Earlier Monday in our Morning Lineup post, we highlighted the recent short-term weakness in gold just days after it hit all-time highs.  While the declines are disheartening for gold bulls, they can take comfort in the fact that at least gold has been doing better than copper.

Copper prices rallied in the second half of 2022, but that rally stalled out in early January at just over $4.30 per pound, below its highs from last May.  Since then, prices have experienced little in the way of positive momentum, falling below both the 50-DMA and 200-DMA.  Copper is now down over 15% from its YTD high, and it’s testing the bottom of its longer-term uptrend channel.

On a five-year basis, you can see again how copper prices are currently testing a long-term uptrend after carving out a downtrend that has been shorter-term in length.

A look at the relative strength of copper is where the relationship between the two commodities really gets interesting.  From May 2018 through May 2020, copper prices consistently underperformed gold, and this was a period that included what was a US manufacturing slowdown ahead of what became a full-blown economic shutdown during COVID.  As governments and central banks flooded the economy with stimulus, the roles of copper and gold completely reversed, and in the span of under a year erased two years of underperformance.  Then, from late February 2021 through June 2022, the two commodities performed roughly in line with each other as there was little movement in the relative strength of the two commodities.

In the first half of 2022 as the FOMC started ratcheting up the rate hikes, copper started to lose ground versus gold, and just in the last few weeks, copper’s relative strength has dropped to its lowest level since the start of 2021!  If copper’s performance is a sign of the strength or weakness in the global economy, someone better start heating up the chicken soup.

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Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

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Economy

IRS Weighs Creating a Government-Run Tax-Prep Option (WSJ)
The IRS is considering the creation of a government-run tax preparation option to simplify the process for taxpayers. The option aims to provide free tax preparation services for individuals with simpler tax situations, reducing the burden of hiring third-party tax preparers and saving consumers a lot of money. [link]

NYC Skyscrapers Sit Vacant, Exposing Risk City Never Predicted (Bloomberg)
NYC office vacancies hit a record of 22.7% this year, or more than twice the historical average.  Worse still, is that the vacancy rate won’t drop below 19% until at least 2026. [link]

What if San Francisco never pulls out of its ‘doom loop’? (FT)
With accidental overdoses, abandoned houses, record crime, and a homeless population of 1% of the city’s entire population, San Francisco has fallen on hard times. What will it take for the city to break out of its doom loop? [link]

The ‘great resignation’ has become the ‘big stay,’ says economist: How Gen Z, millennials can benefit (CNBC)
After a year in which employees faced seemingly unlimited job opportunities, the labor market has softened. “The labor market is no longer in job switchers’ favor.” [link]

International

Nuclear Tests May Be Back on Moscow’s Agenda (Foreign Policy)
With their arsenals aging, the possibility that Russia and the United States will resume nuclear tests would undermine long-term nonproliferation efforts.  Any resumption could have serious implications on arms control agreements and overall stability. [link]

Japanese Stocks Have Hit a 33-Year High. Warren Buffett Helped. (WSJ)
Foreign investors have purchased a record amount of Japanese stocks over the last six weeks, and it appears as though Warren Buffett may have started the stampede. [link]

Science and Nature

Did Scientists Accidentally Invent an Anti-addiction Drug? (The Atlantic)
An increasing number of patients taking Wegovy (aka Ozemoc) have reported that the drug has not only suppressed their appetites, but it has also reduced the urge to drink, shop, smoke, or even bite their nails. [link]

A Scientist Says He’s Solved the Bermuda Triangle, Just Like That (Popular Mechanics)
Karl Kruszelnicki claims he has solved the mystery of the Bermuda Triangle. He says that there is no evidence that mysterious disappearances occur with any greater frequency than in other well-traveled regions of the ocean. [link]

‘Planet killer’ asteroids pose no threat to Earth for at least 1,000 years (Live Science)
Well, as crazy things have become these days, we can all take comfort in the fact that a world-ending asteroid blast will not be a problem…until at least the year 3000. [link]

History

Titanic: First ever full-sized scans reveal wreck as never seen before (BBC)
The first full-sized digital scan of the Titanic, which lies 3,800m (12,500ft) down in the Atlantic, has been created using deep-sea mapping. Check out the article for some great photos. [link]

Human-evolution story rewritten by fresh data and more computing power (Nature)
New research based on large-scale computer models is moving away from the theory that humans originated from a single region of Africa. [link]

What Happened in 2022: An Analysis of the 2022 Midterms (Catalist)
A detailed and long read look at national election results for House, Senate, and Gubernatorial races in the 2022 elections. The bottom line: results defied conventional wisdom and historical trends. [link]

Food and Beverage

Why it’s okay to ignore food expiration dates (Washington Post)
Most foods have them, but how accurate are the “sell by’ dates on most foods you buy, and will you get sick if you eat something that’s past its expiration date? The bottom line is that most of the dates have nothing to do with safety.  Best bet? If it doesn’t pass the smell test, don’t eat it. [link]

The Oscar Mayer Wienermobile Has Lost Its Wiener to Big Beef (Motor Trend)
Goodbye, Wienermobile. Hello Frankmobile.  After nearly a century, Oscar Mayer’s iconic Wienermobile is getting a name change to help draw attention to the company’s ‘100-percent beef’ new hot dog recipe Drivers of the Frankmobile will now be called Frankfurters (instead of Hotdoggers), and Wiener Whistles will be known as Frank Whistles going forward. [link]

The Health Menace Inside Your Sandwich (WSJ)
Recent studies have found that processed meats increase a person’s risk of diseases like cancer and heart disease.  The key ingredient in these products is large amounts of nitrates and sodium.  Is Boar’s Head the next target of the mass tort machine? [link]

AI & Technology

Everyone should use Personal Voice; it does in 15 minutes what currently takes several weeks (9to5mac)
Apple has developed Personal Voice which is a feature that can learn your voice in 15 minutes and turn text that a user types into the interface into audio of their own voice. So, now you really have no idea if the person on the other end of the line is a person or a machine. [link]

Apple Restricts Employee Use of ChatGPT, Joining Other Companies Wary of Leaks (WSJ)
Due to concerns that workers who use these types of programs could release confidential data, Apple is prohibiting employees from using Copilot. [link]

How ChatGPT will raise the bar for millions of entry-level jobs (Fast Company)
Tools like Chat GPT will have major impacts on the labor market in the future with a particularly large impact on the entry-level jobs market. [link]

Lawmakers put on pressure to protect AM radio in vehicles (The Hill)
Following last week’s article discussing how AM radio could become a casualty of the shift to EVs, lawmakers are pressuring car companies to keep talk radio alive. “If Elon Musk has enough money to buy Twitter and send rockets to space, he can certainly afford to include AM radio in his Teslas”. [link]

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Have a great weekend!

Ever since the Federal Reserve started talking about hiking rates at the start of 2022, stocks and bonds have been joined at the hip. Using the iShares 20+ Year Treasury ETF (TLT) as a proxy for the bond market, the correlation between its closing prices and the S&P 500 (using SPY) has been +0.79, implying a very strong correlation.  Visually, it’s also easy to see the relationship as the two sold off throughout most of 2022 and then bottomed out early in the fourth quarter.  From those lows through early April, the positive correlation between the two continued, but ever since then, the paths of the two ETFs have diverged.  Since April 6th, TLT is down 6.8% while the S&P 500 is up 2.7%.  As the sell-off in Treasuries has picked up steam in recent days, market watchers have been expecting stocks to start following suit.  Bulls, on the other hand, are hoping that this is the start of an amicable separation between the two.

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Every day it seems the gap just keeps getting wider, and today the YTD performance spread between the Nasdaq and the DJIA widened out to over 20 percentage points – or the equivalent of the traditional threshold for a bull market.  As of Thursday afternoon, the Nasdaq was up 20.4% YTD while the DJIA was barely hanging above the unchanged line with a gain of 0.3%. Since the Nasdaq launched in early 1972, there have only been three other years where the index outperformed the DJIA by more than 15 percentage points YTD through 5/18, but 2023 is on pace to go down as the only year where the performance gap exceeded 20 percentage points.

The question going forward is, will the Nasdaq continue its outperformance for the remainder of the year, or will the DJIA step up and play catch up?  There have only been three other years where the Nasdaq even outperformed by 15 percentage points at this point in the year, but below we have provided a snapshot of both indices during those three years.  For each set of charts, we show the performance of each index in the top charts where the gray shading shows the period from the start of the year through 5/18.  Underneath each of those charts, we also show the relative strength of the Nasdaq versus the DJIA where a rising line indicates outperformance on the part of the Nasdaq and vice versa.

Of the three years shown, the Nasdaq continued to outperform the DJIA by a wide margin for the remainder of the year in two of them (1991 and 2020).  In 1983, on the other hand, the Nasdaq actually declined 8.2% for the remainder of the year giving up all of its prior outperformance as the DJIA rallied 4.6%.

Have you tried Bespoke All Access yet?

Bespoke’s All Access research package is quick-hitting, actionable, and easily digestible. Bespoke’s unique data points and analysis help investors better visualize underlying market trends to ultimately make more informed investment decisions.

Our daily research consists of a pre-market note, a post-market note, and our Chart of the Day. These three daily reports are supplemented with additional research pieces covering ETFs and asset allocation trends, global macro analysis, earnings and conference call analysis, market breadth and internals, economic indicator databases, growth and dividend income stock baskets, and unique interactive trading tools.

Click here to sign up for a one-month trial to Bespoke All Access, or you can read even more about Bespoke All Access here.