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Strategist Yardeni: Copper Not Fazed by Egypt, May Double

While everyone was focusing on the S&P 500 recouping its losses from the Egypt-driven sell-off on Tuesday, the most telling breakout was happening in the commodity pits with copper . The metal surged 2 percent to a NYMEX record of $4.54 a pound.

“When it was around $4 eight weeks ago, I suggested that it might start behaving like a rare earth metal with a vertical ascent in its price causing it to maybe double over the next 18-24 months,” said Ed Yardeni, President of Yardeni Research. “Professor Copper is among the economic forecasters with the best track record. The Good Professor isn’t fazed by all the commotion in the Middle East.”

Yardeni, a widely followed strategist and economist who held these positions at Deutsche Bank and Prudential over his 25 years on Wall Street, looks to copper as the ultimate economic indicator because of its industrial use. While some economic data around the world can be fudged (especially from China), the price of ‘Dr. Copper’ doesn’t lie, the theory goes.

The metal’s aggressive recovery from its low this year confirmed, before stocks, that the global recovery would be unfazed by Egypt’s turmoil. Yesterday the Institute of Supply Management’s index of manufacturing hit its highest level in seven years. Similar measures from Europe and Asia recently have also confirmed copper’s comeback this week. China is the world’s biggest consumer of copper.

Industrial stocks, which Yardeni is overweight, are confirming the global recovery is intact as well with shares of General Electric, CSX and Deere up more than 10 percent amid better-than-expected earnings and forecasts. Analysts have ratcheted up their profit expectations for companies in this group more than any other sector during this earnings season, according to data crunched by Bespoke Investment Group.

“The jump in food and fuel commodity prices since last summer has created a more immediate inflation problem for China and other emerging economies than for the developed economies,” said Yardeni in today’s note. “However, it is very unlikely that central bankers in the emerging economies will tighten to the extent that economic growth will be impacted much. This is especially so now that more of them need to worry about social and political instability. In other words, they will talk tough and maybe tighten some more, but they will learn to live with the inflationary consequences of rising commodity prices.”

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Trader disclosure: On Feb. 2, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karen Finerman owns (MSFT), (JPM), (HPQ), (GOOG), (C), (BP), (AAPL) and (BAC). Joe Terranova owns (VRTS), (C), (UPL), (GM), (PEP), (MS), (LTD), (CVI), (CVE), (SU), (CPX), (CNQ) and (POT). Steve Cortes owns (SVU), (MO), (EXC) and U.S. Treasuries. Steve Cortes is short (BAC). Steve Cortes is short (LVS). Stephen Weiss owns (TBT), (AMSC), (QCOM), (MSFT), (HPQ), (SMCI), (PZN), (IPI), (AGU), (BTU), (MEE), (DVN), (COP), (HK), (EMC), (FWLT), (VZ), (FAS) and (JPM).
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BRIAN KELLY
Accounts Managed by Kanundrum Capital Own (BAC)
Accounts Managed by Kanundrum Capital Own (EBAY)
Accounts Managed by Kanundrum Capital Own (GLD)
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Accounts Managed by Kanundrum Capital Are Long The Yen
Accounts Managed by Kanundrum Capital Own (GMCR) puts
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Accounts Managed by Kanundrum Capital Own (CME)

KAREN FINERMAN
Finerman's firm is short (MDY)
Finerman's firm is short (SPY)
Finerman's firm is short (IWM)
Finerman's firm is short (IJR)
Finerman's firm is long S&P puts
Finerman's firm is long Russell 2000 puts
Finerman's firm owns (AAPL)
Finerman's firm owns (BAC) leaps
Finerman's firm owns (BP)
Finerman's firm owns (HPQ)
Finerman's firm owns (IBM)
Finerman's firm owns (JPM) and (JPM) leaps
Finerman's firm owns (M)
Finerman's firm owns (MSFT)
Finerman's firm owns (PLCE) and (PLCE) calls
Finerman's firm owns (TGT)
Finerman's firm owns (WMT)
JOE TERRANOVA
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
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Virtus Investment Partners Owns More Than 1% Of (DBV)
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Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (DPUKF)
SIMON BAKER
Baker Ave owns (CRM)
ANTHONY SCARAMUCCI
Scaramucci and SkyBridge Capital Own (V)
DEBORAH WEINSWIG
An Employee Of Citigroup Global Markets Or Affiliates Is A Trustee Of (TGT)
Citigroup Global Markets Or Affiliates Has Managed Or Co-Managed An Offering Of (HD), (TGT), (WMT), (DG) In Past 12 Months
Citigroup Global Markets Or Affiliates Has Received Investment Banking Compensation In Past 12 Months From (HD), (KR), (SKS), (TGT), (WMT), (DG)
Citigroup Global Markets Or Affiliate Received Non-Investment-Banking Compensation In Past 12 Months From (JCP), (KSS), (M), (SWY), (SVU), (TGT), (WAG), (WMT), (COST)
(HD), (KR), (SKS), (TGT), (WMT) Are Or In Past 12 Months Were Investment Banking Clients Of Citigroup Global Markets
(CVS), (HD), (JCP), (KSS), (KR), (M), (SWY), (SKS), (SVU), (TGT), (WAG), (WMT), (COST), (DG) Are Or In Past 12 Months Were Non-Investment Banking Clients Of Citigroup Global Markets (Securities-Related Services)
(HD), (JCP), (KSS), (KR), (M), (SWY), (SVU), (TGT), (WAG), (WMT), (COST) Are Or In Past 12 Months Were Non-Investment Banking Clients Of Citigroup Global Markets (Non-Securities-Related Services)
Citigroup Global Markets Or Affiliates Owns 5% Or More Of (SKS)
Citigroup Global Markets is a market maker in (COST), (CVS), (M), (WINN)

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