Two old trader sayings come to mind:
a) As soon as you think you've found the key, they go and change the lock.That said, here's Pragmatic Capitalist:
b) You can connect any two points. It takes three to make a fence line.
Regular readers know we haven't been all that impressed with Mr. Rosenberg these last thirteen months but every dog has his day and besides, this possible correlation is just between him, us, and the internet.
Great note this morning from the always informative David Rosenberg. Mr. Rosenberg notes something that we have highlighted in the past –
Chinaas a leading indicator. In this case, Mr. Rosenberg highlights China’s high leading correlation with commodities. Is China forecasting a decline in commodity prices? Rosenberg elaborates:
“To very little fanfare, the Chinese stock market — the first index to turn around in late 2008 — has slipped into a bear market. It is down 15 % from the nearby high and 20% from last year’s interim peak. Why this is important is because the Shanghai index leads the CRB commodity spot
priceindex by four months with a 72% correlation (and over an 80% correlation with the oil price). Don’t get us wrong — we are long-term secular commodity bulls; however, we have been agnostic this year from a tactical standpoint — never hurts to take profits after a double!”
Source: Gluskin Sheff