News / Economy

Investors Seek New Way to Predict Markets

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Wild and unpredictable swings on financial markets are making investors seek better ways to gauge the future direction of the economy.  Market participants have traditionally - and successfully - watched the changing price of copper for insight.  But, that's changing

Molten copper, at more than 1100 degrees Celsius, is the start of a manufacturing process that turns out an astounding variety of products from jewelry to massive electrical systems.

David Malpass is the president of the economic research firm Encima Global.

"Over the years, copper has tended to go up when growth is strong and down when global growth is weaker," said Malpass. "It  is used for a lot of  things that people need when they are building."

Copper is so important to the economy that miners go deep into the earth in search of the ore.

Experts watch copper prices to predict growth or recession in the economy.  They joke that "Doctor Copper" has been so good at tracking economic issues, it must have a Ph. D.

But stock market turmoil recently clouded copper's insights as investors fled falling stocks and bought commodities, pushing up the price.  Demand from China also boosted prices, at least until worries about slowing Chinese growth sparked a sharp price drop.

In a Skype interview, Veteran trader, turned Adelphi University Professor Michael Driscoll says the commodity markets can be brutal for anyone who is unlucky or unprepared.

"Commodities are extraordinarily volatile, not for the faint of heart, not for the uninitiated," said  Driscoll.

Copper is often mined from massive, incredibly deep pits, where huge machines devour the earth and giant trucks haul many tons of ore away to be processed.

Driscoll and other experts say traders are also going to have to dig deep to find new and better ways to guess the future direction of the economy as markets grow more complex.

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