In the latest Market on Close livestream, viewer Richard asked a sharp question:
“ITB — the construction index — appears to be the first leg to drop, showing weakness in the overall economy. Is this just a retracement or a sign of things to come?”
John Rowland, CMT, didn’t hesitate to widen the lens by citing two classic barometers of global growth: copper and crude oil.
“If Dr. Copper is the measuring stick for economic activity,” John explained, “then crude oil is the canary in the coal mine for recession.”
Both commodities are historically leading indicators of the business cycle.
Copper (aka “Dr. Copper”) earns its nickname because it’s used in a vast array of industrial applications — from homebuilding and manufacturing to power grids and EVs. When copper prices fall, it often suggests slowing industrial demand.
Crude oil (CLX25), on the other hand, reflects the heartbeat of global energy consumption. Rising oil prices can indicate economic expansion, while sharp declines often point to weakening demand or recession fears.
As of last Friday’s broadcast, both were flashing yellow lights:
“Oil dropped about $2.50 today,” John said. “That’s significant. We’re seeing a fall in crude oil prices — and that can be a signal that growth expectations are softening.”
Viewer Richard’s observation about the iShares U.S. Home Construction ETF (ITB) fits right into the broader macro puzzle. Housing is often one of the first sectors to slow when interest rates bite or consumer sentiment turns cautious.
Pair that with weakness in copper (HGZ25) and crude, and the data starts to “rhyme” with early cycle economic slowdowns seen in past decades.
First, check out John Rowland’s deep dive on the broader context of Friday’s market sell-off. Then, track these early warning signals on Barchart: