Unitas

I work in the construction industry and the slowdown was happening as ealy as 18 months ago. Copper purchasing has already been severely curtailed by the industry yet the price stays strong. the demand is still very robust from the asian economies and outweighs the US slowdown. If you listen to the CNBC every day one would think that the whole world revolves around the US. This is simply not true.

On the issue of a slowdown, that is already in place. Before we enter a recession (defined as 2 down quarters in GDP) I would expect the FED to throw every tool that it has to the defence of the economy. I expect more rate cuts and monetary accomodation to follow shortly. It would not be a good time for a recession (for the Republicans)as we plough towards the US elections. In mo opinion I would expect this stimulus to succeed in staving off a full blown recession for now. This slowdown will however be accompanied by inflation as we in the west start to import inflation from our manufacturing division in China! Their current rate of inflation is running at 6.7%.

Yes a period of stagflation may be already here.

As for VMS it looks as if we have made a significant discovery and should not be affected by back and forward moves in the commodity. The long term commodity bull is still firmly in place.