ka-ching
market vibes
March 26… )
“There’s a lot of dust in the air” Austan Goolsbee, Financial Times interview. “My view is that when there’s dust in the air, ‘wait and see’ is the correct approach. But ‘wait and see’ is not free it comes with a cost (ht Alex)” Thanks Austan.
In the news
BBG says a report on the impact of tariffs on copper may be resolved within weeks instead of next October, possibly a reason copper is rallying. The US produces about 60% of its domestic consumption, and the rest is imported from Chile, Canada, Mexico, and Peru. Sixty-five percent of imports come from Chile; the rest comes from Canada and Lat Am.
The dollar value of copper imports to the United States in 2024 was approximately $17.37 billion, according to data from the United Nations COMTRADE database on international trade. With copper at $5/lb, the tariffs could yield as much as $5 billion in "external" revenue. In my opinion, Copper tariffs don't have the sniff of foreign policy leverage. Just Trump making money. There is no shortage of copper (sources Google and GROK AI).
There is still nothing explicit about tariffs on gold and silver imports. However, reciprocal tariffs set for April 2 might include precious metals. At any rate, there's no shortage of precious metals either, but these inventories will draw down quickly if imports cost an extra 25%.
The DOE reports oil stats at 10:30 today. Yesterday, the API said US crude stocks fell 4.6 mm barrels last week. Futures are a little higher on a mixed bag of items including tariffs and sanctions, but mostly the Venezuelan embargo and Middle East military movements, imo. Russia and Ukraine agreed to a Black Sea truce yesterday. In my opinion… There's no shortage of oil, and sanctions never work. In the end, Trump is going to charge a toll for every barrel … and pound and ounce crossing the border. Ka-ching!
In the markets
May WTI enters the NY session +.66 this morning. Open interest was up 7000 yesterday, a rounding error. Volumes are light. No doubt crude, like every other essential material subject to tariffs on April 2, is being hoarded to the extent future exigencies can be measured and storage will allow.
One thing I will say: all this inventory is problematic from many angles, whether barrels floating at sea or metals holed up in the Comex. The rent is expensive, plus financing, insurance, etc. Tariffs may not be automatically passed on but these costs will be.
If copper puts in an isolated high today, that would be the first sign the rally is starting to fail. I never like surges and spikes in trends. It forces short covering and fomo longs jumping in with bad location who inevitably get stopped out in a correction. The slow and steady grind up keeps savvy longs getting paid and the marginal imbalance in place. A close on the highs is always optimal, but some kind of a range for a few days would be a positive development, too.
Stocks deactivate as soon as the machines switch off in New Jersey at night. No point in posting charts or analysis yet. After the session.
Bonds are clinging to the bottom of this range. I thought they might have a chance to rally back to their POC ca 117 and develop higher. We have some manufacturing data this morning, but I doubt the bond market is going to move on it.
However, there’s a lot of data tomorrow morning.
Open interest is still falling in BTC futures, which I read as AUM continuing to dribble out of crypto.
my vibe
I think the best thing to remember as Trump practices his own special brand of disestablishmentarianism is the end game for MAGA. External revenue, streamlined Federalism, common sense libertarianism, and the restoration of the Constitutional Republic as written by the founders. Lol, a lot of isms…Which it seems he will do to the extent reasonable and tolerable in a world of 8 billion people. But then Trump will "pass the torch to a new generation," and they will do what people always do.
The best you can do is "cover your bag," taking an aphorism from the greatest game. And be loyal. Wherever that takes you. Try to win this game. This season. Stay relaxed. Quarter end and April 2 will come and go. It should be this quiet until then. Wait at the bus stop for the bus. Any trade with a stop is a good trade.
See you tonight with the wrap!
JJ
If you like reading market vibes please hit the like button, and type in your e mail below to become a subscriber.
Share selectively with friends and colleagues and follow me on X @Alyosha745
Charts and data CQG and Bloomberg
Market vibes is not a registered investment advisor, and comments are for informational use only. Any mention of a particular security, index, derivative, or other instrument is NOT a recommendation to buy, sell, or hold that security, index, derivative, or any other instrument. Market vibes makes no representations as to the accuracy of data or any attributions.
A big irony about the potential copper tariffs is the a decent chunk of what is imported from South America is likely produced by mines that $FCX has a major interest in...so basically putting tariffs on an American company...
Regarding your "Spring Weather in Texas" link, I drove straight into that storm for 5+ hours on my way from N. Texas to Colorado for Spring Break. Steady 65 mph wind with gusts 85+mph. Had to pull over and stop on two separate occasions, b/c the dust was so thick visibility literally went to zero, just like a whiteout blizzard. Couldn't see past the hood. Counted at least 30 flipped big rigs on my route. It was a terrifying experience I will not repeat.