“If you fail to prepare, you’re prepared to fail.” ― Mark Spitz
Chart of the Day
Good morning!
Yesterday’s announcement of U.K.’s Anglo American’s merger with Canada’s Teck Resources (TECK 1.74% ) put a spotlight on mining companies in general and copper in particular. If all goes as Anglo proposes, however, the result would be one of the largest copper producers in the world, with an anticipated annual output of as much as 1.2 million metric tons.
There are potential obstacles that must be navigated for the deal to be completed, including the possibility of a bidding war for Teck, with some speculating that U.S. copper giant Freeport McMoRan (FCX 3.10% ) might wish to make a play for Teck as well. The more interesting issue might be how Canadian regulators and authorities respond to the proposed deal. Like the U.S., Canada has designated copper as a critically important material and Canadian authorities are likely to view any change in Teck’s status as strategically important. This is likely why even though Anglo American is headquartered and listed in London, the two companies noted that Anglo Teck is slated to be headquartered in Vancouver.
Copper prices have had a wild ride on global commodities markets this year: prices rose earlier in the year as purchasers stockpiled the metal ahead of President Trump’s anticipated tariffs, then fell after the actual tariff announcement exempted refined copper from the tariffs possibly until Jan. 2027. (The current 50% tariff on imported copper applies to semi-manufactured copper products like wiring and tubes.) Yet the likelihood of copper prices resuming their upward trajectory is high.
Trump has emphasized increasing domestic production of copper, unhappy that the U.S. currently imports about 45% of its refined copper, especially from Chile. However, it can take more than two decades to develop a new copper mine, and expanding existing mines takes time as well. In the meantime, many analysts suggest that a global shortage of copper is likely within the next decade.
As most likely know, copper is critical to AI, both directly and indirectly: a conventional new data center requires as much as 5,000 tons of copper, while new hyperscaler data centers used for AI can require up to 50,000 tons. That’s before we take into account the copper needed to update the power grid to supply those data centers with electricity. Outside of tech, every (gas-powered) automobile contains about 50 pounds of copper, with electric vehicles containing about double that. Every new single-family home uses about 440 pounds of copper. Basically, almost every aspect of modern life involves copper. On the bright side, though, at least we’re about to stop making pennies. (Hey, every little bit counts.)
Thus, by virtue of copper’s importance to modern life, the as-yet-hypothetical Anglo Teck would become arguably one of the more important companies in the world, combining Teck’s copper mines in British Columbia with Anglo American’s and Teck’s respective copper-mining interests in Chile and Peru, each already considerable in their own right.
Share your thoughts
Do you think the Anglo American-Teck announcement will spur more M&A activity in the mining industry? Click here to send us your response.
📧✍️Here’s what a reader commented📧✍️
Question: Do you think Nvidia can continue to climb even as its customers keep seeking to develop in-house alternatives to its AI chips?
Answer: I agree wholeheartedly that Nvidia will remain at the front of the pack like Ferrari, Hersheys, Kleenex, etc. While there will be more competition, Nvidia won’t stand still. They’ll be continuing to develop increasingly better chips and just as importantly, increase production.
Catch up with FS Insight
The balance of data points to softer labor markets, including August jobs report and these recent BLS labor market revisions. This, in turn, is dovish, which is good for equities.
Technical
Given ORCL’s bullish guidance on their Cloud Infrastructure outlook, the shares surged more than 10% after-hours on Tuesday. While the bullish results out of ORCL can help drive the Software sub-sector higher in the short run, in my view it likely won’t translate into meaningful outperformance of software relative to technology.
Crypto
Nasdaq moving into tokenized equities reinforces tokenization as a secular trend. Meanwhile, Solana DAT inflows are substantial enough to warrant an increased allocation in Solana despite macro uncertainties.
News We’re Following
Breaking News
- Wholesale prices unexpectedly declined 0.1% in August, as Fed rate decision looms CNBC
- Trump can’t fire Fed Governor Lisa Cook for now, judge says BBG
- Poland closest to open conflict since World War Two, PM says after Russian drones shot down BBC
Markets and economy
- U.S. economy is worse than thought with 1.2 million fewer jobs — what that means for the Fed CNBC
- Inflation erased U.S. income gains last year WSJ
- US holiday sales set for slowest growth since pandemic, Deloitte report forecasts REU
Business
- Klarna prices IPO at $40, above online lender’s expected range CNBC
- Trump moves to crack down on drug advertising NYT
- Apple Event 2025: iPhone Air, AirPods Pro 3, Apple Watch Ultra 3 CNET
Politics
- RFK Jr.’s new MAHA roadmap is finally public POL
- Trump’s ICE targets Chicago amid objections from mayor, Illinois governor AX
- California limits on ‘addictive’ social media feeds for children largely upheld REU
Overseas
- Donald Trump tells EU to hit China and India with 100% tariffs to pressure Vladimir Putin FT
- Macron names ally Sébastien Lecornu as new French PM BBC
- Israel gambles on decapitating Hamas in Qatar, shocking the Gulf ECON
Of Interest
- Scientists are baffled by a powerful and long-lasting gamma ray explosion outside our galaxy AP
- More children obese than underweight globally, UN report says SEM
| Overnight | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||
| APAC | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||
| FX | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||
| UST Term Structure | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||
| USD HY OaS | ||||||||||||||||||||||||||
|
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 9/10 | 8:30 AM | Aug PPI m/m | 0.3 | 0.9 |
| 9/10 | 8:30 AM | Aug Core PPI m/m | 0.3 | 0.9 |
| 9/11 | 8:30 AM | Aug CPI m/m | 0.3 | 0.2 |
| 9/11 | 8:30 AM | Aug Core CPI m/m | 0.3 | 0.3 |
| 9/11 | 8:30 AM | Aug CPI y/y | 2.9 | 2.7 |
| 9/11 | 8:30 AM | Aug Core CPI y/y | 3.1 | 3.1 |
| 9/12 | 10:00 AM | Sep P UMich 1yr Inf Exp | 4.7 | 4.8 |
| 9/12 | 10:00 AM | Sep P UMich Sentiment | 58 | 58.2 |
| 9/16 | 8:30 AM | Aug Import Price m/m | n/a | 0.4 |
| 9/16 | 8:30 AM | Aug Retail Sales m/m | 0.3 | 0.5 |
| 9/16 | 10:00 AM | Sep Homebuilder Sentiment | n/a | 32 |
