April 20, 2017
Some U.S. stock market investors are getting worried about the price of iron ore in China. This week’s chart helps to show why.
It is definitely an intriguing chart, and a relationship I had not explored before. I have come across a large number of interesting intermarket relationships like this one, and it is always fun to find (or be shown) a new one. But not all of them have merit. So what I’d like to do is use this one to show you how I typically like to contemplate a new relationship that I encounter.
So my first question is about whether the relationship is a durable one. The answer, it turns out in this case, is no. The two have only recently fallen into this apparent correlation. Here is a longer term look: