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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (493)	7/9/2001 3:31:42 PM
From: Frank Pembleton	Respond to of 1643

Ahhh! Ok, sorry for the mix-up. I'll check out Jim Rogers web site, I'd be interested in his reasons for investing in zinc. For now I'm sufficiently invested, whether I like it or not. Thanks Frank P.

To: craig crawford who wrote (493)	7/10/2001 6:47:02 PM
From: piscatologist	Read Replies (2) \| Respond to of 1643

hi craig, i like the thread. found this on yahoo and found it of interest: • The consensus among investors seems to be that the Federal Reserve’s aggressive easing program has started a new cycle in the economy and in the financial markets, even though there hasn’t been a recession yet. We differ with that view. In our judgment, the economy remains in a late-cycle stage, one that has been prolonged by the Fed’s moves. Two late-cycle sectors that we continue to emphasize are energy and power. • Some aspects of the market’s performance appear to bear out our view that the economy is in a late-cycle stage. One is that the relative performance of traditional early-cycle stocks such as retailers and autos has leveled out recently; indeed, early-cycle stocks in general have been average performers for the past two months. Second, and more disconcerting, the S&P financials group has performed only in line with the market since the Fed began easing, despite the size and swiftness of the interest-rate cuts. • Meanwhile, the steeply positive slope of the yield curve has caused some investors to worry about inflation. Because we believe that the economy is still in a late-cycle environment, we also believe that inflation expectations are rising. Consider this: it is difficult to square the mediocre relative performance of the S&P financials with the expectation that the Fed is going to be successful in stimulating economic growth without re-igniting inflation expectations. Another point: history shows that financial assets typically do well when liquidity rises and inflation isn’t a worry. The performance of financial stocks seems to suggest that something may be awry this time around. • That raises a question: why is the yield curve steepening? In our judgment, the Fed’s aggressive easing in the absence of a full-blown recession probably means that there is a fairly low probability that the demand for energy will subside at current prices and a fairly high probability that there will be further increases in energy prices. • Capacity utilization in the energy and power sectors was tight when the Fed began its current easing cycle in January, and it has gotten tighter since then. Only two sectors in the economy are operating at 90% of capacity or higher: energy and utilities. Moreover, data show that refining capacity utilization is at 98% at a time when GDP is barely growing. What would happen if economic growth were to rev up to 3%? • Against that background, we think that investors should stay with the energy and power sectors. The risk is that a recession will come along and alleviate production bottlenecks by reducing demand. For now, however, we think that the liquidity that once flowed into NASDAQ tech stocks should continue to flow into the energy and power sectors. Richard Bernstein Chief Quantitative Strategist