Is Copper a Canary in the Mine?

The following is by David Andrews, and was featured on AnvisorAnalyst.com:

"Gold is often viewed as a store of value and a hedge against economic Armageddon, but "Dr. Copper" is said to be the metal with a Ph.D. in economics for its ability to presage the future of the global economy.

Prices have moved from a steep premium to a discount recently. February copper shipments into China fell 35% from one month earlier; the lowest level in 2 years. Stockpiled inventory is 16% higher so far in 2011.Prices will likely continue to slide until the Chinese buyers return. After such a steep fall, many began to wonder if the metallic professor is warning of trouble; or is this an opportunity for those on the sidelines to get in on the action?

The Trading Week Ahead
Trading volumes may indeed be a little lighter than usual with the peak of the March Break vacation season upon us. Many institutional trade desks will be have lighter staffing than normal as many traders will be off enjoying the renewed purchasing power of the strong Canadian dollar. Notwithstanding, investors will have the latest inflation data to consider as the week unfolds. Rising commodity prices and energy costs are expected to show signs of building which could potentially pressure corporate profit margins. Investors will gauge to see how fast these costs are rising and to see if businesses have begun to pass these rising costs on to their customers.

The Federal Open Market Committee congregates but no major news is expected to emerge in the statement on Tuesday. The FOMC is expected to maintain the Fed Fund Rate between 0 and 0.25% and will announce the continuance of the asset purchase program, or QE2 as originally planned. The Fed may indicate in the statement the improvement in economic activity in early 2011, especially as regards the labour market, and the increase in inflationary pressures. However the latest data are not likely to force the Fed to remove the expansionary monetary policy anytime soon.

The Middle East and North Africa are expected to push volatility higher once again next week. Energy and precious metals will continue to be a main focus and will give directional cues to equity and bond markets.
Earnings announcements are few and far between this week with only Federal Express likely to be market moving. Fedex is a proxy and measure of general business activity for both North America and Europe."

GB