There are lots of reasons people give for copper being a bellwether for economic growth because of its wide use. And there are lots of reasons now being cited for it fall from grace as an economic prognosticator. Things have changed goes one.
Be that as it might, copper of late has been on a tear. Prices are now up for the 10th straight day, a streak that spans 28 years, and many are suggesting signals a turn in the slow-growth miasma witnessed these past several years. But copper is not alone in this rally. Aluminum, zinc and nickel have been on their own upswing.
Copper closed the week up 3.3% punctuating an 8.5% rise in prices over the 10-day stretch. Signs that inflation might be on the upswing in the world's two biggest economies, the U.S. And China, has buoyed investor hopes, as factory activity in both countries has been reported on the rise. But there's still much room for another declaration: Not so fast. Reported is a suspect of interest. Can any one believe U.S. numbers let alone those from the government-controlled China?
Rising car sales in China is one reason cited for the expected good tidings. But sales in the U.S. tell a different story. Ten days, however impressive, don't make a trend. The stock market many seem to overlook has benefited from stilts in it climb higher, $2 trillion in share buybacks. Then there's capital expenditures, anemic by most standards given the excessive amount of artificially cheap money afloat. Further the cheap money has spurred M&A activity not something known to stimulate economic growth,but more an exercise in money grubbing and poor allocation of funds.
Trump is considered an unknown risk. Well, what many Americans, agree with them or not, now know Obama proved to be an unknown risk. In the corporate world, as one might expect, these Johnny come late elites, have a new excuse, short termism. Now short termism has been a Wall Street-caused problem for as long as we can recall, but don't try to awaken that sleeping pooch.
Way back in 2002 you had one of the biggest Wall Street darlings of the time exceed it's expected earning by one penny for 14 straight quarters, probably right up there with one's odds of winning the Super Lottery, and each time the stock price roared upwards. Now JP Morgan's Jamie Dimon and his fellow Wall Street elites are suddenly going to change all that by focusing on the longer term. Anything to get heat off them and the pressure they put on quarterly earnings.
The bottom line here is these elitists are human beings. And history shows without doubt the pit of human greed and arrogance is bottomless. One recent example is the glee from these people over the UK court decision calling for a vote by Parliament. The people spoke. Democracy is only democracy if these people get to define it. Learn that now or step in line to get measured for you ankle shackles.
As for your investments expect the unexpected. Fade the scaremongers and be flexible.
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