The last week has seen some interesting developments in geopolitics, Chinese finance and copper prices.
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Copper is mankind’s most useful metal and is used in everything from consumer products to industrial products. The average home contains 500 pounds of copper and the average car contains 50 pounds. Copper’s electric conductivity is second only to silver, explaining why its largest use, accounting for half of total production, is in electrical equipment.
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US small businesses can’t break out of the malaise they have felt since the great recession hit. The headline of the small business survey fell from 94 to 91.4 in February (vs expectations of 94).
Read MoreWe’ve been commenting on the price weakness of copper recently so we’d like to point out that after the selloff over the last two days copper is now within a few pennies of breaking the low it made last June.
Read MoreThere hasn’t been a genuine oversold condition in the S&P 500 since October 2011. Coincidentally, there has not been a correction in ratio of copper to gold prices since 2011.
Read MoreThe last few days have seen some important data points out of Japan. Below is a quick snapshot of some of those. 1) The Economy Watchers Survey posted a drop in the current conditions component, but the future conditions component plummeted by the largest single month amount since the earthquake in 2011.
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While the headline number increased, narrowly missing economists’ positive expectations (actual 13.9 versus consensus 14.0)… The ’Investor Expectations’ (the forward-looking component of the survey) declined: Though not perfect, the survey’s correlation with GDP suggests room for continued, but limited, improvement in the coming quarters:
Read MoreEarnings estimates (and sales estimates to an extent) have taken a beating over the past three months. On average, EPS growth estimates are down 5.3% for the next fiscal year during this time.
Read MoreEvery month, in the talking contest following the employment report, there is one piece of crucial data that is routinely left of the conversation. Ironically, we find it to be the most important piece of data.
Read MoreWhile the headline payroll number this morning beat consensus (a funky report overall that was obviously affected by weather), over the past seven weeks the economic reports out of the United States have been underwhelming to say the least judging by the Citi Economic Surprise Index.
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The ECB announced that interest rates would be maintained at current levels earlier today, citing staff macroeconomic projections for the euro area, which foresee annual HICP inflation at 1.0% in 2014, 1.3% in 2015, and 1.5% in 2016.
Read MoreThe boom-bust barometer, which compares commodity prices to unemployment claims as gauge for economic activity, has had a strong correlation to the S&P 500 over the past 10 years. However, the boom-bust barometer has not confirmed the new highs made by the equity markets so far this year.
Read MoreYear-to-date, the pharmaceutical and biotech industry group is leading all other industry groups in the MSCI World index, up 11.21% on average. The internal strength has been quite impressive lately, with 82% of the stocks above their 100 day moving average.
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Even amid geopolitical turmoil S&P 500 futures (blue line) and the JPY/USD exchange rate (orange line) are still moving in virtual lock step. But from a longer term perspective we are starting to see some cracks in the correlation. We will be monitoring closely which series catches up (or down) to the other.
Read MoreWith the monthly slue of manufacturing PMI data now in we thought it interesting that Australia posted a nice rebound while China showed a further deterioration (Chart 1). Granted, the Australian data series is much more volatile than the Chinese series, but the two indices have been showing a divergence since early 2013.
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