Copper’s price is an important gauge of global economic health because of its broad use in construction and manufacturing – its price declined about 16% last week (down 25% since August 1). Corporate grade credit-default swaps continue to rise as investor confidence deteriorated. Additionally, World Bank President Robert Zoellick said, “The events of August have started to show the signals of contagion to emerging markets,” and “A new and larger risk looms. The drop in markets and confidence could prompt slippage in developing countries' investment and a pull-back by their consumers too”.
MY TAKE: Investors, business leaders and consumers are in a vicious cycle - lacking confidence in the future, participation in their respective markets will remain constrained. Additionally, the recent broad market swings (both up and down) is reducing investor conviction. A strong rebound, similar to the one from the March 2009 low, seems unlikely. Serious flaws are being exposed in many investment strategies – and the margin for error is contracting. However, patient and disciplined investors are finding an increasing set of opportunities to consider.