Leo Haviland provides clients with original, provocative, cutting-edge fundamental supply/demand and technical research on major financial marketplaces and trends. He also offers independent consulting and risk management advice.

Haviland’s expertise is macro. He focuses on the intertwining of equity, debt, currency, and commodity arenas, including the political players, regulatory approaches, social factors, and rhetoric that affect them. In a changing and dynamic global economy, Haviland’s mission remains constant – to give timely, value-added marketplace insights and foresights.

Leo Haviland has three decades of experience in the Wall Street trading environment. He has worked for Goldman Sachs, Sempra Energy Trading, and other institutions. In his research and sales career in stock, interest rate, foreign exchange, and commodity battlefields, he has dealt with numerous and diverse financial institutions and individuals. Haviland is a graduate of the University of Chicago (Phi Beta Kappa) and the Cornell Law School.


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In the commodities constellation, base metals such as aluminum, copper, lead, nickel, and tin usually attract much less attention than the alluring stars of the petroleum complex. Nevertheless, base metals hold an important position in the global economic universe. Not only are they especially important for the economies of many emerging/developing countries (think of China, a huge base metals consumer), but also for several so-called advanced nations.

Of course history is not destiny. However, history reveals that major moves (trend changes) in the base metals complex (use the London Metal Exchange’s base metal index, “LMEX”, as a benchmark) nevertheless can offer important guidance for significant shifts in other marketplaces. Often LMEX major moves precede those in other financial realms.

The bear marketplace trend for base metals “in general” began in early 2011 and accelerated in 2014 and 2015. Base metals established an important bottom in mid-January 2016. This occurred alongside, though shortly before, troughs in commodities in general (and the petroleum complex in particular) and key lows in the S+P 500 and emerging marketplace stocks. The LMEX bottom also preceded the peak in the trade-weighted United States dollar and a significant yield low in the US Treasury 10 year note.

Emerging and developed countries closely interconnect in today’s international economy. So the base metals price rally since its first quarter 2016 low helped to spark optimism about improved global economic growth. However, the upward walk in base metals has been very modest compared to the sharp petroleum climb. In addition, recent LMEX highs roughly coincide with the April 2016 ones in the S+P 500 and emerging marketplace stocks. And US Treasury note yields have slipped lower since mid-March. Suppose noteworthy renewed weakness in base metals appears, with 1Q16 lows challenged or broken. This probably would signal (confirm) further slowing in real GDP expansion rates not only in China, but around the globe.


Admittedly, in a review of several very important marketplace domains during the 2007-09 global economic crisis era, a notable time lag between the achievement of a crucial price point turning level (major high/major low) in a given arena in relation to those of various other arenas sometimes appears. Nevertheless, many significant trend changes in the LMEX base metal index, the broad Goldman Sachs Commodity Index, emerging marketplace stocks “in general”, the S+P 500, the broad real trade-weighted dollar, and the US Treasury 10 year note occurred around roughly the same time. Given the preceding analysis of the 2011-present period, this underscores the importance of watching base metals as a guide to (confirming indicator for) significant trend changes in these financial arenas.

The LMEX’s lofty May 2007 pinnacle preceded major highs in the broad GSCI (7/3/08 at 894), MXEF (11/1/07 at 1345), S+P 500 (10/11/07; 1576), and Shanghai Composite Index (10/16/07 at 6124), as well as the broad real trade-weighted dollar’s April 2008 major bottom. The LMEX’s high in early February 2011 also occurred prior to (although not long before) major peaks in the broad GSCI and MXEF. And quite significantly, the LMEX’s March and July 2008 very important secondary tops occurred close in time to the major low in the TWD, the final highs in the S+P 500 (5/19/08; 1440) and MXEF (5/19/08 at 1253), and the broad GSCI’s peak. In addition, the LMEX’s December 2008 major low occurred relatively near in time to turns in these marketplaces.

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Base Metals and Other Marketplace Travels (5-16-16)

SHOWING THE WAY: BASE METALS © Leo Haviland October 15, 2013

Industrial metals such as copper and aluminum of course have different supply/demand fundamentals. They intertwine in diverse ways with significant movements in interest rate and currencies, especially the United States dollar. The overall base metals complex often travels in the same fashion (direction) as precious metals. Yet focus on global stock marketplaces in relation to base metals “in general”. Significantly, from the later stages of the glorious Goldilocks Era to its dreadful decline, from the ensuing worldwide recovery up to the present, trends in base metals “in general” very often show the way or confirm trends in key global stock marketplaces.

Price trends in base metals indeed have been closely tied to the China growth story. Yet significant marketplace trend changes in base metals also fit those in emerging stock marketplaces as a whole. The voyage of the base metals complex since roughly mid to late 2007 closely resembles that of emerging marketplaces “in general”. What about in relation to America’s S+P 500? Since its high on 2/14/11 at 4478, the London Metal Exchange base metal index (“LMEX”) has been in a massive bear trend, falling about 35.0 percent to its 6./24/13 low. In contrast, the S+P 500’s glittering advance has continued up to a 1730 high on 9/19/13. But as before 2011, the timing of the S+P 500’s turning points from 2011 to the present in its overall upward climb generally fit rather closely to those in the LMEX index.

The sustained decline in the base metals battleground “in general” since first quarter 2011 continues to signal slower growth in emerging marketplaces in general and in China in particular. Note the continued lowering of growth estimates for China in recent months. In addition, despite the overall directional price trend divergence between the LMEX and the S+P 500, the sustained base metal weakness warns that growth probably will be weak in advanced nations, and that the glowing strength in the S+P 500 will not be eternal.
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METALS AND MELTDOWNS © Leo Haviland, September 26, 2011

The onset and acceleration of vicious bear trends in base metals “in general” such as copper in 2007 and 2008 preceded or coincided with meltdowns in other stock and many other commodity marketplaces. In late 2008, the London Metal Exchange’s base metal index’s bottom dawned only about three months before the major low in the S+P 500. What about 2011? Base metals reached their 2011 summits, as during the early stage of the global economic disaster, around the time of those in the S+P 500.

Erosion in base metal prices, especially as it now coincides with tumbles in stock arenas and in many other commodity playgrounds and some strength in the battered US dollar, confirms and points to further worldwide economic weakness. These intertwined marketplace trends underline that America’s policy actions (and related ones by many other nations) such as gigantic deficit spending, massive money printing, and sustained rock-bottom government interest rates have not sufficiently solved the severe debt and leverage problems that emerged into view in 2007 and 2008.

Although a repeat of the massive price declines of 2008 are unlikely, the current bear trends of 2011 in base metals probably will continue, as will those in equities and many other commodities.

The linkage of the base metal complex to stock marketplace and US dollar moves and interest rate policies and trends underscores the benefits of paying close attention to base metals. There has been a close bond in recent years between trends in the S+P 500, commodities “in general”, and the United States dollar. For example, in 2007, the LMEX major high on 5/4/07 at 4557 preceded the S+P 500 plateau on 10/11/07 at 1576. Eventually the crucial 2008 final tops in various marketplaces arrived. Note the timing coincidence in the final highs in the LMEX (3/5 and 7/2/08), the low in the broad real trade-weighted dollar (April 2008), the final top in the S+P 500 (5/19/08, midway between the LMEX 2008 tops), and the broad Goldman Sachs Commodity Index (7/3/08). Compare the 2011 timing coincidence in tops in these various marketplace domains. For example, the LMEX high on 2/14/11 at 4478 is very close in time to the initial S+P 500 top on 2/18/11 at 1344; compare 4/18/11’s 4469 LMEX high with the S+P 500 peak on 5/2/11 at 1371.

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Metals and Meltdowns (9-26-11)

THE MONEY JUNGLE (PART ONE) © Leo Haviland, May 9, 2011

The S+P 500 is at or near an important high in price and time terms. Watch the major resistance of 1440 (the May 2008 final high before the acceleration of the worldwide economic crisis), plus or minus five percent. Commodities “in general” likewise have achieved or soon will make a noteworthy top. Suppose these reversals haven’t begun yet. What is a guideline for the latest time for them? At the risk of being attacked by hunters armed with hindsight wisdom, let’s climb out on a limb and say midsummer 2011. However, the Federal Reserve and its allies will rush to the rescue and strive to prevent any sustained major fall in equities.

What about the broad real trade weighted dollar (“TWD”)? For the near term, its April 2011 level of 81.3 represents a low or is close to one, with its timing linked to that in stocks and commodities. The United States 10 year note yield will continue to meander sideways. However, yields eventually will move higher and attack the four percent barrier.

In recent years, the linkage between equities, commodities, the broad real trade weighted dollar, and interest rates has been close.

Focus first on price and time notes for these arenas in the period of the dismal depth of the worldwide financial crisis.

Timing may not be everything, but it’s pretty important in both music and marketplaces.

What does this forest of data for stocks, commodities in general, and the broad real trade weighted dollar portend for their current and future environment? There have been two alternating marketplace songs in recent years. Strong stocks/strong commodities/weak dollar has been one clear tune, with sagging stocks/cratering commodities/strong dollar the alternative one. It is very likely that a major or any very significant high in stocks and commodities will occur around the same time (within a couple of months). That peak probably will happen around the time of an important low for the dollar.

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The Money Jungle (Part One)