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.
That’s been an interesting and often repeated story. I’ll look into it.
China’s largest ghost city filled
http://macrobusiness.com.au/2011/04/chinas-largest-ghost-city-filled/
The Myth of China’s Ghost Cities
http://www.stockhouse.com/Blogs/ViewDetailedPost.aspx?p=116863
I’d say reduced demand thanks to a world economy that is crashing down.
Countries that are deep in debt to China is a bad thing, but ? imagine China being over exposed having that must debt lent out and no one will be able to pay it back....
If oil can drop 7% in one day on speculation ,is it too much a stretch to think that maybe speculation drives it higher in the first place. Look at the last 3 years , when the markets were up oil futures rose with it, despite many times having near record inventories. We are being hosed folks.
Folks, the ChiComs have a large army. You can do anything with a bayonet except sit on it. They will march.
‘. Sometimes financial market folks remind me of climate scientists.’
Yes, why is all economic news bad news? Copper has been so overpriced that you’re afraid to go out for the evening lest someone rip the wiring out if your walls. Cheaper commodities is GOOD news for us all.
Yes. Those two links were all that I could find during a considerable amount of time searching. The Chinese government is actually allowing the story of ghost cities to run wherever without rebuttals. Why? The actions and inactions of the PLA in the matter only arouse questions in some of us.
Why is a 50% or more down payment required for Chinese workers to move into those condos or houses? Most of the better employed ones can’t afford such a deal for a condo or four-plex. And meanwhile, there are maintenance crews supported to work in each of those cities.
Why did the PLA allow some Chinese people to get so wealthy? Quite a few billionaires there.
What kinds of clients have those wealthy Chinese people been working with?
Why are the cities built so far from one another?
Why are they being built so hastily?
Study the methods of the emperors in accomplishing huge feats (e.g., large population movements/efforts), and the Hans in particular. We begin to see answers.
Thus...China.
As for contemporary American political speech, it’s insulting and trashy to better American readers. Both political parties are too far gone with anti-American, socially pathological commies as controlling constituents. Propaganda on the economy is equally trashy and insulting. The economy is a no-go. It’s ate up.
We need wholesale changes in business, political and academic leadership at every level. Leadership and policy now are antithetical to our great Protestant beginnings. Contemporary America can’t hold a candle to the America that I grew up in, even during such late times (’60s). No sale, until we are unobstructed in rebuilding it. This debacle of debt—this eduocracy of ignorance—will not be revived.
We’re going to have freedom, but that will probably happen after the repudiation of debt and closings of many offices.
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