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DoubleLine Podcasts

MMM Episode 56: A Wild Week for Nickel and a Bailout for Big Shot

After reviewing macro news and markets for the week of March 7-11, Jeff Mayberry and Samuel Lau turn to the price explosion in nickel on the London Metal Exchange for their topic of the week (13:31). They analyze the short squeeze that produced two back-to-back days of 60% price gains in the industrial metal before the LME halted trading. They also criticize the LME’s controversial decision break at least $4 billion in trades to the benefit of Xiang Guangda, the short-selling, short-squeezed Chinese nickel-and-steel tycoon who styles himself “Big Shot.”

Stocks (2:16) fell broadly for the week ended March 11. The S&P 500 declined 2.9%, led by a nearly 6% decline in consumer staples as companies in that sector announced suspensions or cessations of business in Russia. Energy, the lone positive sector, gained more than 2%. Fixed income markets (4:03) were weak as well, including across the U.S. Treasury curve. Even commodities as tracked by the Bloomberg Commodity Index gave up half a point (6:59). “The underpinnings (for commodities) are still quite strong on the fundamentals,” Sam Lau says, but “there’s going to a lot of chop given the potential disruptions around the war” in Ukraine. Some of biggest losers were wheat, down 19%; gasoil down almost 15%; and aluminum down 10%. These moves, however, are dwarfed by commodities gains in prior weeks, a fact, Jeff Mayberry warns, that promises higher levels of inflation (11:16). The Consumer Price Index came in at 7.9% YoY for February, but he notes that doesn’t include the “commodity rocket ship that we’ve experienced over the past couple of weeks.”

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