October 6, 2018

China weighs on copper prices

Copper is a fascinating and important asset. Traders have known for decades that “Dr. Copper” can foretell recessions, and indeed, we’ve found that including front-month copper futures in our models improves their ability to forecast nominal GDP. Despite the general bullish turn in most asset prices, copper is down substantially from last year, trading around $2.60 per pound, from around $3.40 at the start of the year. I’d proposed in my last post on this subject that this was due to the increasingly weak Chinese economy. This thesis has held up upon deeper investigation. Eyeball the plot above, comparing co-movements between… Read More