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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: rubed who wrote (12766)	4/28/2004 12:33:57 PM
From: orkrious	Read Replies (3) \| Respond to of 110194

China Comments Can't Crush Commodities thestreet.com By James J. Cramer RealMoney Columnist 4/28/2004 12:29 PM EDT Click here for more stories by James J. Cramer Commodities BULLISH China's comments aren't enough to stop commodity demand. That takes excess supply and higher rates. Cyclicals have these giant moves up and giant pullbacks. Giving up on the commodities because of China? Sure, be my guest. The problem is demand; it doesn't get tamped by jawboning and it doesn't get clobbered by Chinese officials saying, "Hey, we want to cut back." Demand gets cut back when rates go so high that no one wants to stockpile copper and aluminum and there isn't much demand anymore. That's nowhere near where we are. These companies generate a gigantic amount of cash. They are levered to a lot more than just China. They finally are in the sweet spot. They are not going to leave the sweet spot until rates move substantially higher. I know that those who are buying stocks like Alcoa (AA:NYSE - commentary - research) or Phelps Dodge (PD:NYSE - commentary - research) are saying, "Wait a second, this pain is just too great," but the way cyclical stocks move is pretty simple: They have giant moves up and giant pullbacks. Non-cyclical buyers are used to seeing giant pullbacks only when secular growth companies "blow up." That's not how cyclicals work. Cyclicals go up huge in anticipation of good numbers and they keep going up until enough supply of the commodity has come on to wipe out demand and rates are much higher. We have neither condition right now. So step up to the plate and join me.