why do metals and material stocks keep going up? If there was a global recession upon us then why is there such a high demand for metals and materials...
If global equities markets price in 6-12 months ahead, why is the Shanghai exchange making new highs?
BTW, I'm in metals because I expect currency devaluations this year. Stocks, bonds and cash do poorly in a devaluation scenario, because even if the price stays the same, the real value declines.
Careful on copper guys. Chinese stockpiles of copper are at an 8 month high, and more supply is coming on line. I am out of copper now because of this.
I think for the same reason unemployment is low: most people consider this just a correction, and believe that everything will soon go up again
Because the demand is still there. I've mentioned before, I was in China last summer and the building is STAGGERING. I mean jaw dropping staggering. In 7 cities, every single one with no exception was covered with tower cranes as far as the eye could see. Each Chinese city had probably as many tower cranes up as most populous US STATES have in the entire state. Out of my hotel window in Beijing, facing only 1 direction... I counted 25 tower cranes within the smoggy view, all working above the 15th-20th floors... The view was the same from Xian... deep in China's heartlands, almost to the Gobi desert. Tower cranes.. EVERYWHERE. I could not even imagine before going there that building could progress at such a rate... not in one area, but every single region of a nation that size. I wonder if the US EVER had so many tower cranes or simultaneous building in our 200 year history. You have nooo idea what is coming... There will be no reduction in demand for materials for years. There's been a shortage in the US of concrete, because China was buying it all, to the point that many US builders were RATIONED on how much concrete could be bought for a period of time. I believe China cranked it's own production on concrete over the last year or 2. China of course would be hurt badly by any recession in the US... they finance our economy right now, and vice versa. All that deficit and debt... you don't think it takes place in a vaccum? They LEND us money so we can SPEND it with them. The end result being they get richer and we get poorer... and we just do not realize it. Or realizing it, we do nothing about it because we can't. Exactly like foreclosing on someone's home leaves the bank with a house that cannot be sold. So they lend more in the form of interest abatement or whatever. I don't think the market is going to crash and burn imminently, but when it comes, it's probably going to be bad. Materials however will likely hold up better than other sectors, and everyone knows it, which is why it keeps growing.
It also happens that the Chinese, Indians and Middle Easterners like to own gold as savings. One last little bounce for the dollar before the waves of debt and deficit swamp the decks and drag it under...
Exactly! There is a little, just a little of "stagflation" Slow economic growth with increasing inflation. Altough inflation is still moderate given the tremendous rise in oil prices.