Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: Frank Pembleton who started this subject	8/21/2001 9:56:48 PM
From: Frank Pembleton	of 36161

Base Metals: Waiting For Demand A friend just recently emailed me a link to a site I haven't seen before. Since this thread has taken a multi-sector outlook, I thought why not? Regards Frank P. Our view has been that investors should be using the current grim backdrop for the basic materials sector as an opportunity to build positions: this also holds true for the S&P metals index in particular. Relative value is excellent, underscoring that there is little relative downside. Base metals prices remain depressed, but new order growth for primary metals appears to have hit bottom. New order growth tends to lead base metal prices by about four months, indicating that some good news may arrive before yearend. In addition, inventory growth is contracting at its fastest pace in nearly a decade, implying that there is no supply overhang, i.e. as soon as demand improves, base metals prices will respond. Conclusion: use price weakness to add to positions in the S&P base metals index, and maintain an overweight stance. bcaresearch.com

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