Dr. Stoxx
Stock Trader & Author, Oxford DPhil, Trading Education
Capital is rotating out of AI capex into areas it starved for two years. Health care, airlines, defense and metals are where the market wants to be for the six weeks to the December 9 Fed meeting; gold and silver are bought on every dip. Risk is still being taken elsewhere: if S&P futures hold 7,700, the rotation carries the index; if they lose it, this was a correction in disguise. x.comÂ
Gold miners have further to fall because gold is acting as just another risk asset. Rising oil, rising yields and a stronger dollar are pressuring gold, silver and the precious-metal miners. x.com x.comÂ
Steel is pricier and still in short supply, factories told ISM, a backdrop for Nucor, the biggest US steelmaker. The stock just bounced at a higher low. x.comÂ
Rising oil worsens inflation and puts Fed rate hikes back in focus, making non-yielding gold and silver less attractive. Investors are also selling metals to meet margin calls. An estimated $1.83 trillion in combined value was wiped out over recent sessions; both metals remain under pressure as long as oil keeps rising and rate-hike expectations stay high. x.comÂ
US steel producers Steel Dynamics, Nucor and Cleveland-Cliffs benefit from the AI data-center buildout. Every hyperscaler campus needs over 200,000 tons of structural steel and rebar, and hundreds are being built. Tariffs on imported steel let domestic mills keep more of the margin. Steel and industrial metals rank among the hottest subsectors smart money is buying, with steel up 19% this month. x.com x.comÂ
Copper, along with gold and silver, has been building tremendous underlying strength while everyone hated metals and focused on semiconductors. Metals did not make new lows during the last ten weeks of neglect, and industries can swing quickly from hated to loved. x.comÂ
The US dollar is about to move higher, and a rising rate of change in the 10-year yield is a risk alongside oil. Selling is picking up under the surface, beyond a breadth breakdown, with rotation into tech delaying the risk. @LJKawa notes the last time the S&P 500 was this close to a record with so few members above their 200-day averages was March 27, 2000, the day after the dot-com closing peak. Index resilience could mean an air pocket lower, or a bounce in equal-weight and small caps. x.comÂ
Copper is one of the clearest trades over the next three years because supply is worse than most realize while AI accelerates demand. Chile, about a quarter of global production, just hit a nine-year production low, and copper miners have held up far better than silver and gold. Deutsche Bank forecasts copper soaring 50% to $22,050 a ton. x.comÂ
Copper hit its highest recorded price in August, and supply cannot answer quickly because a new mine takes twelve to fifteen years, if drilling, permits and governments cooperate. The investment case is the gap between demand rising from about 28M tonnes today to 42M by 2040 and supply stalling around 2030. Two of the four demand engines, the AI build-out and electrification, also drive the tech trade, so bulls on data centres cannot be indifferent to the metal that wires them. x.com x.comÂ
Ampco-Pittsburgh, one of the last Western forgers of the work rolls every steel mill wears out, is absorbing orders displaced by a South American competitor's exit. Q2 orders rose 50% to about $144M, backlog rose about 12% to $385.4M and adjusted EBITDA grew 22% with a return to profit. A re-rating from 0.8x toward 1x EV/sales gives $9-10 if backlog converts, $11-12 if Q3 orders hold above $140M. Risks: $142M debt against $7M cash, asbestos and the steel cycle; bear case $7. x.comÂ