Doctor Copper Prescribing Bull or Bear?

By NFTRH

The title is just an excuse to reference an old market saying about copper as the metal with a Ph.D. in Economics. I think that is just so much noise now as is much of the macro market, with all of its man-made stimulants creating a toxic pool of assets sloshing around the globe; copper included. I’d say the actual Ph.D. is the stodgy old man, gold. He of the counter-cyclical indications.

Anyway, ref. CNBC’s Copper — a metal with a history of predicting economic trouble — hits 1-year low, nears bear market

For whatever reason copper is still watched closely by multitudes of casino patrons and here is the state of its daily chart. Utterly bombed out to an oversold situation right to the level of my excellent, genius and utterly “fantastic” call… that was unfortunately only made to one person (i.e. it was not a call, just an offhand remark to a pal).

July 3rd in response to an inquiry from IKN’s excellent mining funda guy, Mark.

Continue reading Doctor Copper Prescribing Bull or Bear?

The Current Message From the Most Useful Sentiment Indicator

By Steve Saville

As I’ve noted in the past, the Commitments of Traders (COT) information is nothing other than a sentiment indicator. Moreover, for some markets, including gold, silver, copper, the major currencies and Treasury bonds, the COT reports are by far the best indicators of sentiment. This is because they reflect how the broad category known as speculators is betting. Sentiment surveys, on the other hand, focus on a relatively small sample and are, by definition, based on what people say rather than what they are doing. That’s why for some markets, including the ones mentioned above, I put far more emphasis on the COT data than on sentiment surveys.

In this post I’ll summarise the COT situations for five markets with the help of charts from “Gold Charts ‘R’ Us“. I’ll be focusing on the net positioning of speculators in the futures markets, although useful information can also be gleaned from gross positioning and open interest.

Note that what I refer to as the total speculative net position takes into account the net positions of large speculators (non-commercials) and small traders (the ‘non-reportables’) and is the inverse of the commercial net position. The blue bars in the middle sections of the charts that follow indicate the commercial net position, so the inverse of each of these bars is considered to be the total speculative net position.

I’ll start with gold.

Continue reading The Current Message From the Most Useful Sentiment Indicator

China PMI and Copper

By Callum Thomas

With the end of February, China puts itself in the spotlight with the first major PMI results of all the major economies, and major economy is the key word as China’s influence across global markets only grows by the year.  The February manufacturing PMI came in at 50.3 (51.2 expected, 51.3 previous), and the Non-manufacturing PMI at 54.4 (55.0 expected, 55.3 previous).  So, some pretty soft results.  The timing of Chinese new year no doubt played some role (taking place in the middle of February – and hence shutting things down for a couple of weeks around the 1-week national holiday), so we’d need to see March data to confirm, but it still a weak result nonetheless.

On the details, within the manufacturing PMI large firms were down -0.4pts to 52.2 vs small firms down a sharp -3.7pts to 44.8 – highlighting the pressure facing smaller firms which receive less support from the government and are generally more sensitive to changes in economic activity.  Within the non-manufacturing PMI, the Services PMI was down -0.6pts to 53.8, while the Construction PMI was down -3.0pts to 57.5 – which lines up with the slowing in property price gains.  So overall, within the data there was not much to get excited about.  And looking at a key China-sensitive market, the outlook for copper prices is left with some looming questions…

The key takeaways from the February China PMIs are:

-The February China PMI data was materially weaker vs January and consensus expectations.  Chinese New Year likely had some impact, but it was still a weak result.

-The soft data, even if it proves to be temporary, leaves question marks looming on the outlook for copper prices.

-Looking at the copper and government bond markets there are a couple of key divergences, which highlight double-edged risks in copper prices and bond yields.

1. China Manufacturing PMI: This chart shows the breadth of the components that make up the NBS China manufacturing PMI.  You can clearly visualize the moment China stepped up stimulus measures in early 2016, while the rebound in global trade and commodities and weakening CNY also helped. Whereas now you can see the impact of waning stimulus tailwinds (which were already in play) and with the latest results accentuated to the downside by Chinese new year distortions.

Continue reading China PMI and Copper