Earlier this morning on The Macro Show Hedgeye CEO Keith McCullough strung together a laundry list of some concerning economic signals.
Here’s the chart McCullough called up on copper:
… And his analysis:
“I can’t for the life of me see how that would be considered a green shoot. Copper is making fresh, new lows after crashing 22% year-to-date. Never mind where it’s come from its all-time bubble peak when Bernanke was devaluing the dollar. That created a bubble in commodities and overcapacity which is creating deflation.
They used to call this [commodity] Dr. Copper. Dr. Copper is signaling that demand worldwide is beginning to slow.”
Another economic indicator McCullough is also watching is the Korean stock market. “But that’s down too,” he says. The Kospi index was off as much as 1.4% last night. “So when we’re looking for red shoots we’re finding them.”
In related news, our Macro team has been concerned about #Deflation risk for a while now.
The latest deflationary reading comes from China. McCullough addressed this too earlier this morning:
“[Chinese] producer price deflation remains firmly intact for these producers, with prices down 5.9% year over year. If you’re looking for reasons why Chinese companies have missed earnings and revenue estimates that’s one of the big ones. It’s called deflation and that has not gone away.”
It’s another worrisome data point.
But don’t take our word for it. Here’s Reuters on China, global growth and Apple’s earnings miss today:
“The report on Apple added to fears of a slowdown in global growth, especially in China… China's October inflation data on Tuesday showed persisting, if not intensifying, deflationary pressure.”