Copper's Catching a Cold

We were more than clear from the get go that if President Trump was to act on the promises of Candidate Trump, the bad (protectionism) would pose a major headwind for the good (tax reform, deregulation, infrastructure) when we're talking the markets and the economy.

Aside from the equity market serving up a pancake during the first half of a year when the setup coming in was better than the previous year (which happened to be a very good year for stocks and the economy), there's no more vivid a validation of our concern than the present state of the copper market.

Copper (a component in our macro model), with its vast industrial application, is viewed as one of the world's best economic bellwethers. The chart below is all about traders fretting over the unavoidable economic consequences of a global trade war:



Despite growing concerns such as the present trend in copper, as well as the worries purchasing managers literally across U.S. industries, and the globe, are beginning to express, the general setup remains for now decidedly bullish -- this week's data, for example, reflects strength in the labor market (JOLTS report), the housing market (new purchase mortgage apps) and small business sentiment (NFIB Survey) -- as we stated in this week's message:

"As for general conditions, our macro index rose 7 points to a historically solid 54.76, with the economic subindex up 4 points, financial stress unchanged and the financial markets subindex up 8.7 points."

As for the current technical state of stocks in general, here again is this week's brief video commentary (watch if you haven't already):