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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (5027)	1/14/2004 10:11:07 AM
From: mishedlo	Read Replies (1) of 110194

Exports Have Peaked morganstanley.com Asian exports peaked in this cycle in the fourth quarter of 2003, in my view, and will likely grow by half as much or less in 2004, about one-fourth below trend. The slower growth rate should allow raw materials industries to catch up in supply capacity and, hence, make further expansion affordable to low-income economies in Asia. We believe Asian exports could decelerate by 70% by end-2004. China probably frontloaded its exports in 4Q03 due to an expected reduction of VAT rebates in 2004, which we estimate exaggerated its export growth rate by one-tenth last year. The strong euro accounted for one-fourth of China’s export strength. Both one-time factors will disappear this year. Regional trade should decelerate sharply with China slowing its investment growth rate. When global trade slows down, its impact on commodity and equipment producers should be greater than in the past. Although markets are wildly optimistic about commodities, I am afraid that commodity prices could drop significantly in 2004. China’s central role in outsourcing-led globalization has basically increased the volatility in the cyclical commodity and equipment sectors, in my view. The current euphoria about these sectors, though justified by China’s secular story, is mostly cyclical, in my view. ====================================================================== Russ you buy this? Implications? Historicly I have not liked this guy's analysis. Sometimes his analysis is good but conclusions way off. Discussions appreciated. Mish

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