We’ve heard our share of doomsday reports about the US and global economy these past few months.
Whether folks are expecting a full-on, End of Days-style apocalypse, or are just plain-ol’ “meh” about the whole thing, the consensus seems to be that nothing good will come of the current situation.
Our friend Bob Garino of Export Tax Advisors, and former director of commodities at the Institute for Scrap Recycling Industries (ISRI), sees a bit more upside than some of these other analysts.
In Bob’s latest commodity newsletter, he strikes a rather positive – if not jaunty – tone:
“We’re not discouraged. Over the past couple of months, while most published reports and talking heads were thinking in terms of a Ql GDP annual growth rate of 1.5% to 2%, ETA’s expectation was always closer to 3%. Our view was based on positive domestic industrial production and consumer spending, a resurgent housing market, and strong corporate earnings.”
Are those trends sustainable?
After paying the necessary respects to the temple of EU/China Demand Downturn, he continues, “It’s not that we’re overly optimistic about the U.S. or global economies, but we do think that most of the macro reports are focused on the negative, with commentators too quick to dismiss anything that points to growth and expansion for reasons that elude us. The global economy is growing, sub par, for sure, but it’s nowhere near contraction despite all the negativity that’s directed towards Europe.”
We would generally agree there – but it’s tough to forget the global repercussions of the 2008 crash, and if one is a believer in the Butterfly Effect (or at least latches onto the simple definition of the theory, like me), it’s also tough to discount emerging markets’ stumbles, especially in how they could potentially ripple and affect the US. After all, inflation might be low, but as Bob acknowledges, the latest durable goods report is not that great – US domestic consumption spending, cars notwithstanding, still kind of sucks.
Next point: “The good news here, however, is that we’re also seeing a prolonged and uncharacteristic period of low price volatility…the net result of all this is that we believe that upside price pressure is slowly building for the base metals complex.”
Yes, upside price pressure may be rising, but whoa there: “prolonged…low price volatility?” As far as metals commodities are concerned, that sentiment is contrary to what we’ve seen on MetalMiner’s Monthly MMI® Report. For example, our Copper MMI® has shown some considerable volatility over the past several quarters:
Yes, copper and nearly all other big-contract base metals (save for tin), have averaging down so far in 2013. However, aluminum, and especially stainless steel, have also seen considerable volatility of late. Which is to say, buying organizations can’t really sit on their laurels and expect to ride the “down-slide.”
Thanks to Bob Garino and Export Tax Advisors for offering his always-fun-to-read views.