Dr. Copper Catches Chinese Swine Flu As ECRI's WLI Growth At Record High

A bit of curiosity at Bloomberg yesterday:

Pig farmers and other speculators may have amassed more than 50,000 metric tons, Jeremy Goldwyn, who oversees business development in Asia for London-based Sucden, wrote in an e- mailed report after a visit to China. That’s about half the level of inventories tallied by the Shanghai Futures Exchange, which stood last week at a two-year high of 97,396 tons.

Sucden’s estimate underscores the difficulty analysts face in gauging metals demand in China amid increased speculation by retail investors, whose holdings remain outside the reporting framework undertaken by exchanges. Private investors in China also had as much as 20,000 tons of nickel, Goldwyn wrote. “People who have nothing at all to do with the copper trade have been buying copper as a store of value, much like they would with gold,” said Jiang Mingjun, an analyst at Shanghai Oriental Futures Co.
....
The metals holdings by pig-farmer investors and other private speculators give “the impression that there is strong demand in China,” said Jiang at Shanghai Oriental. “But it is actually those who take a pessimistic view of the economy and are looking to preserve their wealth who are buying.”

Ooops! The bitter side of the issue (apart from - what will happen later on with those stockpiles of copper?) is that many economists and market participants regard copper as a leading economic indicator, e.g., ECRI. Although the Bloomberg story compares the farmers stockpiles with inventories tallied by the Shanghai Exchange, these 50,000 tons are not that much related to annual Chinese consumption of some 3.4 million tons in 2005, according to estimates by Deutsche Bank.

Another hot issue is, of course, the private sector deleveraging in the U.S. According to BNP Paribas (HT FT Alphaville):

Private sector credit contracted by $2.32 trn at an annual rate after shrinking $1.84trn in Q1. This is an unprecedented event in the postwar period and highlights the fragility of the recent recovery.

Money supply is also regarded as a leading indicator, but the reflationists often forget the issue with velocity of money ...

However, ECRI's WLI just blows:

September 18, 2009 (Reuters) - A weekly gauge of future U.S. economic growth rose to a level last seen one year ago, while its annual growth rate hit a fresh record high,
feeding hopes of a recovery immune to looming economic threats.

The Economic Cycle Research Institute, a New York-based independent forecasting
group, said its Weekly Leading Index rose to 126.2 in the week to Sept. 11 from an upwardly revised 126.0 the prior week, a figure ECRI originally reported as 125.4.

It was the group's highest index reading since Aug. 29, 2008, when it was 126.3.

The index's annualized growth rate ticked up to a fresh record high of 22.9 percent from an upwardly revised high of 22.5 percent, which was originally reported as 21.3 .

Such a concerted move among all of the index's components suggest an unstoppable" recovery ECRI Managing Director Lakshman Achuthan told Reuters.

Achuthan has recently said that a double-dip recession is highly unlikely, and that an economic turnaround will be stronger than many analysts project.

"We have never wavered on our call precisely because at this stage of the cycle there are no relevant roadblocks," Achuthan said, adding that concerns over mounting unemployment, debt-laden consumers, and dips in a recovery are typical of recessionary times.

"Variations of these fears have existed at this stage of the last 20 business cycle recoveries spanning over a century."

Such a rise in ECRI's WLI growth to a record high "confirms that in the coming months, the economic recovery will surprise a cautious consensus," Achuthan said.

Run with the flow ... while it lasts!