A Tumbling Copper Could Hit The Floor

Aibek Burabayev - INO.com Contributor - Metals


Greed is one of the strongest human motivators. It is easy to get greedy, but it is hard to push it down after it gets extreme. The main point of my previous update in August was to focus your attention on the price action in the $3 area as the price could hit this psychological level and then retreat. My advice was to book profits and wait to see what would happen next.

I hope that you heeded my advice and didn’t get greedy as copper was pushed down below the $3 level very quickly.

In the same post, I thought that this upside move in the metal that had started last year could just be a consolidation before another drop down. In the chart below I go into more details about it.

Chart 1. Copper Monthly

Monthly Chart Copper
Chart courtesy of tradingview.com
Continue reading "A Tumbling Copper Could Hit The Floor"

China: Signals From Dim Sum Bonds

Lior Alkalay - INO.com Contributor


Over the past three years, a dark cloud has been looming large in China—a massive debt bubble. It seems that, with each bit of good news, whether it’s GDP growth hitting 6.9% for the second quarter in a row, exports climbing to 7.2% Year on Year or Retail Sales surging by 10.4%, the dark cloud of a looming debt crisis grows darker and more menacing. So, when investors suddenly find their appetite whetted for Offshore Chinese debt, one should sit up and take notice.

Chinese Offshore RMB bonds, amusingly nicknamed Dim Sum bonds, are relatively new in the market, existing only since 2007. The Dim Sums’ appeal is, that they trade on offshore markets, rather than in mainland China, thereby allowing investors to buy Chinese debt without the risk of interference from Chinese regulators. As a result, the performance of Dim Sum bonds reflects the sentiment of Chinese debt more accurately. Continue reading "China: Signals From Dim Sum Bonds"

Copper Eyes $3 Amid Upbeat Chinese Data

Aibek Burabayev - INO.com Contributor - Metals


Back in May, I posted an update for copper where I shared my concerns about the possible negative impacts of the cooling Chinese economy. At the same time the technical chart didn’t confirm those concerns and on the contrary, showed a possible upside move for the metal.

In this post, I would like to share some macro economic charts and an update of the technical chart.

Chart 1. Copper Vs China Industrial Production (Monthly)

China Industrial Production vs. Copper
Chart courtesy of tradingeconomics.com

I chose the period of the chart above from the start of 2016 intentionally to highlight the time when the metal began to consolidate after a huge drop down. Continue reading "Copper Eyes $3 Amid Upbeat Chinese Data"

Copper Could Face Strong Headwinds From China and Australia

Aibek Burabayev - INO.com Contributor - Metals


Copper topped the ranks at the end of last year and moved north to the middle of February without breaking any serious resistance peaking at $2.8230. Then the price drifted lower, closer to the area of the December 2016 low at $2.4480 as projected in my previous update. Copper has now bounced higher and I would like to share with you some new data, which could change my outlook for the metal.

I would like to start from Chinese data as they are the top importer of the metal in the world. China’s copper import dropped almost 20% in 1Q of 2017 according to the Chinese customs statistics and this is not supporting the pricing information. Below are two charts to show you more headwinds from China.

Chart 1. Copper Vs Chinese GDP Growth Rate (Quarterly)

Chinese GDP vs. Copper
Chart courtesy of tradingeconomics.com

The Chinese economy (left scale, blue) advanced only 1.3 percent in the 1Q of 2017, following a 1.7 percent growth in the previous three months and missing market estimates of a 1.6 percent growth. It has been the weakest expansion since the 1st quarter of 2016. GDP Growth Rate in China averaged 1.84 percent from 2010 until 2017. Continue reading "Copper Could Face Strong Headwinds From China and Australia"

China 2017: More Boom Before the Bust

Lior Alkalay - INO.com Contributor - Forex


Despite the Yuan’s value recently plummeting to an eight-year low, the Chinese economy has been rather stable in the second half of 2016, manufacturing PMI held above 50 (above 50 signals expansion); exports reached $196.8 Bln in November(from $176.2 Bln in January); and in industrial production growth averaged 6.14% Year over Year.

Together, these changes all represent a strong indicator of growth - and of bounce-back - and all thanks to the Yuan. Or more accurately, to the Yuan meltdown. Even as the Chinese Yuan shed more than 7.1% this year, it allowed China’s exports to rebound and stabilize industrial and manufacturing production. But all that stability comes at a stiff price, down the line.

While a weaker Yuan helps exporting sectors, it causes problems in China’s domestic economy. In it, an exceptionally weak currency has the same impact as monetary easing, creating an inverse relationship where, when the Yuan’s value is eroded, China’s housing bubble swells.

The more China’s housing bubble swells, the more its debt problem becomes acute. And, ultimately, the more painful its bust will be. Continue reading "China 2017: More Boom Before the Bust"