Uncharted-FX
Short

Dr Copper sending a sign of a potential recession?

OANDA:XCUUSD   CFDs on Copper (US$ / lb)
If you follow my work, I believe a recession is coming...and could be a reason the Fed is cutting. Check out my posts on the recession signal and the US Dollar linked below.

This sets up the potential confidence crisis that I talk about in my bitcoin and gold posts and why these assets will likely go higher. We are told we are in the strongest economy ever...yet it is so strong that we need to cut interest rates. According to economics, when the economy is strong and overheating, you RAISE interest rates. While cutting is used when the economy is weak. Again, check out my work on how this is leading to a confidence crisis as central banks and the keynesian economists cannot admit their policies failed and were wrong. It is all about maintaining confidence by way of having an excuse to save face (geopolitical). Once market participants know QE will be the norm, the confidence in government, banks and the fiat money will begin to wane.

We know there is a major yield inversion which generally predicts recessions. The yield curve is pretty much inverted but the financial media keeps touting the spread between the 2 year and 10 year yield which has not inverted yet. We are about 9 spreads away before inversion. Once this happens, the media cannot hide the yield inversion anymore. It tells us that people are worried and uncertain about the future.

Copper is also known as Dr Copper , as it shows us a sign of the world economic health. Copper is used in infrastructure and building homes etc.

China's large building boom accelerated coppers demand.

Now we are at the point where it seems the world economy is slowing down. Again a lot of signs showing recession such as bond yields, bad data such as PMI (which tells you what is coming, rather than CPI , which tells us what has already happened: the future vs the past).

Others also point to Oil recently. Oil can tell us things are slowing down too. Oil can remain buoyed however due to geopolitical tensions.

Copper is at a very interesting support area right now. You can see a head and shoulders within a head and shoulders ...although I would be quick to point out that the second head and shoulders (within the larger head and shoulders ) is not a true head and shoulders since they need to appear either at an uptrend or downtrend. But the larger head and shoulders pattern is valid.

So let us watch this 2.50 zone it is very important. A nice break below can take us to 2.20 and then a break below 2.00 can take us much lower.
Copper has and always will be a guide, interesting to also look at rare earths that have become as important in the 21st century. The big correction has already started, as they say, it's only the beginning!
+1 Reply
Uncharted-FX StarkNetworks
@StarkNetworks, Yes the commodity, especially metals complex right now is very interesting! Platinum and Palladium may also feel the burn due to their automotive industry links. I do know that the Chinese own about like 70% of the rare earth supply. However if western nations do make rare earth a strategic metal and fund projects (let's say due to China stopping rare earth imports) we could see a play there as well!
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Great post. I'm sitting on some MDR right now. Thanks.
+1 Reply
Uncharted-FX canna_surgency
@canna_surgency, Thanks! Glad you enjoyed it!
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