Last week, I attended a fantastic conference put on by the folks of Corporate United, one of the largest GPO’s (Group Purchasing Organizations) in the country. Besides keynote speaker Jim Donald (ex-CEO of Starbucks, who was fantastic by the way), the event generated a good deal of discussion not only around the economy in general but various policy initiatives in particular. Some of those policy initiatives we will cover in posts later this week (e.g. carbon cap and trade and the stimulus plan). In the meantime, some of the water cooler chat centered around the economy in general and a few key questions in particular such as:
- Have we hit bottom?
- When do you think prices will start to increase? (They have already in many metals categories. We’ll get onto that in a moment)
- What do you think of the stimulus plan/has it helped?
- Should we start locking in on metals costs because of inflationary concerns?
- When will inflation start?
- What do you see in terms of manufacturing demand?
We won’t venture into answering any of those questions though we will point readers to a couple of recent metals related news stories that we find quite telling and insightful. The first piece appeared last week entitled: Time to Ã‹Å“sell in May and go away’? The most telling conclusion of that story ” fundamentals, which support the proposition [Editor’s Note: the proposition refers to sell in May] and technicals which do not. The second piece, Price data may stoke fears, from The Globe and Mail quotes Avery Shenfeld, an economist and strategist with CIBC World Markets Inc, base metals tend to be among the first to rebound in a recovery. The article also suggests that a rise in steel prices precedes an economic recovery by two months and copper and aluminum gains coincide with a recovery.
Steel prices continue to fall. And we lean on the side of market fundamentals too ” the economy may have reached bottom but oversupply still characterizes many metal markets. Sell in May sounds like a good idea. What do you think?