Some interesting comments by Merrill Lynch, excerpted from an article from The Daily Reckoning (dated 12/12/07):

Merrill Lynch (NYSE:MER) says that a recession in the US and even more subprime trouble cannot possibly derail the commodity super cycle. Dow Jones news wires quotes Merrill’s research report, “For the mining sector, US demand is becoming less relevant, as China consumes two to four times more metal and comprises close to 75-100 per cent of demand growth for many commodities.”

Ah yes. China. We’ve reported here before that despite its mind-boggling appetite for base metals, China may actually just now be entering its most metals-intensive phase of growth. That suggests the case for increasing production is pretty strong, which puts all these proposed mergers in context.

Merrill also said, “While we don't believe the Fed will allow the US to go into a recession, if it did, we believe that this would only impact Chinese demand at the margin.” Two bold statements for the price of one!

To read full article click on (or copy and paste in browser):

http://www.dailyreckoning.com.au/merrill-ubs-clash/2007/12/12/