It is not uncommon to see economists trying to assess the health of the market and its future direction by looking at the most representative data points of the economy. Figures that are supposed to resemble a true and timely picture of what is really going in the aggregate, what they refer to as “current economic conditions”.
Strong upward biased for copper futures since July 16th.
In fact, valid statistics such as “new home sales”, the “Chicago Fed national activity index”, revisions to GDP, jobs reports including aggregate weekly hours in the private sector, annualized light vehicle sales, ISM manufacturing index and a few others all are nothing but real time snapshots from which we could infer conclusions .
There is no question about the relevancy of the data, some of which portend to be leading indicators. But as investors and traders, it is a must that we see beyond these figures digging for information that may tell a story perhaps different than that of the consensus.
Just as an example, at present there are a number of commodities in an upswing that may be indicating that a new upleg in the market is close at hand.
Zinc contracts have been on the rise... why?
Base metals are the ones that typically move first, if investors believe a resumption of growth in the economy is about to take place. In the last few weeks, we have seen breakouts in almost all base metals: futures contracts for lead, zinc, aluminum, tin, copper and nickel have all been posting solid gains. It could all be a head fake, however, it is this plurality, together with the advance of commodity currencies as well as grains and crude oil that may indicate that something is afoot.
Unless what is being indicated is that the reserve currency against which their worth is measured, is losing value rapidly. For you to decide!
These indicators are much better than raw economic data… real leading indicators, not lagging indicators. Long before the data signaled weakness in the global economy, these metals have moved downwards already. I agree about the metals. Don’t they refer to these as the PhD’s of the economy somewhere?
Base metals should be part of the equation in seeing the real picture. It should be part of the main page and not just in an appendix. True enough, base metals are the ones that typically move first when progress is in the air.
Although base metals will move first if there is resumption of growth in economy, investor still look back the importance of base metals. Here in China, base metal look attractive. Rio Tinto anticipates China’s demand for base metals for more expansion. I buy the stock here and put away for long time. Base metal in stock market, still, tell a story of good investment. Sorry for so so english.