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Dennis Gartman: Base Metals Signal Weakness in Global Economy

Just how bad is Europe? If the action in the base metals is any indication, not good.

Sentiment in the market took a sharp turn for the worse after the latest PMI data showed Europe’s business slump deepened at a much faster pace in April than expected.

Specifically, the Markit PMI fell to 47.9 from 49.2 in March, a five-month low. The forecast was for a rise to 49.3.

Meanwhile, European factories had their worst month since June 2009. Companies said their order books were shrinking and they were cutting jobs in reaction to falling demand.

Is Europe really this bad? If the action in copper is any indication, it is.

The Fast pros often recommend looking at the action in copper and other base metals to either confirm of deny an economic thesis such as this.

(In fact, copper is sometimes called Dr. Copper because strong price action often precedes a rally and weakness often precedes a slide. )

And “Copper is having problems,” says commodities investor Dennis Gartman. “It tried to rally – but couldn’t. The action looks very, very poor.”

And moves in other base metals seem to tell the same story.

“Aluminum, zinc – I pay attention to all the base metals. It’s not just Dr. Copper. They all have a PhD in economics and they’ve been turning down.”

If you’re a bull, that’s not good.

All told, “It does not speak well to the global economy,” Gartman says.

* You can find our conversation with Dennis Gartman about 5 minutes into this video clip.





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Trader disclosure: On Apr 23, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Steve Grasso is long ASTM; Steve Grasso is long AVAV; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long LNG; Steve Grasso is long HY; Steve Grasso is long NUAN; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long PRST; Steve Grasso is long S; Steve Grasso is long XLU; Steve Grasso is long ZAZA; Pete Najarian is long AAPL; Pete Najarian is long BAC CALLS; Pete Najarian is long C; Pete Najarian is long MS; Pete Najarian is long INTC; Pete Najarian is long YHOO; Pete Najarian is long SBUX CALLS; Pete Najarian is long COP; Pete Najarian is long PEP; Pete Najarian is long HPQ; Pete Najarian is long WLT; Pete Najarian is short NFLX; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long NFLX PUT SPREADS; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM CALLS; Karen Finerman is long HP; Karen Finerman is short AAPL CALLS; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY

Mark Mahaney
Citigroup Global Markets Inc. or its affiliates beneficially owns 1% or more of any class of common equity securities of NFLX
The Firm is a market maker in the publicly traded equity securities of NFLX

For Will Power
Robert W. Baird & Co. Incorporated makes a market in the securities of AAPL
Robert W. Baird & Co. Incorporated and/or its affiliates expect to receive or intend to seek investment banking related compensation from the company or companies mentioned in this report within the next three months: AAPL

For Dennis Gartman
Dennis Gartman is long Gold

For Rebecca Patterson
Nothing to disclose


CNBC.com with wires.