Dr Copper is speaking , but the FED is Trumponized ! Is this a paradigm shift or financial short sightedness ?


Never mind trying to predict the future; how about predicting the present? On Wednesday the Federal Reserve Board upgraded the US growth outlook from “solid” to “strong”, assuring us that household spending had accelerated to “grown strongly”. It lacked only the word “powerful” to sound like a Trump speech. Copper, however, is telling us not to worry a bit: the metal is telling us to panic. Since the first week of June, the copper price went into steep decline. In the year to date, the metal has deflated by close to 18 per cent. That is going beyond just one Chilean strike being deferred or a Chinese investor club breaking up. The metal is giving western investors a clear signal to sell risk assets or at least reduce their portfolio weighting. I say this as a long-term optimist about the copper price. Most easily or cheaply mined copper deposits have already been identified and at least partly exploited. When the next recovery comes, it will turn out that the world has not invested enough in new mines or mine expansions. That, though, is a five-year view. Right now the copper price is saying we are not far from a more general sell-off in risk assets. Take a look at the copper price chart in 2008. The price was strong at the beginning of the year, peaked in May, and then fell like a lump of ore down a mine shaft.

Read more: https://www.ft.com/content/a8e3a258-9648-11e8-b747-fb1e803ee64e?list=markets-opinion-analysis


Source: The Financial Times Limited 2018. All rights reserved.



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