"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Monday, September 15, 2014

China's Economic Data Unsettles Copper Bulls

More pressure on the copper price this morning is coming as a result of news out of China that its industrial production for August showed the slowest rise since December 2008. Industrial output did rise 6.9% from the previous year's August but that was down from a 9% increase in July.

If that were not disconcerting enough to traders, China's retail sales rose 11.9% in August which is a good number, but it too was down from a 12.2% gain in July.

While at face value, these are good numbers, ( and wouldn't we love to see them here in the US!), the problem is that they feed into ideas that overall growth in China is continuing to slow. The general consensus is that China will experience an annual growth rate this year of 7.5%. This recent data throws some cold water on that expectation.

Copper, which is already seeing selling as a result of lower economic growth forecasts ( see my recent post on hedge fund positioning on the short side of the market ), has moved down to retest last week's low in price near the $3.06 level. If bears can succeed in breaching that, I frankly do not see much in the way of chart support until one nears the $3.02 - $3.01 level.  

As a side note, silver is also being pressured as is platinum which is continuing the theme of selling across the industrial metals. Palladium is a bit higher as I type these comments but its recent trend has also been lower. Clearly, investors are fretting about global economic growth rates.


  1. Bloodbath in tech and biotech today. Jittery market considering Scotland and the Fed mtg...a Bo Polny reverse in Gold seems imminent. LOL

    1. High flyers clobbered: LNKD, TSLA, NFLX, AMZN, JAZZ, but AAPL holding its own...for now.

    2. http://pro.moneymappress.com/MMRBSLG39/PMMRQ967/?iris=252778&h=true

      This is interesting. Didn't know Rickards was that hard up to sell books.

    3. https://docs.google.com/file/d/0Bywe0LES4bGidkFhSU91THk5VE1POHJrNTBFbG9wRk9qOXpj/edit?pli=1

      More humor from Polny...

  2. Amber lights flashing in NASDAQ, barring of course any late day reversals

  3. As an aside, there was an article in the NYT a few days ago about Seniors with student debt. The figure mooted in the article was 2million people over 60 had student debt! There were about 56 million people over 60 in the US in 2010 & the percent that went to college of that cohort is about 25%. Say 50% of them got student loans as college was still affordable. That implies that 28% of the wealthiest generation in American history didn't bother to pay their back their loans. Article goes on to say how the federal government garnishes social security payments for people w/ unpaid student debt (interest compounded).

    Imagine what will happen when the current cohort of student loan takers reaches retirement...

  4. beans- NOPA: 119.6 last month 110.5 Aug 2013 Oil stocks 1.213 in Aug... 1.589 in July.

    bean oil having a nice day on thoughts that the frost did hurt 'bean quality' which affects the oil content. canola damage was large in canada over weekend, said to support.

    soymeal did end up with an outside key reversal on weekly chart last week, said to be more support.

    corn bulls talking oversold market and how all these acres claimed by usda are not going to happen. perhaps those long hedge funds Dan wrote about are defending their position in corn.

    NDX those who bought alibaba are selling their high flyers so as to not increase capital into an overbought market... the best time in any year to invest in stock market is around Nov 1st, definitely not sept/oct time frame.

    CL fighting hard above the key 92.50 number, technicals look 'bottomy'.

    1. Alibaba is actually a good company that's been around since the 90's. And it's market cap actually makes a modicum of sense. Because it's not within the borders of the flood of petrodollars.

  5. It's the darned Commies again!

    China's Gold imports are down 17% YOY http://www.ingoldwetrust.ch/another-week-strong-gold-demand-china but that just masks the underlying devious plan to dilute and impurify our essential bodily fluids! As Jesse points out - "Gold is moving from West to East. China is clearly executing some longer term plan with regard to gold and its own fiat money as a reserve currency."

    Apparently, "China" is buying the dips" - for thise of you listening to this in Black & White at home in Minnesota, here is what "a dip" looks like - http://www.kitco.com/charts/popup/au0030lnb.html and, because you can't actually see either any end to this current trend, or any evidence of the Chinese stepping up their activities, that doesn't mean they aren't doing it, just that they are really really devious.

    Put more simply, in the immortal words of none other than the esteemed David P "out of Europe",

    " these charts are not the result of a free market -- they are rigged by those who control the majority of the shares (the bullion banks). Therefore, investors need to keep in mind that a false technical signal may be used in order to trick people into selling.” http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/15_Gold,_Crazy_Markets,_War_In_Russia_%26_The_Entrance_To_Hell.html

    or, as Art Cashin neatly summarizes it -

    “On this day (-1) in 1812, a very valuable piece of real estate committed suicide ..." which I think we can all agree tells us pretty much everything there is to know about the price trajectory of Gold over the short-medium term

    My two points are as follows

    a. Do not conflate "the Chinese" with "China" - Asian markets are every bit as fragmented as anything you will find in the West, and, contrary to what people would love to believe, we are not dictated to in terms of what to invest in, or when

    b. As Dan notes, Chinese economic data are "mixed" but nonetheless still firmly in positive territory; there is no magic in the Chinese economy, it is just darned big and going through the same evolutionary phases as Japan, Korea and a host of other economies have experienced. It is not about to collapse (as many would wish), it is not all imaginary, and it is not an oppressive state-controlled dictatorship: it is 1.3 billion people flying in loose formation from a pretty bad place to somewhere slightly better


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