A couple of months ago, I wrote, “They call copper ‘doctor’ because he’s supposedly got a PhD in economics. And when it comes to inflation, it’s certainly true that he is far more accurate with his forecasts than the vast majority of economists. The recent breakout in the copper price suggests core inflation is likely too low at present and will soon begin to trend higher over the next couple of years.
Today’s CPI reading validates this view. Core inflation in April came in at nearly 3%, surpassing even most the aggressive forecasts. And while the economists at the Fed would encourage us to view this surge as “transitory,” copper prices would appear to suggest otherwise. According to the doctor, inflation should generally trend higher from its recent lows for a prolonged period of time.