Stocks were mixed yesterday, but it’s the metals market that got ROCKED. This morning, equities are modestly higher along with Bitcoin. Most other markets – including Treasuries, the dollar, and crude oil – are flattish.
Let’s talk about copper – which I covered in more detail in my Chart of the Day piece here. President Trump suggested in comments to reporters yesterday that 50% tariffs will be implemented on copper imports. That caused US-traded Comex futures to soar the most since they were introduced in 1988. Yet benchmark London Metal Exchange prices didn’t move much. Then they slid modestly overnight.
That widened the gap between the benchmarks for US and global prices to an unprecedented 25%. Result: Shippers could send even more copper to US shores to beat the new tariffs. Metal was already flooding in because traders and producers were hoping to front-run levies – and profit from arbitrage opportunities created by price divergences. The United States Copper Index Fund (CPER), which tracks futures prices, jumped 8.4% yesterday to an all-time high.
United States Copper Index Fund (CPER)
Data by YCharts
Who is in line to take Jay Powell’s place as Chairman of the Federal Reserve? Both Kevin Hassett and Kevin Warsh are reportedly jockeying for position, though Treasury Secretary Scott Bessent is also in the mix. Hassett is the current director of the National Economic Council and former chairman of the Council of Economic Advisers during Trump 1.0. Warsh is a former Fed governor and adviser to ex-President George W. Bush.
Trump has made no secret of his desire for Fed rate cuts. He has been lambasting Powell for sitting on his hands at the last few meetings, and any successor would have to carefully navigate the role’s political challenges. Wall Street generally likes having an independent Fed. If the relationship between the executive branch and the Fed gets too cozy, it could cause volatility in stock and bond markets.
Finally, pharmaceutical giant Merck & Co. (MRK) said it would acquire Verona Pharma Plc (VRNA) for $10 billion. The purchase is Merck’s biggest since 2023, and it’ll add Verona’s Ohtuvayre treatment for chronic obstructive pulmonary disease to Merck’s repertoire. Merck is making various moves ahead of the 2028 expiration of its patent on the Keytruda cancer drug. It was the industry’s best-selling drug in 2024, generating revenue of almost $30 billion.
