Market Overview

Who's To Blame For The Rough Start To 2016?

Who's To Blame For The Rough Start To 2016?
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With a slumping Chinese economy sending waves and possible rate hikes looming overhead, traders and investors have kept a wary eye on the markets thus far in 2016. 

But Adam Button, a currency analyst and the director of ForexLive, thinks people are looking at the situation all wrong. It's not really China's fault. 

According to Button, who was a guest on Thursday's edition of PreMarket Prep, we should really be pointing the finger at commodities, not China. 

"I think we're missing the story," he said. "It's not the U.S., it's not the Fed, it's probably not really China. We look at the world in terms of developed economies and emerging markets; maybe we should be looking at in terms of commodity importers and commodity exporters."

Button singled out the struggling economies of major commodity exporters, including Canada, Saudi Arabia, Australia, Brazil, Malaysia and Indonesia, saying "Those are the places, not China, that are roiling markets."

With China mostly a commodity importer, their slowing demand could be what's actually tipped the scales, but for Button it comes down to supply of the importers. 

"There's an oversupply issue, and that's what's driven down commodity prices."

Until prices fall, and Button doesn't see that happening for a while, he said we're still going to see that effect seep into the domestic economy. 

PreMarket Prep is an interactive morning show that discusses trading ideas and key technical levels to provide you with everything you need to know for daily trading. It airs lives every morning from 8-9:30 AM ET here, and is also in podcast form here. You can listen to the rest of the interview with Adam after the second break in the clip below.

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