Copper Futures Are Getting Destroyed In Another Asian Commodities Rout (Dr Copper)

BI ^ | 11-23-2015 | Greg McKeena

[blam]

Greg McKenna
November 23, 2015

It’s an ugly day on industrial commodity markets in Asia today with some big falls in crude oil, copper, zinc, and Chinese rebar steel.

At the moment Nymex crude for January delivery is down 2.74% to $40.75 a barrel, Brent crude is down 1.75% to $43.87 a barrel, Copper in US trade has fallen 2% to another six-year low of $2.01 a pound, but it is down 3.74% in Shanghai.

Zinc in Shanghai is down 1.03%, and rebar steel on the Shanghai exchange is off 3.35%. Interestingly even against this back drop Gold still can’t find any buyers and is down $7 an ounce to $1071.

The weakness appears based in Chinese exchanges, where the biggest falls are but as the prices also show the price pressure has reverberated around the globe. Today’s selling has also been accompanied by a continued US dollar strength today while the PBOC allowed the USDCNY to set back near the top of the recent, weaker range, at 6.3867.

Trade has had a real “China worry” feel about the move today with Australia’s big miners under pressure as well. BHP is down 2%, Rio is off 1% and commodity currencies like the Australian and New Zealand dollars have been dragged along for the ride lower. The Australian dollar is down 0.88% at 0.7174 while the Kiwi is off 0.81% to 0.6509.

(snip)

[Darteaus94025]

[Attention Surplus Disorder]

Fantastic!

[RinaseaofDs]

It’s a vote of no confidence in the global economy, the media’s attempt to fluff the economy by either ignoring bad news or by flat out lying about economic statistics, and in the US economy as the ‘emerging engine’ to lead the economy in China’s stead over the next couple of years.

One poster here brought up the Baltic Dry Index, that is another extremely reliable leading indicatory. The other, highlighted today in the WSJ, is the recent spate of share buybacks.

Of all the bellwethers, that one is the most troubling. Reason is that a share buyback ISN’T about boosting the stock price, as the WSJ would have you believe. The share price DOES rise, but that isn’t why its done.

It’s done because corporate leadership and the board agree that there is no better place to deploy the capital at the moment. Period.

If you did that sort of thing prior to 2008, you’d be fired as a CEO because it signaled that you were out of ideas for how to fuel growth.

What the share buyback trend indicates is that growth is off the table in boardrooms as a reasonable expectation of CEOs. Boardrooms are in consensus that minimizing the damage is good enough for the short term to keep the CEO employed. Not at all a good sign, especially if the world is looking to the US as a haven.

Last but not least - Swiss banks moving to negative interest rates. Taboo until this year. German banks have signaled, basically, that there aren’t many other alternatives.

For the first time in what is probably our lifetimes, the sound financial advice of the moment is stuffing the family mattress with something valuable, but not currency.

[OldSmaj]

Thanks to all.

Some good informative answers.

I'm not a stupid man...in fact, I'm fairly well educated and been pretty much throughout the world...but my primary experience has always been, quite frankly, learning how to and teaching others on the art of killing and causing mayhem and being an expert on the weapons to do so with.

Not had a whole lot to do with world markets, other than figuring out exchange rates in the various countries around the world and, in my misguided youth, finding the best drinking spots in the various places.

It's refreshing to get a straight, non-condescending answer from folks.

I have made investments in the commodities markets...not lost a penny yet, other than some I got caught with on silver prices, but not enough to hurt.

I definitely do not see a future in copper futures.

Again, thanks, everyone for the informative and mature answers.