Collateral Damage... August 9th, 2019 by John Gross

We are told that American farmers have been the hardest hit in the trade war, thus they will be compensated for their losses.

No question, those who till the soil have been hurt, but the damage extends way beyond the farm belt.

Just 14 months ago, the Spot price of copper stood at $3.30 with the market in a rising trend.

On Friday, copper closed at $2.58, off 72¢, or 22% from June 2018 when the first trade shots were fired.

So the damage extends to any company – from miners, manufacturers, and distributers of copper products, to the entire recycling industry.

And of course, it is not just copper that has been affected, as most nonferrous metals, and industrial materials are well off their highs of last year.

Global energy and equity markets have also lost value, as fears of slower growth take their toll, and the damage spirals out further.

Last week we saw currencies being devalued, and interest rates falling, with precious metals rising as the flight to safety continues.

Although it was initially thought differences could be / would be ironed out, those hopes have been dashed on more than a few occasions.

Last week the spread on 2 and 10 year treasuries fell to a new low of just 10 points, as illustrated in the first two charts of this report, leading some to believe an inversion is coming.

May be time to hunker down, as there doesn’t seem to be any end in sight to this increasingly complicated mess.

Regards,
John

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