As Rod Serling used to say, “for your consideration”, first I present to you the Baltic Dry Index:
On the other hand, here is “Dr. Copper”:
Both are considered strong indicators for the world’s economy. With the price of copper holding up, that means the world’s liquidity is ok, and the production is ok. However, the Baltic Dry Index falling off a cliff like that is showing a severe lack of trade.
I can’t say for sure what I am seeing, but I know I don’t like the looks of it.
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I agree my TRAN is down .5% today and that usually does not bode well.
“Copper presents a more unusual picture. China’s copper imports in December hit an all-time record high of 508,942 tons, up 47.7% y-on-y. However, there is little reason to believe this was driven by end user demand. Most analysts I’ve talked to believe it was primarily due to a resurgence in speculative arbitrage based on the gap between copper prices in Shanghai and London, and possibly renewed interest in using stockpiled copper as collateral for obtaining loans — both practices spurred by expectations of monetary easing. In short, the Chinese are buying copper, like homes, to trade not to use.”
http://chovanec.wordpress.com/
could be an explanation. I have looking to both of them too recently.
Btw: I like that blog too to give me added insight about China, it documents well the risks for a slowdown in China.
plas,
Thanks for sharing that link. That’s a great blog!
On another note, I had neard about the Chinese using copper as a quasi-currency. That could explain the disparity between the price of copper and the Baltic Dry Index.
Then you hear about them borrowing money on copper in warehouse so they borrow more money to buy more copper. Sounds like it is good to have no rules!!!!!!!!!!
I never heard a reason why china was buying copper.
Copper is about like oil demand is higher in the summer. As long as the rumors keep flying around about QE3 copper should pick up. IMO
Doesn’t this have alot to do with the oversupply of vessels. Take a look at a weekly chart of the two on stockcharts. BDI’s high of the past 3 years was in November of 09. The two have been diverging for awhile
m,
They do look almost inverse to each other.
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