Dr Copper...running out of patience (and patients)

bee

From Link:

"...copper prices had in recent years started to track very closely with whatever the stock market was doing. But the key point about that relationship then was that when disagreements appear, it is usually copper that knows what the real story is."

copper_weakness_is_a_warning_sign

My Take:
I wonder if a Chinese-centric index might show less divergence to copper than a US-centric index? Here's CU (Copper)
charted with FXI (LC China) and SPY (S&P 500):

scott

I think what's concerning is the shadow banking market in China, where copper and iron ore was used as collateral (http://www.investing.com/news/commodities-news/china-shadow-banking's-use-of-copper-collateral-threatens-red-metal-271498)

"But Credit Suisse Group AG (VTX:CSGN) analysts estimate that a third of China’s imported copper is used in financing, while others believe that half of the copper in China’s warehouses is tied up in such financing deals."

Personally, I think you're going to run into real turbulence at some point because of this - it's just not sustainable. Whether or not this is swept under the rug is another story, but all of this kind of thing can only be covered up so much.

I remain positive on EM long-term, but I am growing increasingly concerned with China and Brazil short-term.

I want to be in health care, I want to be in ag, I want to be in energy, I want to be in real assets. I do not want to be in "hot" things (Asian or US social media.) I don't really want to be in telecom although AT & T and Canada's Rogers are probably getting cheap.)

I sleep well with staples (Reckitt Benckiser being a favorite name - I like Costco too), a lot of health care, some preferred, energy (which I think remains reasonable), boring tech (Qualcomm.) I'm not selling the Asian names I own. I do think Marketfield's (MFLDX) short of emerging markets may work longer than I thought.

I've decreased risk in some regards. I think you want to limit exposure to "sexy" names/sectors. Boring is beautiful, especially for older investors.

bee

Thanks for the link Scott...great read.

scott

bee said:

Thanks for the link Scott...great read.

Thanks - I guess my whole thing is an increasing focus on what are "needs" (even something like Canadian National Rail - I don't like that they are being forced by the Canadian govt to increase grain shipments, but between oil, grain and everything else, rail is simply not going anywhere and it feels like there's not enough railroad for what needs to be shipped - apparently there's a glut of timber that needs to be moved, too) versus what are "wants". For the foreseeable future, I'd rather focus more on "needs".

Ted

@Scott: FYI: I live in a southern suburb of Chicago a half-mile from CNN's mainline south to the gulf coast. In thirty-five years I have never seen as much traffic.
Regards,
Ted
http://www.bloomberg.com/news/print/2014-03-11/buffett-s-bnsf-leads-locomotive-surge-to-ease-railroad-cargo-jam.html

bee

Picking up on your comment about rail. I was stopped at a rail crossing today and I was amazed at the flexibility of the rail line to haul; UPS trucks, Livestock, Stone, Fuel, all on the same engine, line and timetable. Logistics has come a long way.

scott

Ted said:

@Scott: FYI: I live in a southern suburb of Chicago a half-mile from CNN's mainline south to the gulf coast. In thirty-five years I have never seen as much traffic.
Regards,
Ted
http://www.bloomberg.com/news/print/2014-03-11/buffett-s-bnsf-leads-locomotive-surge-to-ease-railroad-cargo-jam.html

Thanks - good to hear as CNI remains a large position and I just don't see that changing, probably for many years. It's the kind of business I particularly like - a needed toll road with only a handful of dominant players. I also own Kansas City Southern, although to a much lesser degree.