Pretty much everything from stocks to bonds to gold and oil have been marching lockstep higher in the last several weeks, helped by a recovery economy and a weakening dollar. But here’s one asset that hasn’t joined the parade.
Since peaking in mid August, copper has drifted lower, and hasn’t been able to regain its hold highs — on a dollar-weighted basis, the chart on the right would look much worse.
WSJ: “Even if copper is not rallying with the equity market dollar-for-dollar in a tight correlation, it is going to lend some spillover support, along with the weakness we’ve seen in the dollar,” said Adam Klopfenstein, senior market strategist with Lind-Waldock.
But Michael Gross and Mr. Klopfenstein also suggested the upside is limited by demand concerns. “You still don’t have any base demand. Everything is all speculative right now,” Michael Gross said. “We’re speculating demand is going to pick up, but it hasn’t yet, and that’s probably why you’re not getting any upside-breakout support.”
Does it matter? Well, insomuch as copper is said to possess as “PhD in economics” due to its predictive ability, the lack of demand for it, and the lack of a speculative price runup should be a red flag.