More supply/demand imbalance for copper … the “commodity comeback” of 2024 … an important live event next Tuesday with Louis Navellier … the power of “social signals” for earnings
Yesterday brought yet another headline supporting what we believe is a fat pitch opportunity for putting a wad of cash in your pocket.
From CNBC:
Copper could skyrocket over 75% to record highs by 2025 — brace for deficits, analysts say
If you believe in a soft landing in 2024… if you’re a tech/AI bull this decade… if you support the green energy transition… if you’re confident the Fed will cut rates many times this year… then you’re bullish on copper by proxy.
That’s because copper is one of the most important industrial metals in the world.
It’s critical for a healthy, growing global economy… it’s a “must have” for tech/AI advancements (due to massive computing needs and copper’s role in computing hardware) … and it’s a lynchpin component of green energy technologies.
Yet, despite the tsunami of demand on the way, reports continue to show that current copper supply is insufficient to meet the coming need. Yesterday’s story from CNBC is just the latest report highlighting this imbalance.
From CNBC:
Copper prices are set to soar more than 75% over the next two years amid mining supply disruptions and higher demand for the metal, fueled by the push for renewable energy.
Rising demand driven by the green energy transition and a likely decline in the U.S. dollar in the second half of 2024 will push copper prices higher, according to a report by BMI, a Fitch Solutions research unit…
To be clear, that 75% forecasted jump in copper’s price could translate into vastly greater investment returns from specific copper mining stocks.
For example, when the commodities boom began four years ago, our macro expert Eric Fry put his Speculator subscribers in an options trade on copper mining giant, Freeport-McMoRan (FCX).
Roughly a year-and-a-half later, those subscribers locked in a gain of 1,074%. That turns $10K into more than $107,000.
Driving a potential repeat of this copper-related 10X return is what Eric has called the “commodity comeback” of 2024
It involves the second act of the commodity boom that began back at the turn of the decade.
In summer 2020, Eric made the call that a new commodity supercycle had begun. For newer Digest readers, here’s Eric explaining what this is:
Unlike stocks, which tend to move higher over time, commodity prices cycle through powerful multiyear booms, followed by spectacular multiyear busts.
These are called “supercycles.”
No two supercycles are identical. But they all share two distinct traits:
1. In their youth, they produce huge investment gains.
2. In their advanced years, they produce huge investment losses.
That’s why it’s so important to pay attention to them early on. They grow up so fast.
The easiest way to monitor a commodities supercycle is through the TR/CC CRB Commodity Index (CRB), which holds a basket of global commodities.
Below, we look at the CRB Index over the past 20 years. Note the exceptional timing of Eric’s “buy” recommendation based on his identification of a new supercycle, as well as the recent, two-year stretch of sideways consolidation (in blue).
As we’ve pointed out before in the Digest, these extended price lulls do not mark the end of supercycles
Here’s a Goldman Sachs Commodity Outlook piece from last year with some helpful perspective:
Commodity supercycles never move in a straight line; rather, they are a sequence of price spikes, with each high and low higher than the previous spike.
Commodity prices, unlike financial markets, perform an economic function of balancing supply and demand, so once high prices have rebalanced the market in the short term, the high prices are no longer needed, and prices come crashing back down as we witnessed [two years ago].
But ending one spike doesn’t mean the end of the supercycle – long-run supply issues take years to resolve.
Given the growing imbalance between supply and demand, it’s just a matter of time before the second leg of this commodity boom takes off – even more so if you believe we’ve skirted a global recession.
For an easy way to play copper, there’s Global X Copper Miners ETF, COPX. Eric has recommended COPX in the past. His official trades have profited to the tune of 100% and 85% respectively (he sold in tranches).
You can also circle back to Eric’s 10X winner Freeport-McMoRan. While he closed the trade in his Speculator service, it’s still in Eric’s Investment Report portfolio today, sitting on a 225% gain as I write Thursday morning.
We’ll keep you updated, but don’t let this opportunity slip by. All signs point toward higher copper prices over the coming years.
Switching gears, for a faster opportunity to profit, put next Tuesday on your radar
In the long-term, what drives stock prices are earnings. But in the short-term, what drives stock prices are surprises to expectations.
Whether it’s an unexpected jump in quarterly revenues, a surprise reduction in forward guidance, or a step-down from a CEO that comes from out of left field, when reality fails to match expectation, stock prices move.
Consider how a company can report an earnings-per-share loss of $1. But if the expectation had been for a loss of $3, this is a huge, positive surprise to expectations. The stock price is likely to soar, even though the company is hemorrhaging money.
On the other hand, if a company reports earnings per share profits of $5 but the expectation was for $8, that stock is going to tank even though it’s generating healthy profits.
Bottom line: In the short term, surprises move stock prices.
So, the question becomes “is there a way to get a bead on these surprises ahead of earnings?”
Yes – and that’s the focus of a special live event next Tuesday when legendary investor Louis Navellier will be sitting down with Landon and Andy Swan, the founders of LikeFolio and the brains behind Derby City Insights, one of InvestorPlace’s corporate partners.
How fundamental superiority and social signals provide clues about earnings outperformance
Regular Digest readers are familiar with Louis’ market approach. In short, he’s a quantitative investor who uses sophisticated computer algorithms to scan trillions of data points to identify stocks with superior fundamentals.
When this fundamental superiority translates into strong, expectation-topping earnings that surprises Wall Street, Louis’ stocks leap higher.
So, where do Landon and Andy fit in?
The answer ties back to how to get a bead on earnings surprises ahead of time. And this points us toward something called “social signals.”
Here’s Louis to explain:
Andy and Landon have their own system – LikeFolio – that turns hundreds of millions of social data points into proprietary demand and sentiment metrics to tell them when a stock could be ready to lift off.
I think of this approach as using artificial intelligence to help gauge consumer sentiment.
Imagine having an awareness that tens of millions of people have been discussing, say, a specific clothing retailer. In their social media accounts, they’re tagging photos with the name of this retailer… they’re bragging about wearing this brand in online platforms… they’re having in-app conversations about wanting to purchase upcoming clothing releases from this retailer…
For any individual investor, there’s no real way to grasp the size and momentum of this social data. But with an AI tool engineered exclusively for such a purpose, the data is manageable – and provides powerful, actionable insights.
Back to our retailer hypothetical, let’s say that our AI tool found an avalanche of bullish social signals for this retailer. That would suggest one thing…
An increased likelihood of a robust earnings surprise to the upside. And for investors who have this tip-off ahead of time, this has the potential to be quite lucrative.
This coming Tuesday night at 8 PM ET, Louis, Landon, and Andy will be discussing how to capitalize on these social signals and ensuing earnings surprises during their event, The A.I. Earnings Predictor Summit
Back to Louis:
Andy and Landon use consumer insights to spot which companies are gaining (or losing) momentum on Wall Street. That’s the “iron law” of the stock market.
Understanding that the major drivers of a stock’s prices are earnings (or the anticipation of them) and developing advanced algorithms that can help us spot the opportunities earnings create is our shared secret to unlocking profits in the market.
We’ll bring you more details here in the Digest over the coming days, but to reserve your seat for this free event, click here. We’re anticipating a big turnout.
I’ll give Louis the final word:
Earnings season is just around the corner – the 10-week profit bonanza when publicly traded companies report their quarterly (and full-year) numbers, and stocks make some of the biggest moves we’ll see all year.
Join us on January 9 at 8 PM ET to listen in on our conversation… and to find out how YOU can take full advantage.
RSVP here now to secure your spot.
Have a good evening,
Jeff Remsburg
