Juggling Dynamite

Cash crunch from slumping global demand is beginning to hit home for commodity producers like Australia. Canada’s new Federal Budget is due this Thursday…
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In the 1990’s, Cape Cod barbershop owner William Flynn invested his $150,000 nest egg in the stock market. At one point he had about a million dollars. Thirteen years and two stock crashes later, he is right back to where he started. Here is a direct link.

This morning copper has broken through 3.50 to trade slightly below the cyclical support which has been in place since the economic recovery began in 2009. A barometer of global demand, this breach if it holds, has traditionally been a leading indicator for the risk market cycle. This time different?

Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

Bonds and the US dollar seem to be agreeing with copper’s pessimistic assessment of near-term prospects for global growth. Both are continuing to attract international inflows as a relative safe haven in a world of increasingly wildcard risks. The much fabled “great rotation” out of US bond markets is so far non-existent.

Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

Meanwhile the strengthening US dollar is an increasing dead weight on the translated earnings of US multi-national firms. See: US firms brace for a Wallop, Weak Yen and Euro threaten to take a major toll on Exporters’ sales this quarter.