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China and Copper Remain Bearish

China and Copper Remain Bearish

China and Japan account for 18% of world GDP (if you believe the numbers) and all is not well. As stated before the economic term GDP is just a politically made up statistic by US President Roosevelt to tell the masses that things were improving during the great depression, when they were not. The true measure is income and net savings growth.

Back on topic.

Both China and Japan have increasing economic issues:

Japan

- QE of 25% of GDP is not resulting in economic growth.
- QE has increased the cost of living (energy cost) thus incomes under pressure.
- Domestic and international demand for Japanese goods has fallen and industrial production sank recently

China

- Shadow banking stress of $10 trillion is a major concern (Bert Dohmen comments)
- Funding for non state own business has dried up
- American companies exposed to China are suffering. Apple, Yum Brands, Anglo American, MacDonalds.

Copper (JJC) has a high correlation to China ETF FXI, China copper demand is about 30% of the worlds copper market. The chart below shows the price and volume wave situation, and at the moment rallies in JJC and FXI should be sold.

Copper and China Chart

Investing Quote...

"It is not as important to buy as cheap as possible as it is to buy at the right time." ~ Jesse Livermore

"The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell." ~ John Templeton

 

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