In this Stockhead series, investment manager James Whelan, managing director Barclay Pearce Capital Asset Management, offers his insights on the key investment themes and trends in domestic and global markets. From macro musings to the metaverse and everything in between, Whelan offers his distilled thoughts on the hot topic of the day, week, month or year, from the point of view of a professional money manager.
Morning all,
Firstly a check in on copper, which saw an amazing rally since February, but after the lunacy of the last few weeks we’re hesitant to charge in here.
A little tongue in cheek also but when every second podcast is about something then definitely don’t go rushing in to buy it.
Speaking of which, we actually did touch on it and much more on the Friday podcast.
We also talk to the head of Team Travel and Logistics at the NFL team Las Vegas Raiders.
A brilliant chance to catch up with someone tasked with the role of moving 180 people from one place in the US to another for a few hours and then move them back, fed and watered. An absolute work of wizardry, spoken as someone managing a team that sometimes find it difficult to be in a meeting room for 15 minutes at a week’s notice.
Link here for the podcast with lots more goodies contained.
Also speaking of which there’s a nice little explainer podcast that actually explains more of the direct reasoning for the spike.
Search for the “Goldman Sachs The Markets” podcast and listen to their rep from the Commodity Sales and Trading Team, Adam Gillard discuss the arb that emerged between London and the US (LME & COMEX) in price.
Then the arb really became more profitable as the prices of copper on the two exchanges moved further apart.
Here’s the quote:
“Because the price differential between copper in the US and copper in Europe and Asia became so wide that in theory, physical participants could move physical copper between Europe and the US and make money. Thus, the paper arbitrage, so the difference between those two copper prices, should in theory narrow. So macro buying on the medium term structural bull thesis caused the ARB to rally and that caused people who are short the arbitrage, so short COMEX and long LME to stop out of their position, which resulted in further momentum buying.”
Been on telly
I went on ausbiz last week and had a little look at some names to get ready for the next wave.
I still like Alma Metals (ASX:ALM) but we’re putting together a basket of names we like this week and I’ll publish that when I get a few seconds to organise it.
Data Centred
Also, and this is from the recent newsletter from Global X, one of the big copper requirements is going to be (already is) in data centres. I’ve mentioned the data centre thing before but AI going exponentially exponential is a free kick for the increased demand on data centres and power required to run them.
We are not ready.
Meanwhile inflation is solved, get involved(er).
Tongue in cheek again with this one but the main gauge the Fed uses for inflation (core PCE ex food & energy) is expected to be low. See above.
Keep in mind we’ve been riding this dumb merry go round where inflationary data cycles between overheating and overheating slower.
Markets ebb and flow based on it and so much for the “sell in May” crowd because we’re a few days away from one of the best Mays THIS DECADE.
So if we have a little pullback then don’t be surprised and use it as a change to add. Also this PCE number comes out on Friday, and if it’s hotter than the expectations then expect swift profit taking.
AMERICANVA
Finally Canva have just made an announcement about something.
I’m not here to talk about that, but I was reminded as to how I will never work for big tech for just this reason.
this is why australian companies should stop hiring americans pic.twitter.com/qVsy38aUx9
— des (@dotnetschizo) May 26, 2024
Dancers, rap singers, ugh.
Stay safe and all the best,
James
The views, information, or opinions expressed in the interview in this article are solely those of the writer and do not represent the views of Stockhead.
Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.
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