Commodities Collapsed Just Before The Last Stock Market Crash – So Guess What Is Happening Right Now? – The Economic Collapse 07-22-15

Salient to Investors:

Michael Snyder writes:

  • Global debt is at record highs, too big to fail banks have never been more reckless, and global financial markets have never been more primed for a collapse. Most people lack the patience to wait for long-term trends to play out so if the stock market is not crashing today, they think that everything must be fine.
  • Commodity prices crashed a few months ahead of the financial crisis of 2008, and we are seeing a repeat. The Bloomberg Commodity Index is down 26% over the past 12 months to a 13-year low. Copper, iron ore, aluminum, zinc, nickel, lead, tin and lumber prices are leading indicators and their falling prices are forecasting a global economic meltdown. The FTSE 350 Mining Index dropped to the lowest since 2009 this week. Gold and copper are near the lowest in at least 5 years, and crude oil is down to $50.
  • The Australian and Canadian dollars are at 6-year lows, and the Brazilian real is at a 10-year low all vs. the US dollar – all commodity resource nation currencies. The Indian rupee is at a 17-year low vs. the US dollar because manufacturing is slowing, and if Americans are not buying, the Indians, Chinese, Vietnamese are not making things.
  • The junk bond market collapsed a few months before the last stock market crash and junk bonds are starting to collapse again.

Andy Pfaff at MitonOptimal calls the commodity bear market a train wreck in slow motion.

Marc Faber at The Gloom, Boom & Doom Report sees a stock market decline of easily 20% to 40% and cites the growing number of companies trading below their 200-day moving average, stock declines leading advances, and the high number of new 12-month lows.

Read the full article at http://theeconomiccollapseblog.com/archives/commodities-collapsed-just-before-the-last-stock-market-crash-so-guess-what-is-happening-right-now

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Correlations Revive as China’s Slowdown Beats Rates – Bloomberg 09-26-14

Salient to Investors:

  • China’s deepening slump is re-establishing the link between currencies and commodities, weakening the Australia dollar, New Zealand kiwi and Canadian loonie on concern their economies will slow and outweigh their relatively high interest rates.
  • Shahab Jalinoos at Credit Suisse said you can only resist gravity for so long as the tango between rates and commodities ultimately gives way to the weak commodity price story as the driver.
  • The Bloomberg Commodity Index at a 5-yr low means there is little to support the Aussie, New Zealand kiwi and Canadian loonie.
  • Luc De La Durantaye at CIBC Asset Mgmt said lower Chinese growth points to a correction in commodity prices and continued correction in commodity currencies and is short the Australian and New Zealand dollars, and increased his bearish bets on the Canadian loonie in July.
  • The median analysts expects China to grow 7.3% in 2014, the slowest pace in over two decades.
  • IEA said oil demand globally is growing at its slowest since 2011, while non-OPEC production is rising by the most since the 1980s.
  • An increase in US interest rates would erode the appeal of Australian and New Zealand assets, which is based on them having the highest benchmark interest rates in the developed world.
  • Steven Englander at Citigroup said commodity prices are more important to the loonie and the kiwi and the move in commodities and slowing US demand – the world’s primary locomotive of commodity purchases – is too big to ignore.
  • Steve Lee at Nuveen Asset Mgmt said the Aussie, the kiwi and the loonie have lost their appeal as they are now more vulnerable.

 

Read the full article at http://www.bloomberg.com/news/2014-09-26/correlations-revive-as-china-s-slowdown-beats-rates.html

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Goldman Says Buy H-Shares Amid Growth: China Overnight – Bloomberg 12-02-13

Salient to Investors:

Noah Weisberger at Goldman Sachs said:

  • The Hang Seng China Enterprises Index will rise 18 percent to 13,600 by the end of 2014, the biggest gain since a rise of 62 percent in 2009, on prospects the economy will stabilize.
  • Commodities will lag the rally in equities.
  • Buying Chinese stocks and selling copper futures may generate a combined return of 25 percent next year.  Stability in China’s growth is insufficient to lift demand for copper as a supply glut weighs on the market as economic growth is driven by the developed market.
  • Equities are Goldman’s favorite asset class in an environment where growth is moderate but not overheating, while policy makers remain accommodating.

The median economist predicts China’s GDP to grow 7.5 percent in 2014.

The Hang Seng China Enterprises Index is at 19 percent below its average valuation of the last 5 years.

Allan Conway at Schroder Investment Mgmt has been positive for China for some time and is overweight Chinese stocks with 22 percent of his portfolio.

Goldman recommends buying S&P 500 futures while selling the Australian dollar; betting European interest rate swaps will decline while 5-year Treasury yields will rise; and selling the Canadian dollar.

Read the full article at  http://www.bloomberg.com/news/2013-12-02/goldman-says-buy-h-shares-amid-growth-china-overnight.html

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