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XMFSinchiruna (27.97)

Aluminum Alert: China Stalls, Market Falls

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October 21, 2008 – Comments (3)

As recently noted in the case of the steel industry, the market for aluminum is not looking as though it will be near the front of the pack as the commodity sector eventually mounts its inevitable recovery. In fact, the near-term fundamentals for aluminum have carved an abrupt about-face from bullish to very bearish in just a few months' time. Keep in mind, however, the extend to which this reversal of furtune has already been priced into the stocks, and you may yet perceive some value / limited downside risk in the sector. Still... I would recommend some serious caution in aluminum over the coming months, while keeping a close eye on these bellwhether industries whether you own them or not.

http://www.fool.com/investing/value/2008/10/21/aluminum-alert-china-stalls-market-falls.aspx

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3 Comments – Post Your Own

#1) On October 21, 2008 at 5:17 PM, awallejr (82.72) wrote:

I am having my concerns about China.  While they still are projecting a 9% GDP growth rate, which the US would kill for, it is still considered a slowdown and hence decreasing demand for commodities I supect.

I am still of the view that the turnaround must come from the US, that the BRIC countries are not strong enough to lead.  Time, of course, will tell.

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#2) On October 21, 2008 at 5:53 PM, XMFSinchiruna (27.97) wrote:

awallejr

Sure... but ask yourself to what extant has a slowdown already been priced into shares with these 50-80% declines across the board?

As for the US leading the way to recovery... don't hold your breath. Most unfortunately, we are looking at a protracted depression.

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#3) On October 21, 2008 at 8:13 PM, awallejr (82.72) wrote:

Oh I think they have been more than oversold.  But I still don't see an extended depression because there are too many things we can do to avoid one.  This simply isn't the 1930s, where a decade long dustbowl took place (modern agricultural science prevents that).

You will see adjustments more than anything.  You also have to factor in the ultimate aging of America.  Alot of people leaving the fulltime workforce just through age (tho I suspect many will still have to work at least part time).

The companys that adjust will survive and even grow.  Economic transformations occur all the time. That's the strength of our economy and country.  And while some like Peter Schiff just wants it all to collapse and rebuild from the ashes, I am of the view that such unnecessary horror IS avoidable.

I suspect come 2010 things will look alot brighter.  By then foreclosures will have peaked and the cyclicals will start improving.

I do discount geo-political and environmental impacts simply because I can't predict the future to that extent.

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