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250 Years of Freedom: What We Inherited, and What We Owe

"This Nation was born when a band of men, the Founding Fathers, a group so unique we've never seen their like since, rose to such selfless heights. Lawyers, tradesmen, merchants, farmers. Fifty-six men achieved security and standing in life but valued freedom more. They pledged their lives, their fortunes, and their sacred honor. Sixteen of them gave their lives. Most gave their fortunes. All preserved their sacred honor.”

Ronald Reagan made this statement during the commencement address at the University of Notre Dame on May 17th, 1981. Reagan went on to say, “They gave us more than a nation. They brought to all mankind for the first time the concept that man was born free, that each of us has inalienable rights, ours by the grace of God, and that government was created by us for our convenience, having only the powers that we choose to give it.”

As I've gotten older and wiser (I hope), those words have taken on a different meaning. When I was younger, I admired the courage it took to create a new nation. Today, I find myself thinking more about the responsibility that comes with it. The Founding Fathers accepted enormous personal risk because they believed the generations that followed deserved something better than they had. America has never been perfect, and frankly, that was never the goal. The goal was always to leave something better for those who came after. For 250 years, each generation has had both the opportunity and the responsibility to continue that work.

The Preamble to the Constitution begins with these words: "We the People of the United States, in Order to form a more perfect Union, establish Justice, ensure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

We have faced many challenges throughout our nation's history. We haven't always lived up to the ideals upon which this country was founded. It took 85 years, and a Civil War, before slavery was abolished. Women did not gain the right to vote until the Nineteenth Amendment was ratified in 1920, and it took the Voting Rights Act of 1965 to prohibit many discriminatory voting practices.

In the twentieth century alone, we have faced two World Wars, the Great Depression, the Vietnam War, and the assassinations of John F. Kennedy, Robert Kennedy, and Martin Luther King Jr., to name a few. Today, we face political volatility and renewed uncertainty. Yet “in Order to form a more perfect Union,” Americans have always found a way to move forward. I believe we will do so again.

The Declaration of Independence reminds us, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

Two hundred and fifty years is a remarkable milestone. Few countries have enjoyed the freedom and opportunity that America has. Even so, the principles established in 1776 have carried us through wars, economic hardship, political disagreement, and extraordinary change.

Reflecting on this milestone, I've found myself thinking more about the men who made it possible. I am grateful to our Founding Fathers for the tremendous sacrifices they made. They gave us more than a nation. They gave us an opportunity that every generation has the responsibility to preserve, strengthen, and pass on.

We owe a great debt to those who made those sacrifices. The best way to repay it is to honor the principles that brought us here: freedom, opportunity, honesty, integrity, and hope for anyone willing to work for it. As Winston Churchill said, "We make a living by what we get, but we make a life by what we give." What we inherited is worth protecting. What we owe is our commitment to leave our nation stronger for the generations that follow.

INFLATION

Not So Fast

Yes, headline CPI fell 0.4% for the first time in six years. No, inflation isn’t behind us. The details matter, and they tell a very different story. Inflation will continue to go up and down with oil prices.  

• The Consumer Price Index (CPI) headline inflation fell in June 0.4%. The main reason was the biggest decline in gas prices since 2022. Core inflation, excluding food and energy, was flat from the prior month. Annual gauges continued to point to elevated inflation, with the headline index inflation up 3.5% from a year earlier and the core measure 2.6% higher. For most consumers, the lower gas prices will help, but affordability will still feel bad.  
• Personal Consumption Expenditures (PCE), the inflation measure preferred by the Federal Reserve, rose 0.4% in May, matching April's pace. On a year-over-year basis, PCE accelerated to 4.1%, its highest reading since early 2023. Core PCE, which excludes food and energy, also remained elevated, rising 0.3% for the month and 3.4% over the past year.
• The Producer Price Index for June declined 0.3% month-over-month. This brought the annual wholesale inflation rate to 5.5%. The drop was largely driven by a 12% slump in gasoline cost. Core prices, excluding volatile food and energy, edged up 0.2% for the month, translating to a 4.7% annual increase.  
• The GDP for Q1 was revised upward to 2.1% from 1.6%. The Atlanta Feds GDPNow forecasts Q2 at 1.3%, which was a sharp drop from last month's 3.3% growth for Q2.

MANUFACTURING

Reasons for Optimism

Manufacturing remains one of the brighter spots in today's economy. While not every data point improved this month, the longer-term trend continue moving in the right direction.

• The ISM Manufacturing PMI eased slightly to 53.2 in June from 54.0 in May, but the broader picture remains encouraging. The index has now expanded for six consecutive months, and perhaps most importantly, order backlogs have grown every month in 2026 after more than three years of contraction. While new orders and production softened in June, both remain firmly in expansion territory. The prices index also declined as energy prices eased, though expect continued volatility.

• Core industrial production was unchanged in May, ending four consecutive months of gains. The slowdown was largely offset by continued strength in high-tech manufacturing, where production increased another 1.8% thanks to ongoing AI investment and the reshoring of semiconductor manufacturing. High-tech manufacturing is now up 12.6% over the past year and nearly 20% on an annualized basis over the past six months, making it the fastest-growing major manufacturing category. Business equipment production also remained strong, rising 0.6% in May and 5.7% over the past year, another encouraging sign of broader reindustrialization. Most of the remaining weakness was concentrated in oil-related nondurable manufacturing.

• U.S. core capital goods orders continued to rise, increasing 1.3% in May, and 10.2% in the past year, the largest annual gain in four years. All major categories outside transportation posted gains in May, led by primary metals (+3.0%), industrial machinery (+1.9%), and fabricated metal products (+1.5%). Orders for primary metals, fabricated metal products, machinery, and computers and electronic products have all seen double-digit growth in the past year.

• Shipments of core non-defense capital goods rose 0.3% in May. If unchanged in June, core shipments would increase at an 8.2% annualized rate in Q2 versus the Q1 average. Business investment has consistently increased since mid-2025, driven by a more favorable tax environment and AI spending. 

• Everyone knows that gas prices have slowed consumer spending. Wrong. Core consumer spending rose 0.6% in May and, if unchanged in June, would increase at a 6.9% annualized rate in Q2 versus the Q1 average. The biggest driver was internet and mail-order sales, which are up 12.2% over the past year. Even though I dislike Amazon’s sustainability footprint, it just makes it too easy to shop.

• U.S. Civilian Aircraft Equipment Production in the 12 months through May was 9.0% above the year-ago level according to ITR. They expect the growth trend will generally rise through at least 2028, although growth will slow in late 2027 and early 2028.

• The NFIB Small Business Optimism Index rose 2.1 points in June to 97.4, nearing its 52-year average of 98.0. Expectations for better business conditions and real sales expectations improved substantially and primarily drove the rise in the Index.

• Nonfarm payroll employment increased 57,000 in June. The U.S. employment picture has clearly strengthened during the first half of 2026, adding on average 92,000 jobs a month versus an average of just 10,000 per month in 2025.

• Construction spending totals for May 2026 hit a seasonally adjusted annual rate of $2,210.2 billion. This reflects a 0.1% increase from April's revised estimate.

• Car and light truck sales for June rose slightly from May again. The annual rate (SAAR) of 16.52 million units was up from May at 16.3 million units. ITR sees this trend relatively flat through 2028.

• Artificial intelligence impact on jobs? Jobloss.ai, which tracks layoff announcements, estimates roughly 127,000 jobs have been lost to AI since the beginning of 2025. Considering there are more than 162 million people employed in the U.S., that isn't a significant number... unless you're one of the 127,000.

• The Shapiro Nonferrous Scrap Activity Index, which tracks daily purchases from the same accounts across our nine locations and represents a diverse industrial customer base, showed no change in June based on our twelve-month trailing average.

The monthly data will continue to ebb and flow, but the longer-term trends remain encouraging for manufacturing and the broader economy.

CHINA

The Chinese Trade War

According to Matthew Klein of The Overshoot Substack, China's trade surplus continues to expand at a remarkable pace. In 2025, Chinese residents sold roughly $4.5 trillion in goods and services to the rest of the world while purchasing just $3.4 trillion in return. During the 2017-2019 period, that annual trade gap averaged only $140 billion. Through the first four months of 2026, China's trade surplus in goods and services is already running 40% above the January-April average from 2022 through 2024.

China continues to strengthen its manufacturing dominance, and nowhere is that more evident than in the automotive industry.

Klein notes that Chinese spending on imported passenger vehicles remained relatively steady at roughly $50 billion annually from 2017 through 2023. In just the first four months of 2026, however, that pace has fallen to less than $20 billion annually. At the same time, China has transformed from importing and exporting roughly 1 to 2 million vehicles annually before the pandemic to exporting more than 8 million vehicles in 2025 while importing fewer than 500,000.

The change in export value is just as remarkable. Chinese finished vehicle exports have grown from roughly $8 billion annually before the pandemic to more than $130 billion (!) annually since last summer.

Those are staggering numbers. If there was ever any doubt about China's determination to dominate global manufacturing, these statistics should put it to rest.

Klein argues that China’s post-pandemic surplus stems from, “the same source of its previous world-destabilizing surplus in the 2000s: systematic transfers of spending power.”  Rather than flowing to consumers, much of that spending is being redirected “to businesses, local governments, and foreign consumers.”

China's consumer economy continues to struggle. Retail sales fell 0.6% in May from a year earlier, including a 16% drop in car sales. Excluding that, spending was up 1.6%.

Meanwhile, China’s manufacturing engine continues to accelerate. Industrial production rose 4.5% in May, driven by a boom in exports and tech-related industries. Exports and China’s expanding trade surplus continue to offset the housing bubble crisis that was never fully resolved.

Overall, China’s PMI reached 51.7 in June, essentially unchanged from May and marking the seventh month of expansion.

China may be winning the trade war, but it’s doing so by embracing manufacturing, exports, and global trade, while drifting further away from the traditional ideals of the Communist People’s Revolution.

METALS

Sell in May and Go Away

Sometimes old market sayings survive because they continue to prove true. “Sell in May and go away” certainly did this year.

Spot prime aluminum prices fell $0.41 (14%) from June 1st to July 1st. Cash LME dropped $720 per metric ton, marking the worst monthly drop since 2008, a year I will never forget.  Prime scrap prices did not track with the $0.40 drop in prime. Most AMM prices fell only about $0.10 as margins tightened for the first time this year. Secondary aluminum prices, however, were about the same as last month.

Prime copper fell $0.41 (6%) while nickel dropped $1.43 (17%). Scrap steel prices were unchanged. It’s nice to be hedged, our insurance protection against price changes.

Gulf state producers report that damaged smelters are returning to production faster than expected. China is producing aluminum at roughly 3% above its announced “cap” of 45 million metric tons per year, while other Asian producers are also increasing output.

Ed Meir of Marex, the most accurate forecaster I follow, believes projected aluminum deficits of 1.4 to 2 million metric tons this year could fall to 1 million tons or less. This rebound in supply has already pushed the Midwest premium down from $1.17 at the beginning of June to $1.07 today.

Goldman Sachs now expects the global aluminum market to post a deficit of 100,000 metric tons in 2026, down sharply from its prior forecast of 720,000 tons, while raising its 2027 surplus estimate to approximately 1.5 million metric tons, up from 590,000 tons.

Reflecting a weaker demand outlook and increased aluminum production, Goldman also cut its Q4 2026 LME aluminum forecast to $2,950 per ton from $3,200, and reduced its 2027 average price forecast to $2,700 from $2,950 per ton, as it expects inventories to rebuild through 2027 and smelter margins to normalize.

Harbor Aluminum continues to maintain its forecast for record-high aluminum deficits, increases in aluminum demand and lower oil prices creating lower interest rates. Harbor believes prices will begin rising again later this September and still expects $4000 LME prices in 2027.

Stay tuned. The forecasts will undoubtedly change. They always do.

CLOSING

I am deeply grateful to the United States. Generations of Americans have worked hard and many have sacrificed their lives to make the American dream possible.

My ancestors were Jews living in small towns across Ukraine, Russia and Poland. They faced persecution simply because they were Jewish, and many were murdered. America offered them something they could not find anywhere else: hope and the opportunity to live in freedom. They left behind their families and everything they knew to begin a new life here. Their dream was simple. They wanted to raise their families without fear, practice their faith freely, educate their children, and earn an honest living.

My grandparents arrived in America in the late 1800s. Like so many who endured persecution, they rarely spoke of the hardships they had experienced. They simply didn’t want to burden us with those memories. One grandfather became a produce peddler. The other, a junk peddler. One step above a trash man. Neither sought wealth or recognition. Their goal was simply to provide a better life for their families.

This story is shared by many immigrant families. Irish Catholics fled famine and persecution. Millions of others came from across Europe searching for opportunity, freedom, and a shot at that American dream.

The story of African Americans was tragically different. Enslaved Africans were brought here against their will and endured generations of unimaginable injustice. Their struggle for equality did not end with emancipation, and the pursuit of equal opportunity continues today.

I still believe in the American dream. I still believe that all men and women are created equal. I still believe in life, liberty, and the pursuit of happiness. And I still believe we are working toward the promise made in the Constitution to form a more perfect Union.

That work did not end in 1776. It belongs to every generation.

I intend to do my part.

“Those who deny freedom to others deserve it not for themselves.”  -  Abraham Lincoln

“The secret of happiness is freedom, and the secret of freedom is courage.” - Thucydides