Global economic momentum improving, but don’t ignore disconnect between stocks and Doctor Copper

07 January 2014

Global economic momentum is improving and looks set to surprise on the upside in 2014. However, Doctor Copper should not be ignored. Copper has frequently been dubbed the metal “with a Ph.D. in economics” for its uncanny ability at forecasting the global economic cycle. When the global economy expands, industrial output increases and demand for copper pushes its price up. The converse happens when the global economy contracts.

The two charts below show the 5-year weekly copper price and the MSCI World (Stock) Index for the same period respectively.

copper

msciworld

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