Copper Could Signal what EM are Upto
• Some experts say copper can predict turning points in the global economy. • There also seems to be a strong correlation between copper and Emerging Markets stocks. • Follow copper in real time here. YOU often hear people call it, "Dr. Copper". They say the metal has a Ph.D. in economics because of its ability to predict turning points in the global economy. I'm not sure about all that, but I do see a strong correlation between it and Emerging Market stocks. Today we're taking a look at these two assets and why Copper's next move is likely to coincide with the direction of Emerging Market stocks. Here is a chart of the Emerging Markets Index Fund $EEM at the top going back 13 years. Plotted below it are Copper Futures. Notice how they pretty much look exactly the same: I think it's a pretty good bet to make here that whatever Copper does, EM stocks will follow. Here is a closer look at Copper. The question is simple: Is this a breakout from the 5-6-year downtrend on its way to retest those former highs from 2006, 2008 and 2011 above 4? Or was this just a mean reversion and counter-trend rally within an ongoing downtrend?
A worker monitors a process inside the plant at the copper refinery of Codelco Ventanas in Ventanas city, northwest of Santiago.