GLOBAL ECONOMICS AND POLITICS

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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THE METALS MARKETPLACE GAME: TOUCHING BASE (c) Leo Haviland March 16, 2015

Base metals such as aluminum, copper, lead, nickel, and tin capture far fewer headlines than the alluring stars of the petroleum complex. Nevertheless, base metals play an important position in the global economic game. Base metals are very significant not only to the economies of emerging/developing countries (think of China), but also to numerous so-called advanced nations. Despite assorted twists and turns, base metals “in general” (use the London Metal Exchange’s base metal index, “LMEX”, as a benchmark) have been in a bear path since early 2011. The renewed price meltdown in base metals over the past several months underscores recent and probable future slowdowns in real GDP growth rates in developing nations such as China. However, as emerging and developed nations closely interconnect in today’s international economy, base metal weakness probably also points to reductions in future output rates for advanced nations.

In the 2007-09 global economic crisis era and its aftermath up to the present, many significant trend changes in base metals, gold, the broad Goldman Sachs Commodity Index (and the petroleum complex), and the emerging marketplace stocks arena “in general” have occurred around roughly the same time.

The broad real trade-weighted United States dollar’s trend does not lock base metals prices, or those of any other playground, into a particular pattern. Nevertheless, the gradual strengthening of the dollar since mid-2011 roughly intertwines with the large bear move in base metals, gold’s bloody stumble since its September 2011 peak, and monumental declines in the broad GSCI (and the petroleum complex).

Emerging marketplace stocks in general, like benchmarks for base metals and commodities in general, have slumped in recent months. Further declines in the LMEX and the broad GSCI, especially when accompanied by US dollar rallies, will be a bearish warning sign (confirmation) for emerging marketplace stocks. Further noteworthy erosion in emerging marketplace stock prices likewise will be ominous for stock marketplaces of advanced nations.

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The Metals Marketplace Game-Touching Base (March 16, 2015)