New Copper Premium Contract to be Launched in China by CME Group

CME Group announced it'll be launching a new China Copper Premium Contract in November.

Chinese Exports Down, Consumer Spending Up?

The economic data is getting weirder and weirder. China devalued the renminbi because its exports had plummeted about 8 percent, and now we hear consumer spending in America was up 3.1 percent in the second quarter.

Have U.S. consumers suddenly stopped buying Chinese products? I don't think so. For that reason I'm very suspect of these numbers.

Once answer could be consumers slowed down spending during one part of the quarter, which could have skewed the export numbers of China for last month.

Other than that, it's very strange if we find out that wasn't the case, and somehow consumer spending exceeded expectations by a lot, but they decided to spend on goods from America or other countries. Since that hasn't happened in years, as far as what would essentially boycotting Chinese products, it's very difficult to believe these numbers are reflective of real consumer spending.

Again, the only scenario I can think of is if Americans really spend big in the first two months of the quarter, and then cut back. Otherwise, something stinks in these numbers. 

Will Fed Raise Interest Rates in September?

When you consider the self-deception of the Federal Reserve, it's difficult to project whether or not it will raise interest rates in September.Even though global economic conditions are deteriorating, there has been no strong signal one way or the other on what Yellen is thinking.

Almost all of Asia is crashing. Countries with strong exposure to commodities, like Canada, Brazil, Russia and Australia are struggling, and Europe is weak as always. That leaves the U.S on its own. I don't see how it can maintain any semblance of growth in the near future.

One temporary answer would be for the government to increase spending like it did the last quarter to reinforce the illusion of a strong recovery. That never works over time though, which is good for gold.

As a matter of fact, if China and many other Asian countries work to strengthen their currencies by selling Treasuries en masse, even while they engage in a currency war, that would almost certainly halt the idea of raising interest rates, and some believe it may even initiate another round of quantitative easing. We all know what that would do to gold prices.

We must watch China in the weeks ahead, as it has already sold off over $100 billion in Treasuries over the last couple of weeks, and it's sure to continue to do so. Almost certainly other Asian nations will do the same, which has the potential to change the direction the Fed wants to go.

What's happening in Asia is countries are fighting to remain competitive with exports, which of course why they're devaluing their currencies. At the same time they don't want them to fall so much it wreaks havoc on imports and brings about higher inflation domestically, so they're selling Treasuries to support their respective currencies.That means Treasury yields are going to remain level or go up, which the Federal Reserve doesn't want to face when it comes time to make an interest rate decision.

Will China's Silk Road Become a Ghost Train?

Even though the official numbers from China's National Bureau of Statistics suggest consumption is moving steadily along, accounting for 51.2 percent of GDP, and following on the heels of the 12 percent boost in retail sales in 2014, there are questions these numbers may not reflect the reality on the ground.

It has been pointed out that "private surveys and results from consumer product companies" paint a different picture; one that draws the conclusion that consumer spending has been level or contracting.

Other data contributing to this as being the likely scenario are the PPI in April dropped for the 37th month in a row, and manufacturing in China, with a 49.2 reading in May (-4.6%, missing analysts expectations of -4.4%), confirms it is contracting faster than believed.

The point is the decisions and proposed spending actions and focus of Chinese economic leadership reinforces the strong probability China is struggling to not only grow its economy, but to keep it from contracting.

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