Interesting note from SocGen’s Dr. Michael Haigh and Jesper Dannesboe regarding copper, which is famously seen as a good barometer of economic health.In their view, Dr. Copper is dead, not so much in that the economy is dead, but rather it’s just not that good of a barometer:
Doctor Copper is dead because copper prices will, in our view, not be leading the ongoing slowdown of the global economy. Investors who use the copper price as a leading indicator for the current business cycle downturn are likely to be disappointed as copper is likely to lag other leading indicators. The reason for this is simple: the physical copper market is tight and has tightened further over recent months. The same is true for oil. The physical crude oil market is extremely tight at present, which explains why crude oil prices have been very resilient despite the terrible newsflow coming out of Europe and fears of a global recession.