperature conductivity, something useful when trying to cool or heat rooms with an HVAC system.  These characteristics along with ample supply combine to make this element fundamental to the way we live. 

Copper’s link to our lives also binds it to the economic cycle.  Its price tends to move slightly ahead of the economy as firms choose to hasten or slow their production according to inventory and demand levels.  It’s ability to change ahead of the economy has earned it an honorific Ph.D. in economics (we’re not sure which school, however), so you’ll often hear it referred to as Dr. Copper.

So, what’s it been doing lately?  Great question!  Take a look at this page from Bloomberg.  You’ll notice that it peaked recently at $4.9845 per pound of copper and has taken a steep drop since then.  While many of the economic indicators we follow are still decelerating, Dr. Copper is in outright decline.

Copper’s swift fall is not the signal used to determine a recession has started.  So as President Biden suggested earlier this week, a contraction is not “inevitable.”  Atlas will point out, however, that Dr. Copper is not facing mid-term elections, so the element may not have as much at stake as the White House when it comes to crafting a narrative about the economy.  Another forward-looking economic indicator is the price of publicly traded companies, and those aren’t looking so hot lately either.  Fortunately for those in Atlas’ managed portfolio, our exposure to stocks was reduced in January, so accounts won’t need another doctor to revive them.