Anybody seen any 'Green Shoots'?
Posted on 09/24/2011 1:15:44 PM PDT by blam
What Are Copper And Oil Signaling?
By Eric McWhinnie
September 24 2011
With the markets in turmoil, investors are looking for indicators that will help clean their crystal balls. Two of the more widely used economic indicators are copper and oil. Copper (NYSE:JJC) is often referred to as Dr. Copper, because of its ability to give insight to the future of the global economy. Oil (NYSE:USO) is often seen as the lifeblood of the economy since it is used in everything from plastics to finished motor gasoline. Recently, copper and oil have given investors reason to worry.
On Friday, copper fell to its lowest level in over a year. Copper prices are down nearly 19% in only a week as the Federal Reserve announced, “There are significant downside risks to the economic outlook, including strains in global financial markets.” Copper had been relatively stable this year with demand strong in foreign markets. However, China (NYSE:FXI), once considered the country to keep demand in commodities (NYSE:RJI) high, continues to slow its economy. In addition to the HSBC (NYSE:HBC) preliminary PMI survey that showed China’s manufacturing may shrink for a third month, Freeport-McMoRan’s (NYSE:FCX) CEO gave a concerning outlook for copper. Richard Adkerson said, “A China slowdown has more of an impact than anything else.” He goes on to describe copper as a window for the global economy, and expects slower growth rates to continue. FCX is the world’s largest publicly traded copper producer, with operating, expansion, and growth projects in the copper industry. Copper also received additional pressure this week due to a decline in housing starts. Housing starts dropped 5% to a seasonal adjusted rate of 571,000 units. It was the largest drop since April.
Although falling oil prices will offer some relief to consumers at the pump, the rapid decline this week has investors on edge. Last week, light crude oil traded near $90, but fell to an intraday low of $77.55 on Friday. It was the lowest intraday low since August. With global growth concerns increasing, brent crude has declined nearly 7% since last week. Also, oil companies such as Exxon Mobil (NYSE:XOM) and Halliburton (NYSE:HAL) are now trading at new lows for the year. On Tuesday, the IMF cuts it global growth forecast for this year and next. The IMF stated, “The global economy is in a dangerous new phrase. Global activity has weakened and become even more uneven, confidence has fallen sharply recently, and downside risks are growing.”
Copper and oil both appear to be warning the markets that a global slowdown is underway. Equities are also signaling this as the Dow (NYSE:DIA) just finished 6.4% down this week, its worst week since October 2008. Furthermore, copper and oil are signaling that investors have lost confidence in the Federal Reserve’s ability to stimulate the economy through Operation Twist.
Anybody seen any 'Green Shoots'?
ping
(Or is it "III" now? Perhaps it just feels that way...)
I don’t understand the logic here. Without understanding what drove copper from $3.50 to $4.50, how do you know what drove from $4.50 to $3.30? The outlook for the economy is bleak, because outlook for the economy is bleak. Sometimes financial market folks remind me of climate scientists.
I think copper is a better indicator of economic futures than oil - its not sensitive to middle east craziness. Like oil, its used throughout the economy.
There’s a simple explanation for markets this week:
When all investments are dropping. Equities. Global stocks. Commodities. Precious metals.
It is not investments which are dropping. It is currencies the investments are traded in, rising.
Why?
They are signalling a down turn in manufacturing.
Sometimes financial market folks remind me of climate scientists
Commodities traders think selling is the right bet at this time. We don’t need them to tell us the economy is crap. We already know.
Analysts are stupid. They look at oil like someone looking at reeds batting in the wind instead of cherry tree branches for information about whether a hurricane is coming.
$3.50 to $4.50 probably speculators and demand from China. The word is China’s building boom may be ending. They were using enough resources to build a city the size of Houston in a month.
Komatsu is saying they are not getting paid by developers in china. Komatsu is Caterpillar’s competition.
The “confidence” in Obama and the western and Chinese debt binge is over. People think things are not going to get better.
They sure will not with Hussein, Romney, Amigo Perry, Newt or Federal Reserve Herman Cain. The Fed is pure evil along with anyone who worked there.
“I think copper is a better indicator of economic futures than oil - its not sensitive to middle east craziness. Like oil, its used throughout the economy.”
Maybe ammo prices will fall now that the price of copper is down.
Nickel also - it's an industrial metal as well - and it's been tanking:
I was pushing a cheap, no-risk "investment" in small amounts, of the 5c piece as another inflation hedge, since the melt value at the time was about 6.5c. It's now at 4.9c, which tells me 1929 is right around the corner.
Komatsu is saying they are not getting paid by developers in china>>>>>>>>
That sure says something. ChiCom bubble economy maybe over for a while or a decade
BTW, I'm a retired chip-maker. (We were always the first to lay-off and the first to rehire.)
I don’t understand the logic here. Without understanding what drove copper from $3.50 to $4.50, how do you know what drove from $4.50 to $3.30? The outlook for the economy is bleak, because outlook for the economy is bleak. Sometimes financial market folks remind me of climate scientists.
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I agree. The fall could just be from hedge fund ‘operators’ having to sell to cover margin calls, and not “world downturn” at all.
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