Marketplace - Copper prices are climbing

Episode Date: April 9, 2024

Curious about which way the global economy’s headed? Take a look at copper prices. Demand for the metal is soaring, and copper futures are now at the highest levels in almost two years. Also in this episode: $10 billion. That’s how much Blackstone’s paying to acquire luxury apartment owner AIR Communities. Plus, the impact of a federal shutdown on tribal nations and the latest for a seller of records and comics in Jackson, Mississippi.

Element number 29 on the periodic table, CU is the symbol. It is also the economic indicator of choice. Today, from American Public Media, this is Market Class. In Los Angeles, I'm Kai Risdahl. The 9th of April today. Good as always to have you along, everybody. We begin on this Tuesday in the commodities markets. Gold, $2,365 an ounce at one point today.

A record and a 14-plus percent gain since the beginning of the year. Crude oil, go ahead, pick your benchmark. Both West Texas and Brent North Sea gave back a little bit today, but both of them bumping back up against $99 a barrel. Here's another one. Copper futures are the highest they've been in almost two years, which we are leading with because it is used in so much stuff. Power lines, appliances, cars and trucks, wind turbines, and EV batteries, I could go on. Point is, if you want to figure out which way the global economy might be headed, copper's a really good place to start. So we put Marketplace's Henry Epp on the reading the copper tea leaves beat for us today.

A commodity price generally goes up because there's more demand than supply. And right now there are signs that demand for copper is rising. China's looking better. The U.S. is going gangbusters. Ian Lang is director of the Mineral and Energy Economics Program at the Colorado School of Mines. Improving economic conditions in the two largest economies in the world are likely driving copper demand. But so is a longer-term trend, he says, the energy transition. To the extent that we are putting on more solar farms, more wind farms, more batteries, I'll get coppers needed for all of those. You got to connect it to the grid. Plus, EVs need a lot more copper than traditional cars. And all of those new data centers need the

metal too. But Chris Berry, president of House Mountain cars, and all of those new data centers need the metal too. But Chris Berry, president of House Mountain Partners, doesn't think those growth areas tell the whole story of copper prices right now. I think it has a lot more to do with impediments on the supply side. One example, a court in Panama ruled a contract the government signed with a copper mine's Canadian owner was unconstitutional. The mine's been closed ever since. And Barry says other countries are getting more involved in copper mining operations. Foreign governments are saying, wait a minute, why would we allow foreign companies to come into our country, build these mines, basically extract the value and ship it offshore to create higher value products? More government intervention could slow down mining or expansion plans, he says, and higher interest rates have already slowed down investments

in mining. That could change if copper prices keep rising, but higher commodity prices could eventually show up in the price of other goods, says Bob Iaccino, chief market strategist at Path Trading Partners. So this is not a welcome turn of events for central banks, to see the sort of commodities rally that we've seen. Because if those commodities, including copper, push up inflation, their jobs get a lot harder. I'm Henry Epp for Marketplace. Wall Street as the week goes on, kind of meh.

Actually, traders are mostly waiting for the inflation update that is coming to us tomorrow. It'll be the March Consumer Price Index. Elsewise, we will have the details when we do the numbers. If copper prices are one kind of economic indicator, which they are, rent is another. The investment giant Blackstone announced yesterday it's going to pay $10 billion to buy Air Communities, AIR, AIR being short for Apartment Income REIT Corporation, REIT being short for Real Estate Investment Trust. The upshot of all those initials and acronyms is that Blackstone is now said to be the new landlord for 76 luxury apartment complexes in some of the highest priced markets in this country, Miami, L.A., and Boston among them. The thing we are interested in, though, is that $10 billion price tag, a sign of life, perhaps, for the rental market, which has seen rents drop and vacancies rise the past couple of years. Marketplace's Matt Levin is on that one. As an apartment broker in Austin, Texas,

Garrett Dominey helps out-of-towners find higher-end apartments and helps landlords find out-of-town renters. Back when every Tesla worker and their mother was moving to Texas, he used to have a lot of success posting apartment ads to Craigslist. Back then, you'll get a hit maybe even within the day. Now it's weeks, months. even within the day. Now it's weeks, months. The pandemic era mass migration to Texas is ebbing, but Austin renters also have more options now. A glut of newly constructed apartment buildings in the city has sent rents down 7% year over year, and landlords are getting more creative with their marketing. We see gift cards, like you get like a $2,000 Amex gift card if you sign within 48 hours. We're starting to see a return for concessions. So, you know, several years ago, that was not the case. Kaitlin Chagrou-Walter is VP of Research at the National Multifamily

Housing Council. Nationally, about one in three rental listings on Zillow offer concessions, like a month of free rent or parking. Those enticements are way up in construction-friendly Sunbelt cities. Walter says the pandemic put a bunch of new developments on the same timeline. Two properties are crossing each other. One may have been originally slated to open in 2023, one in 2024. Now they're both opening in 2024. So they're competing for the same folks. Record numbers of new apartments coming online have led to a 1% drop in the

national median rent, says economist Chris Salviati at the Rental Datacite apartment list. But those new apartments tend to serve higher income clientele. That does impact the full market, but it has less of a direct impact on kind of those lower priced properties. In other words, lower income renters aren't likely to get much of a discount, let alone a $2,000 gift card. I'm Matt Levin for Marketplace. David Brancaccio is, I believe, an owner, not a renter. But wherever he lays his head, he gets up real early in the morning to bring you all the business news you need to know for your day. The Marketplace Morning Report. Check it out. Two data points with which to set up this next item.

Number one, small businesses account for just about 65% of all the new jobs in this economy. just about 65% of all the new jobs in this economy. And number two, owners of those small businesses are not feeling all that great right now. So says the monthly Small Business Optimism Index out today from the National Federation of Independent Businesses. The index hit a 12-year low with a quarter of those small business owners especially concerned about higher labor and input costs. That, of course, is the macro story for the micro. Well, as it happens, we know a small business owner or two.

So we picked up the phone, made some calls. Philip Rollins runs the comic and record store Offbeat. He's in Jackson, Mississippi. Business at Offbeat has been pretty good. It's picking up now. First quarter has been very slow. But it's picking up and getting more consistent customers. A lot of people are still getting into the hobby of collecting records, but also more people have gotten into collecting comic books as well, too.

The biggest challenges that I'm facing right now would have to be just kind of balancing everything right now. I'm kind of slaying myself with a lot of events and starting up a lot of community based stuff. Like we started an anime manga club so people in community can come and talk and discover new manga and anime. Record Store Day is taking up a lot of my time for comic book day is coming up and our 10 year anniversary is coming up as well we haven't gotten any beyonce yet that comes out on vinyl on the 12th fingers crossed but um we did we did have some pre-orders so we have a good bidding stock so far records are still kind of there it stands there whether a price wise the average record right now is between 30 to 40 dollars depends

on what it is some there are some that are 25 there are There are a lot that are $25 still. But most are running in between, like around that $30 range, $27 range. I have been looking at other vendors for records just on saving costs for myself. But I am selling a lot more used or what I call preload records because the cost is way better for that. But a lot of people have been buying more older stuff than newer stuff as well too. So what's on the horizon? Just trying to get to June, honestly, and get through all these events.

And some friends have started a Bring Your Own Vinyl Night. So I'm bending at that and also DJing it. these events and some friends have started a bring your own vinyl night so i'm help i'm uh bending at that and also djing it things are things looking up and things are being positive for 2024 philip rollins running off beat and trying to get to j. He's in Jackson, Mississippi. In a lot of tribal communities, everything from police and fire to medical clinics and K-12 education is paid for with federal dollars. That's a legacy of the trust and treaty obligations the United States has to those tribal nations. It also means, though, that the yearly budgets for those tribes, and in some ways their larger economic fates, are tangled up with the federal government's budget cycle. And if you're familiar with the

way Congress manages its spending crisis after crisis after crisis, it's clear that all those vital services are often at some risk. Marketplace's Savannah Marr has that one. The annual Reservation Economic Summit brings thousands of tribal leaders to Vegas. This year, a lot of them were breathing easy for the first time in a while because two days before the summit began and just hours before a March deadline, Congress passed the first of two packages to fund the government through September. It's the federal budget process, so it's not always the easiest thing to navigate. Justin Barrett, treasurer of the Eastern Shawnee Tribe of Oklahoma,

watched this year's budget drama closely because lots of vital social programs in his community are federally funded, like his tribe's Child Care Development Fund. That funds child care for any person in Ottawa County below the poverty line, and then it also funds our Early Childhood Learning Center. If the federal government shuts down, Barrett says the Eastern Shawnee tribe has to find a way to float that program out of its own coffers. Plus parts of the law enforcement, housing, and education budgets. During a drawn-out budget cycle, he says the uncertainty and the constant looming threat of a shutdown take a toll.

You know, it doesn't provide a lot of stability, right? And we don't know what resources will be available. right and we don't know what resources will be available. Every time Congress kicks the can down the road, tribal leaders are spending valuable time making and remaking shutdown contingency plans. What is it going to take to support the programs that we have? What is it going to take to support the tribal members? Andrew Alejandre is chairman of the Piscenta Band of Nolaki Indians, which keeps a reserve fund set aside in case of a shutdown. We've been pretty fortunate. We're a 300-member tribe. We're in California, right on the Interstate 5. Where the tribe's casino and golf course get plenty of foot traffic. Alejandre says many of his tribe's programs are self-funded, with revenue from those enterprises.

But most tribes can't insulate that way. Since we are in a very rural community, there's not a lot of economic opportunities here. Bill Trepanier is secretary treasurer of the Lakuta Ray Band of Chippewa. He says his 1,200-member tribe is very reliant on federal funding. Most of our services right now are funded almost entirely by grants and government assistance. Trepanier says those federally funded services also employ lots of tribal members who can't just find other work in rural northern Wisconsin. He's spent months this federal budget cycle bracing and strategizing for potential economic breakdown. I think about it a lot. Sometimes it stresses me out to the point of not sleeping at night.

For now, Trepanier can turn back to the tribe's other economic priorities. It's not that long now before we have to worry about it again. These services we're talking about are owed to tribal nations who ceded tens of millions of acres of land in exchange. Melanie Benjamin is with the Native American Finance Officers Association. She says those are treaty promises protected by the Constitution. Those are contracts and they're valid. They're the supreme law of the land. When you're in a shutdown, how are you supposed to uphold that contract?

Last year, for the first time, Congress funded the Indian Health Service with advance appropriations to provide a bridge between budget impasses. That way, at least tribal clinics and hospitals remain open during a shutdown. Benjamin says all federal programs that serve tribes should be funded on the mandatory side of the budget. Tribes are always like the last thought. We need to be considered essential. Especially as dysfunction in the federal budget process starts to feel like the norm. I'm Savannah Marr for Marketplace. Coming up. They actually produced a radio script called Housewife versus Economist.

I mean, I'd listen. First, though, let's do the numbers. Dow Industrial is off nine points today, less than a tenth percent, 38,883. The Nasdaq added 52 points, about a third of one percent, 16,306. There, the S&P 500 picked up 7 points, a tenth percent, 52 and 9. Those high copper prices Henry Epp was telling us about up at the top of the program have been great news for copper

mining companies. Natch. Rio Tinto pocketed 1 and 8 tenths percent today. Southern Copper dug up 3 and 3 quarters percent. First Quantum Minerals, the company with the mine Henry mentioned that the Panamanian government shut down, up 5% today. Looking now at a couple of companies that are dealing with those declining residential rents that Matt Levin was telling us about.

Cushman and Wakefield trimmed 3.4% today. Apartment Investment and Management tacked on 1.3%. Mid-America apartment communities climbed 2% on the day. Boeing descended 1.9%. The FAA is looking into a whistleblower's claim. The company did not address safety and quality concerns around the production of its 777 and 787 Dreamliner models. Bond prices today, thanks for asking. They rose.

Yield on the 10-year T-note down 4.35%. You're listening to Marketplace. Hey there, I'm Bridget, co-host of Million Bazillion, Marketplace's podcast for kids about money. I want to tell you about our email newsletter course, Million Bazillion Academy. In this new and improved course, we'll help your kids learn about crypto, credit cards, and inflation in just six weeks. Each lesson comes with a podcast episode, a fun cartoon, discussion questions, and an activity that lets kids apply what they're learning in the real world. You can start at any time and work at your own pace. Sign up today at marketplace.org slash academy.

This is Marketplace. I'm Kai Rizdal. The Francis Scott Key Bridge used to be a critical part of I-695 around Baltimore. Something like 30,000 cars and trucks crossed it every day. Now they've all got to find another way to get to where they need to go, but it is ugly out there. The Maryland Transportation Authority is warning drivers to expect heavy traffic throughout the region. And it's also asking, and this is a quote, for patience from the motoring public during this unprecedented time. So we asked Marketplace's Stephanie Hughes to check in with that motoring public to see how their patience is holding up. There's a sound effect that 70-year-old Chip Keller uses to describe his new commute.

That's Keller's impression of his pickup slowing to a stop in heavy traffic. Keller's impression of his pickup slowing to a stop in heavy traffic. He used to drive across the Key Bridge to his job as an equipment operator southwest of Baltimore and says it took him 20 minutes to get there early in the morning. Now he takes a tunnel under the river instead and says he spends at least twice as long in his car. We were spoiled with that bridge. Most of the people around here were spoiled with that. If we wanted to go somewhere, we were there. Before the bridge collapsed, the average commute time for people in the baltimore area was just

under 30 minutes but now all the usual traffic is crowding onto the roads that are left and trucks hauling hazardous materials can't go through the routes with tunnels michael bader runs the 21st century cities initiative at johns hopkins part of what's going to end up happening is a lot of truck traffic that had gone over the Key Bridge is now going to be going through the suburbs, and that's going to cause problems on 695, which is the Beltway in Baltimore. And all that time in the car can make people grumpy and sad. Bader points out there's research that shows long commutes tend to be linked to bad moods. But it also is just time. So that's time you're not spending with family. It's time you're not spending exercising. It's not time you're not spending doing other things.

But when a road is no longer accessible, commuters will find solutions. Transportation consultant Courtney Ehrlichman is based in Pittsburgh, where the Fern Hollow Bridge collapsed two years ago. She says drivers there were worried they'd be faced with long drives until the bridge was rebuilt. The reality is people will adapt. If those commutes are taking too long, they will ask for different start times at work, work from home. She says this also creates an opportunity for drivers in the region to experiment with other kinds of transportation, like public transit or carpooling. In Baltimore, I'm Stephanie Hughes for Marketplace. Matt Levin was telling us earlier about landlords trying hard to get more tenants in the door by giving them deals on their rent,

which I mentioned because it's a fair bet that some of those tenants are tenants because being able to buy their own homes just isn't in the cards. We have, as we all know, been dealing with inflation in this economy the past couple of years on basically everything. Groceries, new cars and trucks, construction supplies, all of that and more have gotten more expensive. One item in particular, though, housing has had such sharp inflation over decades now that it's starting to change the landscape of American economic life. Marketplace's Mitchell Hartman looks at what happens in society and what has happened in history when prices for basic necessities get so high. Let's go back four decades to 1984. Ghostbusters is a blockbuster that year. And the median price of a new home? Not so scary. $79,900.

Since then, consumer prices overall have risen about 200%. But that median home price these days? $417,700, up 423%. There's no question that the cost of a house has gone up relative to cost of living overall. Chris Mayer is a professor of real estate at Columbia Business School. More and more, a single-family home has become a luxury good, which has not been the case in the United States until now. Mayer says for previous generations, working-class homeownership was plausible, even likely. My in-laws lived in Redding, Pennsylvania, neither graduated from college, and yet they were

homeowners and owned multiple houses over their lives, having a part of the American dream. And that would be very, very difficult for folks in the same circumstance looking at the cost of homes today. This is not the first time America has dealt with rapid destabilizing price increases, says Notre Dame economic historian Tom Stapleford. The big moments of price inflation are happening around wars, World War I, World War II. It's the early 1940s, and as the U.S. prepares for war, factory towns spring up across the country and workers flood in. There's not adequate housing services, so food prices, shelter prices are going way up. The government tries to convince consumers it's really not that bad.

They actually produced a radio script called Housewife vs. Economist. Starring the wartime head of the Bureau of Labor Statistics talking to his wife. You purchase apples. Apples are so much more expensive than they were before. But maybe you didn't notice sugar prices are still the same. The government's trying to calm American housewives down because of how badly they reacted to soaring prices back in World War I. In 1917, when food prices doubled, working class women in New York rioted, just like they had more than a decade earlier over kosher meat prices. It's a long tradition.

Going back to the 1500s, says Swarthmore College economic historian Robert DuPlessis, when grain harvests in Western Europe repeatedly fail. You actually get religious and political rebellion as a result of a disastrous bout of inflation. Grain prices basically triple in a couple of months. People riot. They also stop buying meat and new clothes to buy bread. Duplessis sees parallels today as high home prices ripple through this economy. People have to rent rather than buy. They cut back on essentials to pay for housing. The housing inflation of today is a little bit like the grain inflation of the 16th, actually into the 18th century. Because remember, grain riots had a lot to do with the onset of the French Revolution. Now, one reason why riot and revolution are probably not in the cards today

is that food prices haven't doubled or tripled in a matter of months. Instead, it's taken four years since the pandemic hit for food prices to go up 25%. Home prices have more than quintupled, but that's over 40 years. And as expensive as mortgage rates are right now, they were twice as high in 1984, peaking that year above 14%. Still, Chris Mayer at Columbia Business School says home price inflation is fueling a lot of consumer discontent and disillusionment. Are you better off relative to previous times? Housing leads the list of things where the answer to that question today for many people is no, I'm not better off.

Mayer says for the past century, home ownership was a rite of passage for most Americans, a prerequisite for creating a family and building wealth. But with prices at current levels, it is no longer. I'm Mitchell Hartman for Marketplace. This final note on the way out today, just to circle back to where we started, courtesy of a Wells Fargo analyst note from this morning that we saw on CNBC. Costco, as I think we mentioned at the time, started selling gold, the actual bullion, last summer. One troy ounce bars or what you can buy. Well, it seems they are a hit. Wells Fargo figures that Costco is selling $100 million to $200 million worth of gold a month. That's a lot. Our digital and on-demand team includes Kerry Barber, Jordan Mangy, Dylan Mietenen, Janet Wynn, Olga Oxman, Ellen Rolfes, Virginia K. Smith, and Tony Wagner. Francesca Levy is the executive director of digital and on-demand. I'm Kyle Rizdahl.

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