The economy is ready to take off…
That’s what the world’s foremost “authority” in economics is telling us.
The last time this “authority” told us the economy was about to take off was November 11, 2016… right after the U.S. election. Since then, U.S. GDP has grown 3.8%.
The previous time before that was October 2009. When this authority spoke, GDP rose 4.7% a year later…
And on both occasions, the market shot up higher… It’s up 18% since the election. And in the 18 months following the 2009 signal, it shot up 28%.
The “authority” I’m talking about is copper.
Let me explain…
When Copper Speaks, the Economy Listens
Investors often refer to copper as “Dr. Copper.” That’s because the price of copper can signal what’s going on in the economy.
You see, nearly everything we buy contains some copper. It’s an important metal in construction, electronics, and vehicles. These sectors make up a large portion of the economy.
As consumers demand more houses and electronics and vehicles, demand for copper will inevitably rise as well.
As I told you in yesterday’s Daily, the price of copper (along with other industrial metals) is on the rise. And quite often, when you see the price of copper rising, you see the economy expanding.
But we need to see more than a small increase in copper prices. That signal I look for is copper making a new 52-week high.
This doesn’t happen often… But when it does, the market and the economy take off.
After taking a little breather from its run up after the election, copper made another run higher last month… reaching a new 52-week high.
You can see that in the chart below.
Above, I’ve compared the price of copper to GDP growth over the past 30 years. As you can see, when copper is making new highs, GDP is also rising.
This happens because copper is in almost everything we use.
Before businesses can sell the cars, houses, and electronics we demand, they must first buy the copper that goes into them.
That means demand for copper will pick up before the big sales. And that’s why copper rises immediately before the economy takes off.
Right now, copper is saying the economy is strong. And with a strong economy comes a strong stock market.
You must own stocks. If not, you’ll miss out on gains as this market rips higher.
Nick Rokke, CFA
Analyst, The Palm Beach Daily
The Year of the S&P 500
By Chris Lowe, editor at large, Bonner & Partners
This year has been the best year for the S&P 500 since 2013.
Today’s chart looks at the year-to-date return (first 174 days) of the index. It plots it against returns over the same period in each of the past four years.
As you can see, year-to-date, the S&P 500 is up 11%.
That compares with a 6% return at the same point in the year during 2016… a -5% return in 2015… an 8% return in 2014… and a 15% return in 2013.
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