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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Augustus Gloop who wrote (8882)	3/3/2008 9:12:55 PM
From: robert b furman	Read Replies (3) \| Respond to of 33421

Hi john and Aug, Suggest you listen to Bucyrus webcast. They sell /recondition open mining shovels. Huge and the size of buildings - they load up the Terex and Cat dumptrocks that have tires twice the size of humans. They have a backlog like never before. Each shovel means a new mine. Each shovel is a long term capital commitment. Economy 101 - Natural resource business cycles are long term plays - it takes years to open a new mine. The profits made from margins that expand as shortages in the beginning pay for expansion of new supply that meets and exceeds demand at the end of the cycle - thus declining prices. Ag commodities ditto - the economic cycle is longer and looks like the swirls of a snickers bar. As this commodity inflation justifies new investment and its resultant supply - prices do diminsh and a second wind of business expansion is met with price stabilization. Of course we also know that price inflation will be met with higher rates and that will bring recession. The real question is if we have a late cycle expansion? Bob