In this edition of Market Factors we start by discussing the record-breaking rally in the copper sector, how long it may last, and how to play it. Section two involves “deeply disturbing” threats to Federal Reserve independence and the diversion looks at historical fiction and why I need more.
Production at a HudBay mine
Metals
Copper demand skyrockets
The copper price has ramped higher by 52 per cent since the beginning of 2024 and is setting record highs near US$6.00 per pound. The copper miner stocks covered by RBC Capital Markets analyst Sam Crittenden climbed 68 per cent in 2025 and even if he’s concerned that the sector is climbing “too far, too fast”, he remains constructive on the sector for 2026.
The global electrification initiative is the driving force behind the rally, as copper is used for power transmission and in electric machines of all sizes. In a recent interview with CNBC, S&P Global vice chairman Daniel Yergin predicted that the global economy will require 50 per cent more electricity by 2040. He noted that this is equal to 650 new nuclear power plants per year.
Most investors are aware that data centers will become an important source of demand for power and copper but the extent of the trend can still surprise. Data centers currently require roughly four per cent of U.S. electricity. Mr. Yergin forecasts this to rise to 14 per cent by 2030, less than four years from now.
New copper supply is vital but Mr. Yergin notes that even if significant new deposits can be found, it can take up to 17 years for the mine to become operational.
Mr. Crittenden from RBC reports that supply disruptions, notably at Freeport-McMoRan Inc.’s Indonesian site and Hudbay Minerals’ fire-interrupted Manitoba project, are temporarily boosting the commodity price.
The average valuations in the sector are not straightforward to judge. Based on price to net asset value, the stocks are expensive at 1.2 times when 0.8 times is the ten-year average. The forward price to EBITDA is similarly discouraging at 7.5 times versus the ten-year average of 5.7 times.
However, stock values currently reflect a commodity price of US$4.39 per pound, which is 26 per cent below the current spot price, according to Mr. Crittenden. The historic discount is ten per cent.
The RBC analyst recommends Hudbay Minerals Inc. (HBM-T), Capstone Copper Corp. (CS-T) and First Quantum Minerals Ltd. (FM-T). Strong free cash flow continues at Hudbay and the analyst expects higher grade production at its Pampacancha property in Peru. RBC expects a solution to Capstone’s labour issues in Chile. For First Quantum (which I own personally), Mr. Crittenden is looking for positive news regarding mines in Argentina and Peru.
Traders in New York on MondayRichard Drew/The Associated Press
U.S. politics
Threats to Fed ‘unambiguously risk-off’
U.S. equities have rallied through tariffs, Venezuela, ICE thuggery and other White House initiatives and the U.S. dollar has remained reasonably stable. The president’s meddling legal threats against Fed chairman Jerome Powell is just the latest act in the circus.
Equity weakness was contained as of Monday morning, but there is grave concern in the analyst community. Evercore ISI economist Krishna Guha wrote, “we are stunned by this deeply disturbing development … on the face of it, it looks as if the Administration and the central bank are now in open war.” Mr. Guha described the market implications as “unambiguously risk-off.”
I was taught that “the market’s never wrong.” The rule is not to be taken literally but as a reminder that when markets are acting in a way that surprises me, it’s almost always that I’m wrong. Still, I’m having trouble believing that U.S. stocks and the greenback should be as stable as they look to start the week with three more years of President Trump ahead.
Diversions
I need historical fiction suggestions
The MakeUseof site recommended the Netflix show The Last Kingdom on Friday and this has me looking for a new historical fiction book series. The show is based on a series of books written by Bernard Cornwell that I read a long time ago, and I also read another set of his books retelling the Arthurian myth in a really entertaining way.
I like historical fiction a lot, the further back the better. The Shardlake series set in Tudor England was great and the Barker and Llewelyn books were also terrific. The Patrick O’Brian British Navy series is a must-read for any historical fiction fan, as are Anne Perry’s Thomas Pitt sagas and Hilary Mantel’s Wolf Hall trilogy.
As for individual books, The Thousand Autumns of Jabob de Zoet is among my top picks for any genre. A Conspiracy of Paper is an excellent read with good detail on invention and the rise in stock trading.
I would love to find another series. Email me any suggestions but maybe not stories set in England, as I’ve just realized writing this that my reading has been centered there. I’ve read most of the popular authors, so the niche suggestions are very welcome.
The essentials
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Globe Investor highlights
David Berman argues Suncor outranks the big U.S. energy players in terms of stocks to buy amid the turmoil in Venezuela
A $15.8-billion fund manager says she’s ditching Rogers Communications
CIBC chief market technician Sid Mokhtari thinks a market correction is looming in the first half of this year - but there will be an upside
Jamie McGeever asks, How long can Wall Street shrug off Trump’s ‘visible hand’?
Quick Hits
Any uranium-related stock started 2026 with a huge head start. Energy Fuels Inc. has already jumped 27 per cent this year with Denison Mines not that far behind at 26 per cent. Cameco is higher by 19 per cent. Non-uranium leaders so far include Lithium Americas Corp. (up 25 per cent) and crypto miner Bitfarms Ltd. (21 per cent).
U.S. year-to-date leadership is microchip-sensitive despite memory provider Sandisk Corp. being the top performer at 59 per cent. Lam Research Corp. (up 28 per cent), Intel Corp. (23 per cent), Micron Technology Inc. (21 per cent), Microchip Technology Inc. (18 per cent) and Applied Materials Inc. (17 per cent) are all in the top 10.
The U.S. president published a screed on the conservative social media site Truth Social signaling his insistence on a 50 per cent year-over-year increase in defence spending in 2027. This is obviously good news for defence contractors but the White House is displeased with executive salaries and capital deployment in defence companies, and he may enact measures that will limit profits while attempting to address his issues.
China has been the biggest buyer of Venezuelan oil for years. I’m not sure how significant this fact is yet.
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