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Trump Effect: Freeport and Copper Finally Break Free

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Trump effect

The US is gearing up for Donald Trump to become its 45th president. Although Trump’s victory sparked an initial selling spree on Wall Street, markets recovered handsomely. Commodity prices also rallied after the presidential election results.

Copper finally broke the $5,000 per metric ton level—decisively this time. Copper producers including Freeport-McMoRan (FCX) and Southern Copper (SCCO) were trading in a narrow price channel for the last few months. They rallied after the election results. The upward price action isn’t limited to copper producers. We saw a broader rally in metal and mining shares (XLB). Diversified miners like Rio Tinto (RIO) and BHP Billiton (BHP) saw renewed buying interest after almost five years of depressed commodity prices.

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3Q16 earnings

Freeport released its 3Q16 earnings before the market opened on October 25, 2016. The company reported adjusted EPS (earnings per share) of $0.13. Analysts polled by Bloomberg expected the company to post adjusted EPS of $0.18 in the quarter. Freeport also missed consensus revenue estimates in the quarter. You can read more about Freeport’s 3Q16 earnings in Why the Markets Shrugged Off Freeport-McMoRan’s 3Q16 Earnings Miss.

Series overview

In this series, we’ll see what a Trump presidency could mean for Freeport. We’ll look at some of the other medium-term fundamental drivers that could drive Freeport once the post-election euphoria dies down.

Let’s start by analyzing how Trump’s proposed infrastructure investments could boost Freeport.

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