February Investment Perspectives

In this month’s Investment Perspectives, the Investment Strategy Group discusses how the pursuit of a soft landing continues in the new year and anticipates volatile but trending bond markets. Plus, strong market performance in December points to potential positive results for 2024.

In this month's issue:

 

Copper Is Seeing Red

Mark Luschini
 

A couple of months ago, in this publication, we wrote about the prospects for uranium in the context of the almost ubiquitous employment, or at least acceptance, of nuclear energy as a means to solve the world’s need for plentiful, consistent, and clean energy. We referenced the years of underinvestment in uranium mining that is complicating the ability to fulfill the existing demand without consideration for future developments that could lead to supply imbalances for years to come. We also mentioned copper being in a similar position.

As one of the red metals, which include brass and bronze, copper (atomic number 29, and symbol Cu on the chemical periodic table), is a soft element renowned for its conductivity. Historically, it has been referred to as “Dr. Copper” due to what many consider, perhaps somewhat tongue in cheek, that it is the only metal with a PhD in economics. The title infers an academic ability to provide unusual insight into the health of the global economy. Why? Because copper possesses the ability to transmit electricity efficiently and is widely utilized in the early stages of almost all industrial activity and construction, both of which are barometers of economic fitness.

 

4 Key Issues for 2024

Guy LeBas
 

As an annual follow up to Investment Perspectives’ “Year in Review,” this second issue of 2024 will focus on four key themes that we believe will dominate the bond markets for the remainder of the new year.

In 2023, we identified the risk of a policy error (“we have yet to feel the downside from rate hikes”), disinflation (“core CPI could end up running below 2% by late-2023”), construction jobs (“recession is largely contingent on builder layoffs”), and credit confidence (“credit market performance hinges on market confidence”) as the major themes for the year. Three of these key themes proved significant, and the fourth was a nothingburger.

 

Earnings Matter

Gregory M. Drahuschak

 

In the short term, the stock market reacts to a wide range of items, but in the long run, earnings are what really matter.

The earnings report barrage this month is critical to the stock market’s intermediate-term direction as the earnings bar for some of the market’s most prominent names is quite high, especially considering the rise in the price of their stocks in a very short period.

In recent months, the stock market has focused on the potential that 2024 earnings could be up by a low double-digit percentage, but lately that assumption has been questioned.

 

You can read the full Investment Perspectives here.

 

 

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