In a world where almost every asset class now trades together (ex US Treasuries) it is not surprising to see some very high correlations amongst risk assets. But this chart courtesy of a piece by Doug Kass @ Realmoney.com showing the relationship between (Doctor) copper and the S&P 500 is quite eye opening. With copper breaking down yet again today, it does not bode well if the trend of the past year continues to play out.
- Copper hit a four-month low on Friday after weaker-than-forecast U.S. jobs data fractured confidence already dented this week by worries over Chinese monetary tightening and euro zone debt.
It was something I highlighted in 2007 when Kool Aid was near its highest level - S&P 500 hit its highest levels in October 2007! [Nov 23, 2007: Is Copper Signaling a Slowing Global Economy?]
Hmmm, maybe this guy was onto something. [Feb 2, 2010: Trader Who Called 1996 Crash in Copper Says Prepare for Another - "Catastrophe" Awaits]