Wednesday, November 30, 2005

CLSA China Nov Purchasing Managers' Index 49.8 vs 50.1 in Oct -

Wow! A slow down in China!

China has built a lot of manufacturing capacity, the world energy crunch has made it too much. The good/bad news for traders is that metals prices are about to take a dip, a deep dip. The CRB has turned down and several of the big miners have been downgraded.

A decline in metals will allow interest rates to fall. A decline is needed because US housing construction is ready for a long fall. The number of unsold homes on the market is as high as ever. The most recent new home sales number was super strong but will likely be revised. New home sales cannot stay strong with a glut of used homes on the market.

Fireworks ahead!