Dr. Copper, the metal with a Ph.D. in Economics (used to describe copper as an economic leading indicator) appears to be telling us something different compared to the consensus on economic growth. Is copper wrong this time? Or is the consensus wrong?

I would probably lean towards copper as being correct here. The activity in the metal tends to be less emotional that what we see in equities and bonds. And, the copper market certainly is not plagued by political rhetoric which tends to influence what we hear from policymakers and politicians.

Perhaps the copper market is not willing to give the benefit of the doubt to China (which tends to get a lot of the benefit of the doubt from Bubblevision anchors and guests). Perhaps it is not willing to give the benefit of the doubt to fiscal and monetary authorities who have a reputation for dismal forecasting abilities, rightfully earned over the past 15 years.

Interestingly, copper, as a leading indicator, is a little at odds with the bond market. If the U.S. and global economics are more sluggish than expected, then bond yields might have some difficulty maintaining interim highs over the short-term (this would also decrease the chance of a significant Tapering of Federal Reserve Quantitative Easing).

So, if copper is right, and it does make a good case, it could be good for bonds but bad for equities where the rationale for recent highs is getting more tortured by the day. That said, this would only have ramifications for the short-term. Medium- to long-term, there are policy risks (botched exit from QE, another government shutdown, and another debt ceiling debate) that could change things yet again.

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