Copper drop kind of disturbing.

[Fermion]

Early warning indicator. Copper dipping to $2.55 a pound.

A few weeks ago there was talk that everything was ok as long as copper held $2.75. Now it is dipping into the $2.40s.

Weak copper demand when inventories are at historic low seems to indicate a much slower global growth demand than we have been led to believe.

 

[2B]

The oil industry was carrying the US economy in both GDP and job growth. That's now gone. Our government has increased the cost of doing business in the US with new regulations and mandates. We're going into a recession whether anyone wants to believe it or not. Copper prices reflect the declining industrial demand. The hope in the US is that consumer spending picks up as the gasoline prices continue to drop.

I'm pretty negative in the near-term. I don't see a 2008/2009 redux but we'll see a hit (IMHO). It seems to clearly demonstrate how useless QE has been. It hasn't worked in decades for Japan. Europe has extremely low interest rates yet they seem to be planning to start it there. Why? The only defense that QE has is the cry that it would have been so much worse without it.

 

[target2019]

This article expounds on the subject, and more.

Copper Tumbles Most in Six Years Amid Commodity Collapse - Bloomberg

Have to read more about economic cycles today. Links to economic clock articles below.

Asset Classes » Australian Investors Association

https://www.fidelityworldwideinvest...nning/managed-solutions/investment-clock.page

 

[Fermion]

It is probably getting about time to have a negative 10% year in the indexes. Oh well, good run while it lasted, huh?

 

[HawkeyeNFO]

6 straight years of gains. No complaints. If it goes down this year, then look to scoop up some bargain prices on the good companies.

 

[2B]

6 straight years of gains. No complaints. If it goes down this year, then look to scoop up some bargain prices on the good companies.

I think a drop this year was inevitable with me beginning my retirement.

 

[audreyh1]

The oil industry was carrying the US economy in both GDP and job growth. That's now gone. Our government has increased the cost of doing business in the US with new regulations and mandates. We're going into a recession whether anyone wants to believe it or not. Copper prices reflect the declining industrial demand. The hope in the US is that consumer spending picks up as the gasoline prices continue to drop.

I'm pretty negative in the near-term. I don't see a 2008/2009 redux but we'll see a hit (IMHO). It seems to clearly demonstrate how useless QE has been. It hasn't worked in decades for Japan. Europe has extremely low interest rates yet they seem to be planning to start it there. Why? The only defense that QE has is the cry that it would have been so much worse without it.

I don't see how it clearly demonstrates that QE has been useless. Rather the opposite I would think.

 

[jim584672]

QE was slowing down the deflation. Now QE is over deflation will become more evident.

 

[2B]

I don't see how it clearly demonstrates that QE has been useless. Rather the opposite I would think.

The purpose of QE is to lower interest rates. Our Fed stopped doing it (we think) and interest rates continued to fall. The rates were pretty low when they started it. Japan's rates have and are lower than ours. Germany's bonds are safely lower than the US interest rate without QE. Only near bankrupt euro countries have rates above the US rates. People don't have any reason to borrow money in stagnant economies.

So, are you taking the position that without QE in the US it would have been so much worse? Have decades of QE in Japan led to low interest rates or have decades of QE led to low economic activity? Does Europe need QE to drive low interest rates lower or will the stagnant Eurozone keep interest rates low anyway? What explains lower interest rates in the US after the Fed stopped QE?

Somewhere in the field of economics, QE has been elevated to have mythical powers to transform economies that I can't see actually happening.

 

[2B]

QE was slowing down the deflation. Now QE is over deflation will become more evident.

Every economic downturn in the US prior to the Great Depression was resolved with a short, sharp deflationary period. Economic growth and recovery quickly followed. The Depression of 1920 was the last one that was allowed to run its course. Never heard of it? You didn't because it was so short. The Great Depression had major deficit government spending based on the Italian Fascist model and Soviet propagana of their supposed success (all lies). Without WWII we might still be in the Great Depression because we sure weren't coming out of it on our own. We've double downed on the same policies and we have now had the longest Great Recession in history.

 

[jim584672]

No worries, Fed will not raise rates, start QE5, then we are off to the races.

 

[38Chevy454]

No worries, Fed will not raise rates, start QE5, then we are off to the races.

Crank up the gov't money printing presses

As long as the dollar stays strong, it minimizes the deflation. Kind of twisted logic, but making inflationary choices offsets the deflation.

 

[Big_Hitter]

FCX taking a huge nose dive today - holy carp

 

[audreyh1]

The Great Depression had fiscal tightening and protectionist import tariffs.

Japan's economy is quite different from the U.S.

The strong dollar does not reduce deflation. Rather, since we are an import economy, it increases disinflation/deflation in the US.

Until global demand increases, and/or we start to deal with labor shortages in the US (which we could have in a few years), inflation will not be a threat.

 

[Dash man]

The strong dollar is taking its toll on emerging markets. I think we're in for a wild ride.


Sent from my iPhone using Early Retirement Forum

 

[Fermion]

FCX taking a huge nose dive today - holy carp

Well, they "diversified" into oil and gas at just about peak prices for oil, and now their copper cash machine has fallen some 15%.

I expect a dividend cut. I had some shares purchased in the low $30s that I sold for a tax loss in December around $28. Boy was that a good decision!

 

[sheehs1]

As other countries devalue their currencies against our dollar, US exports will take a hit which does not bode well for the multinationals. Global deflation and cheaper global goods will take the wind out of the U.S. recovery….(I think anyway).

 

[Lakewood90712]

Copper prices have always been an indicator of industrial activity.

Maybe I can afford to repipe the house with copper now instead of pex ! ( 75 yo galvanized steel water pipes , no leaks so far)

 

[Brat]

Pex is better than copper for most residential applications.

Did anyone notice that AA is down as well. Sympathy or data based?

 

[laurence]

Every economic downturn in the US prior to the Great Depression was resolved with a short, sharp deflationary period. Economic growth and recovery quickly followed. The Depression of 1920 was the last one that was allowed to run its course. Never heard of it? You didn't because it was so short. The Great Depression had major deficit government spending based on the Italian Fascist model and Soviet propagana of their supposed success (all lies). Without WWII we might still be in the Great Depression because we sure weren't coming out of it on our own. We've double downed on the same policies and we have now had the longest Great Recession in history.

Wut?

I mean, I read your political opinion loud and clear, but those simply aren't true statements. We did come out of the great depression on our own, and we had periodic recessions at about the same clip throughout our country's history, and we've had decent growth in this country for some time now, and the 2007 recession isn't close to being the longest....

 

[Mr._Graybeard]

My mom used to talk about hard times on the farm in the 1920s. The 1920 recession was no brief blip for a lot of farmers and rural communities.

 

[haha]

My mom used to talk about hard times on the farm in the 1920s. The 1920 recession was no brief blip for a lot of farmers and rural communities.

That was largely caused because the US was provisioner to the world during the teens, due to WW1 and its immediate aftermath. When those markets reverted to their European prewar status, the bottom fell out of agricultural commodity demand.

The rest of the economy was in a huge boom.

Ha

 

[Running_Man]

Worldwide Copper potential production since the QE has started in 2009 has increased by about 6 percent per year, like oil there was talk of Peak Copper just like Peak oil as China was going to consume the worlds supply. But growth has averaged well under 6 percent and so mines are operating under capacity, causing prices to drop as demand is not enough to meet growth, a similar problem to oil in that cheap financing makes high capital investment ideas seem like sure things.

Many of the mining complexes have the same problem, a good early example was the potash market when everyone was building potash mines, at a cost of 2-4 billion dollars a mine when Potash was $1000 a ton and that collapsed the potash market.

This is why the central banks of the world despite being very stimulative have sent money to stock markets and commodity speculation in production. I am skeptical that negative interest rates and governments buying all speculative debt in an attempt to inflate an economy can actual do what central bankers are hoping for, this situation is extremely abnormal.

 

[Mr._Graybeard]

That was largely caused because the US was provisioner to the world during the teens, due to WW1 and its immediate aftermath. When those markets reverted to their European prewar status, the bottom fell out of agricultural commodity demand.

The rest of the economy was in a huge boom.

Ha

Yes, but the agricultural sector represented nearly half of the economy at the time, so half the economy was booming and half was in turmoil. The farm foreclosure rate grew steadily from 1921 to 1928. "Paris" wasn't the only reason you couldn't keep them down on the farm.

I'm just saying that the 1920 recession wasn't a brief blip for everybody.

 

[timo2]

Worldwide Copper potential production since the QE has started in 2009 has increased by about 6 percent per year, like oil there was talk of Peak Copper just like Peak oil as China was going to consume the worlds supply. But growth has averaged well under 6 percent and so mines are operating under capacity, causing prices to drop as demand is not enough to meet growth, a similar problem to oil in that cheap financing makes high capital investment ideas seem like sure things.

Many of the mining complexes have the same problem, a good early example was the potash market when everyone was building potash mines, at a cost of 2-4 billion dollars a mine when Potash was $1000 a ton and that collapsed the potash market.

That's the way mining companies roll. My early career was as a mining geologist, until one of the regular production downturns did me in. I also recall copper mining has been in the tank at least twice in my lifetime.