Leading Financial e-Letter Investment Contrarians Reports on China’s Commodity Conundrum

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In a recent Investment Contrarians article, editor Danny Esposito comments that manufacturing in China has been weak and has been falling for seven months straight. He believes this is why there are reports of car parking lots filled with commodities like copper, rather than being filled with cars, simply because economic growth is stalling.

Leading Financial e-Letter Investment Contrarians Reports on China’s Commodity Conundrum

Leading Financial e-Letter Investment Contrarians Reports on China’s Commodity Conundrum

“There are reports that China’s steel mills have postponed orders for iron ore,” notes Esposito. “In one port, reports are that there is so much iron ore filling the warehouses that iron ore is being stored where wheat normally is.”

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In a recent Investment Contrarians article, editor Danny Esposito comments that manufacturing in China has been weak and has been falling for seven months straight. He believes this is why there are reports of car parking lots filled with commodities like copper, rather than being filled with cars, simply because economic growth is stalling.

“There are reports that China’s steel mills have postponed orders for iron ore,” notes Esposito. “In one port, reports are that there is so much iron ore filling the warehouses that iron ore is being stored where wheat normally is.”

One bonded warehouse manager noted that the turnaround for copper used to be one or two months; now it is six months, Esposito reports. Clearly, he says, these are the effects of the economic contraction.

Confirmation that the Chinese economy is in trouble came in the form of BHP Billiton Ltd. and Rio Tinto Limited putting their expansion plans with relation to the Chinese economy on hold, believes Esposito.

As far as Esposito is concerned, there is no greater evidence of an economic contraction within the Chinese economy than when mining giants scale back in a market in which they have continually expanded. They sense trouble with the Chinese economy and foresee a sharp downturn in commodity demand, says Esposito.

“Over the last few months, one reading of manufacturing has been showing not only a slowdown, but also an actual decline in manufacturing activity in the Chinese economy,” he reports.

“With this backdrop, China this week cut interest rates for the first time since 2008. This means the People’s Bank of China is very concerned that the economic contraction is gaining steam within the Chinese economy,” believes Esposito.

Clearly, the recession in Europe has halted growth in Asia, particularly China, he notes. The economic contraction within the Chinese economy has reached the stage where the People’s Bank of China felt it needed to step in. This is why commodities are sitting unused in parking lots, concludes Esposito.

To see the full article and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.

Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.

After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.

Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.

Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.

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