DBB: Base Metals Slammed To Start September, Weighing Macro Risks

seekingalpha09-04

lucentius There are a handful of crosscurrents impacting the cyclical commodities space today. For starters, I like to analyze trends in the US Dollar Index (DXY). As it stands, the greenback has been...

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As it stands, the greenback has been...</p>\n\n<a href=\"https://seekingalpha.com/article/4718871-dbb-base-metals-slammed-to-start-september-weighing-macro-risks\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>DBB: Base Metals Slammed To Start September, Weighing Macro Risks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDBB: Base Metals Slammed To Start September, Weighing Macro Risks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-04 17:58 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4718871-dbb-base-metals-slammed-to-start-september-weighing-macro-risks><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>lucentius There are a handful of crosscurrents impacting the cyclical commodities space today. For starters, I like to analyze trends in the US Dollar Index (DXY). As it stands, the greenback has been...</p>\n\n<a href=\"https://seekingalpha.com/article/4718871-dbb-base-metals-slammed-to-start-september-weighing-macro-risks\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0106831901.USD","symbol_name":"贝莱德世界金融基金A2","start_time":0,"source_url":"https://seekingalpha.com/article/4718871-dbb-base-metals-slammed-to-start-september-weighing-macro-risks","article_id":"2464321130","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/182418890/image_182418890.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2464321130","pubTimestamp":1725443932,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"lucentius There are a handful of crosscurrents impacting the cyclical commodities space today. 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As it stands, the greenback has been","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0106831901.USD":"贝莱德世界金融基金A2","BK4127":"投资银行业与经纪业","FDN":"First Trust Dow Jones Internet I","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","BK4585":"ETF&股票定投概念","BK4533":"AQR资本管理(全球第二大对冲基金)","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","LU2237443895.HKD":"abrdn SICAV I -  GLOBAL DYNAMIC DIVIDEND \"A\" (HKD) ACC","IE0004086264.USD":"BNY MELLON GLOBAL OPPORTUNITIES \"A\" (USD) ACC","IE00B19Z3581.USD":"Legg Mason ClearBridge - Value A Acc USD","IE0004091025.USD":"BNY MELLON GLOBAL OPPORTUNITIES \"B\" (USD) ACC","LU2237443382.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA USD","BK4550":"红杉资本持仓","BK4588":"碎股","LU1791807156.HKD":"BGF WORLD FINANCIALS \"A2\" (HKDHDG) ACC","BK4552":"Archegos爆仓风波概念","LU2237443549.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA SGD-H","LU2237443622.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc USD","LU2237443465.HKD":"abrdn SICAV I -  GLOBAL DYNAMIC DIVIDEND \"A\" (HKD) INC","IE00B19Z3B42.SGD":"Legg Mason ClearBridge - Value A Acc SGD","LU2237443978.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc SGD-H","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","IE00BFXG1179.USD":"BNY MELLON U.S. EQUITY INCOME \"B\" (USD) INC","BK4504":"桥水持仓","DBB":"基础金属ETF-PowerShares","LU2237438978.USD":"Amundi Funds US Pioneer A2 (C) USD"},"translate_title":"DBB：基本金属9月初暴跌，权衡宏观风险","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DBB":1,"FDN":0.75,"US7Y.BOND":0.66,"US6M.BOND":0.66,"US5Y.BOND":0.66,"US3Y.BOND":0.66,"US30Y.BOND":0.66,"US2Y.BOND":0.66,"US12M.BOND":0.66,"US10Y.BOND":0.66,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6},"content_text":"lucentius There are a handful of crosscurrents impacting the cyclical commodities space today. For starters, I like to analyze trends in the US Dollar Index (DXY). As it stands, the greenback has been under a bit of pressure, dropping in the red for a brief moment late last month. With lower interest rates on the horizon, on the order of 100 basis points now through year-end in terms of the Fed Funds rate and potentially eight quarter-point eases over the next 12 months, interest rate differentials could favor foreign currencies. A weaker dollar often helps commodities, particularly during inflationary environments. We’ve seen that relationship breakdown over the last two-plus years, though. Recall in the first half of 2022 when the DXY surged amid geopolitical turmoil as a result of Putin’s invasion of Ukraine – that's also when commodities were on the way up. Today, much simply depends on the global growth outlook. It appears that tempered GDP outlooks correspond with a softer dollar. Moreover, lower economic growth rates would clearly be a headwind for one bellwether commodity ETF: the Invesco DB Base Metals Fund (NYSEARCA:DBB).  I have a hold rating on DBB based on mixed risks looking out through 2025. I’d like to be bullish on something like DBB, but price trends, ongoing weakness in US PMI readings, and many hard data points out of China are hurdles too hard to overcome. US Dollar Sinks Back to the Flat Line YTD TradingView According to the issuer, DBB seeks to track the performance of the DBIQ Optimum Yield Industrial Metals Index Excess Return Index plus the interest income from the fund's holdings of primarily US Treasury securities and money market income less the fund's expenses. DBB is designed for investors who want a cost-effective and convenient way to invest in commodity futures. The index is rules-based and composed of futures contracts on some of the most liquid and widely used base metals — aluminum, zinc, and copper (grade A). DBB and the index are rebalanced and reconstituted annually in November. DBB is a small ETF with just $120 million in assets under management as of August 30, 2024. The annual expense ratio is high at 0.75% and its forward dividend yield is also lofty at 6.72%. The fund is able to generate interest income care of its Treasury positions. Share-price momentum sports a strong A- ETF Grade by Seeking Alpha’s quant system, but I will point out areas on the chart that are not as encouraging.  DBB is also considered a risky product, evidenced by a higher-than-median standard deviation gauge. Finally, liquidity is sometimes an issue considering that average daily volume is under 200,000 shares and its 30-day median bid/ask spread can be wide at times, averaging 10 basis points, per Invesco. Let’s take a closer look at why I am not overly excited about the growth factor when it comes to DBB. Notice in the chart below that the consensus global GDP growth rate has increased for this year, but for 2025, the expected expansion pace is seen holding under 3%. I see downside risks to that given sagging data out of China and the risk of a slowdown in what has been a resilient GDP growth rate in the US so far this year. 2024 Real GDP Growth Forecasts: Near 2.6% Global, China's Outlook Dims Goldman Sachs Steady 2025 Global Growth Expectations Goldman Sachs US Recession By 2026 Chance Seen at 44%   Kalshi Moreover, analysts at Goldman Sachs recently pushed out their outlook for higher copper prices to not come about until after 2025. They were upbeat that the balance of 2024 would see generally favorable fundamentals for the industrial metal, but copper's price has retreated sharply since notching $5 per pound back in the second quarter. GS: \"We delay our end-2024 copper target of $12,000/t to post-2025\" Goldman Sachs Zooming out, May was indeed at least a near-term across the base metal complex. Momentum has turned weaker despite the dollar’s latest drag down. I would have liked to see risk-on cyclical metals rally amid a lower-dollar environment, but we just haven’t seen that. Industrial Metals Struggling Since Mid-May Koyfin Charts It’s important to point out what DBB actually owns. It’s allocated roughly one-third each to zinc, copper, and aluminum, with a large Treasury holding. Like many commodity ETFs, the fund may not track spot commodity prices, so that's a risk to be aware of. DBB: Holdings & Dividend Information Seeking Alpha Seasonally, September has been a notably weak month, 2023’s 4.1% climb notwithstanding. The average performance in the final month of the third quarter is -1% before gains have historically taken place in October and November. So, it’s possible that there’s a bit more base-metal pain before better price trends in the fourth quarter. DBB: Bearish September Risks, Bullish October-November Seeking Alpha The Technical Take As the global growth picture evolves ahead of 2025, DBB’s technical chart is likewise mixed. Notice in the chart below that DBB has clear support around the $17 mark. That level held during the 2022 bear market and as price consolidated into the early part of this year. Following the big run-up into the second-quarter peak, this current pullback is not all that bad looking.  Consider that the long-term 200-day moving average remains modestly upward sloping and there is a high amount of volume by price in the high teens to the low $20s, suggesting that there should be some support from previous buyers here. The May 2024 peak also came on a weaker RSI momentum reading, evidenced by a bearish divergence between momentum and price in the summer. The RSI then went on to notch technical oversold conditions in early August. Now, with price coming back down to the 200dma on better RSI, both price and momentum are moderate in terms of overall strength. DBB: Ongoing Trading Range Affirms A Neutral Broad Trend Stockcharts.com The Bottom Line  I have a hold rating on DBB. Commodities got off to a very rough start to begin September, and DBB fell big on its own. With mixed macro risks looking out through 2025 and a neutral chart, I am not overly excited about this base metals ETF.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2464321130"}