Copper and Canadian stock market: siamese twins

With copper off more than 2% to start this morning on news that Chinese manufacturing is still contracting, it is instructive to remember the extreme correlation between the Canadian stock market and the price of copper over the past few years. Well actually there has been a high correlation between stocks and commodities of all kinds in these intervention-induced price cycles. But this chart is insightful.

Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

As the the VIX broke below 15 yesterday on a sign of wide complacency not seen since the peak of 2007, while Chinese and European data continue to “surprise” to the downside this morning, this quote resonates:

“It’s difficult to raise your voice and be heard, especially with a message nobody wants to hear…

Bernanke and Treasury Secretary Tim Geithner’s warnings that European banks and sovereign debtors need to continue dramatic action to solve the debt problem shows that most people won’t listen to the folks at the top of the heap either. Not if the message is one they don’t want to hear.

Alas, like the people who build on coasts after tsunamis or rebuild on faults after earthquakes, time is a great narcotic. Every day is fine, until something bad happens. Then it’s very bad.”    See:  Ben and the Muppets’ European Adventure

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