Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: orkrious who wrote (13195)	10/9/2004 11:48:16 AM
From: russwinter	Read Replies (2) of 116555

<will the bust cause demand to drop so much that prices fall enough to make the stocks unattractive.> It will all be relative, but here's a scenario. The Cu market must get into equilibrium. If inventories are gone that means demand must equal supply, and there will be no more slack. That will be depressionary and it's getting closer at hand with Comex and LME inventory down to only 134,525 MT. It will crush the world economy. The difficulty might be an overshoot, where demand collapses beyond supply. However, I don't see this happening quietly at 1.45-1.50 Cu (NTO at 2.70), or the user market making some kind of benign adjustment. I think it will be cathartic, and manifested by a big spike, 1.45 simply doesn't ration properly given current demand. I do not think the user market just comes back at the otherend of the spike like mushrooms after a spring rain, many enterprises will already be wrecked. I have little idea what prices will look like then, cross that bridge when we get to it.

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