Orders for U.S. durable goods unexpectedly jumped in May. The 1.8% (vs. the expected 0.6% fall) rise in bookings for items meant to last several years matched the previous month’s increase. (read the report from Bloomberg). This suggests to us that the economy is in fact improving (contrary to popular opinion). We are not that surprised by the improvement in goods orders given the behavior of raw materials commodities. The Goldman Sachs Industrial Metals index is a leading indicator for industrial activity/demand economic growth (call it what you will).
We view any weakness in industrial metals as a buying opportunity.
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