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A lot of attention has been paid to the
slowing of the Chinese economy and
its effects on emerging market
commodity suppliers such as Brazil.
Bloomberg Business writes that the
end result could be a plus for U.S.
and Europe.
Before We Continue…
Click the links below to get your
FREE training materials.
Free Weekly Investing Webinars
Don’t miss these free training events!
http://www.profitableinvestingtips.com/free-webinar
Forex Conspiracy Report
Read every word of this report!
http://www.forexconspiracyreport.com
Get 12 Free Japanese Candlestick Videos
Includes training for all 12 major candlestick signals.
http://www.candlestickforums.com
The bottom line is that commodities
are cheaper these days as China
woes help the West.
[T]he slowest growth in 25 years in
the world’s second-biggest economy
is proving a boost for consumers and
companies in Western Europe and
the U.S., according to Neville Hill, co-
head of global economics and
strategy at Credit Suisse Group AG in
London.
Here’s why. When China grew at
double-digit rates, its voracious
demand for materials drove up
commodity and energy prices.
That hurt the buying power of
consumers in Western economies
and weighed on corporate sentiment
as rising costs hurt profits.
Now, that situation is being reversed.
Plunging commodity prices are
boosting European and American
shoppers and spurring corporate
earnings growth.
In essence China is exporting
deflation but of a good variety.
Imports from China are cheaper.
Exports from the U.S. to China will be
hurt but these exports are a tiny
fraction of the U.S. economy.
While Asia and commodity exporters
across the globe suffer from the
Chinese slowdown the China woes
help the West.
How long will the cheap commodity
bonus last?
The Price of Oil
The price of oil moved up 4% last
week due to potential supply
disruptions in Libya and Brazil.
But over the long term the major oil
producers like OPEC, Russia and the
USA are unlikely to cut back.
When supply routinely exceeds
demand prices fall and stay there.
China is the second biggest
consumer of oil in the world after the
USA.
As its economy slows so does its
demand for oil and so China woes
help the West by keeping demand
below supply.
CNBC puts the recent oil price
rebound in focus.
Aside from the suspected build in
U.S. stockpiles, there is still no sign
that production is slowing from major
oil producers such as OPEC, the
Organization of Petroleum-Exporting
Countries (OPEC).
Despite a sharp decline in oil prices
from a high of $114 a barrel in June
2014 to their current level, OPEC,
which is led by Saudi Arabia, has
refused to cut production levels
(which would support prices) and has
regularly exceeded its 30 million
barrels a day ceiling.
The stated reason for Saudi Arabia
not cutting back on oil production is
that they want to maintain market
share.
Another reason is that the Saudi royal
family maintains control of the
country by providing very generous
social benefits.
Essentially they are holding off the
Arab Spring by bribing their citizens.
Do not expect this tactic to end soon
and thus the Saudis will keep
pumping oil in excess of demand.
A Mixed Bad of Benefits
and Pain
The China woes help the West in that
they make consumer goods less
expensive.
However, commodity producers in the
USA are hurting just like the folks in
Brazil or Australia.
The New York Times reports that
the chill in commodity demand hits
America’s heartland.
A thousand miles south of this gritty
steel town on the Mississippi River,
West Texas oil rigs have shuddered
to a halt.
Seven hundred miles north, mines in
the Iron Range of Minnesota have
been stilled.
The drilling rigs, with their deep
underground pipes, once consumed
much of the steel that Granite City’s
blast furnaces could produce, while
the mines supplied the raw material.
So now, more than 2,000 workers at
the mammoth United States Steel
plant not far from St. Louis are
waiting to see if they will be next.
This month, the company warned
them it might be forced to idle the
plant.
Layoffs could begin around
Christmas.
Caterpillar is laying workers off and
the oil boom in the western Dakotas
is slowing down.
While China woes help the West it is
a mixed bag of benefits for
consumers and pain for those whose
work it is to produce now-unwanted
commodities.

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China Woes Help the West

  • 1.
  • 2. A lot of attention has been paid to the slowing of the Chinese economy and its effects on emerging market commodity suppliers such as Brazil.
  • 3. Bloomberg Business writes that the end result could be a plus for U.S. and Europe.
  • 4. Before We Continue… Click the links below to get your FREE training materials. Free Weekly Investing Webinars Don’t miss these free training events! http://www.profitableinvestingtips.com/free-webinar Forex Conspiracy Report Read every word of this report! http://www.forexconspiracyreport.com Get 12 Free Japanese Candlestick Videos Includes training for all 12 major candlestick signals. http://www.candlestickforums.com
  • 5. The bottom line is that commodities are cheaper these days as China woes help the West.
  • 6. [T]he slowest growth in 25 years in the world’s second-biggest economy is proving a boost for consumers and companies in Western Europe and the U.S., according to Neville Hill, co- head of global economics and strategy at Credit Suisse Group AG in London.
  • 7. Here’s why. When China grew at double-digit rates, its voracious demand for materials drove up commodity and energy prices.
  • 8. That hurt the buying power of consumers in Western economies and weighed on corporate sentiment as rising costs hurt profits.
  • 9. Now, that situation is being reversed.
  • 10. Plunging commodity prices are boosting European and American shoppers and spurring corporate earnings growth.
  • 11. In essence China is exporting deflation but of a good variety. Imports from China are cheaper.
  • 12. Exports from the U.S. to China will be hurt but these exports are a tiny fraction of the U.S. economy.
  • 13. While Asia and commodity exporters across the globe suffer from the Chinese slowdown the China woes help the West.
  • 14. How long will the cheap commodity bonus last?
  • 16. The price of oil moved up 4% last week due to potential supply disruptions in Libya and Brazil.
  • 17. But over the long term the major oil producers like OPEC, Russia and the USA are unlikely to cut back.
  • 18. When supply routinely exceeds demand prices fall and stay there.
  • 19. China is the second biggest consumer of oil in the world after the USA.
  • 20. As its economy slows so does its demand for oil and so China woes help the West by keeping demand below supply.
  • 21. CNBC puts the recent oil price rebound in focus.
  • 22. Aside from the suspected build in U.S. stockpiles, there is still no sign that production is slowing from major oil producers such as OPEC, the Organization of Petroleum-Exporting Countries (OPEC).
  • 23. Despite a sharp decline in oil prices from a high of $114 a barrel in June 2014 to their current level, OPEC, which is led by Saudi Arabia, has refused to cut production levels (which would support prices) and has regularly exceeded its 30 million barrels a day ceiling.
  • 24. The stated reason for Saudi Arabia not cutting back on oil production is that they want to maintain market share.
  • 25. Another reason is that the Saudi royal family maintains control of the country by providing very generous social benefits.
  • 26. Essentially they are holding off the Arab Spring by bribing their citizens.
  • 27. Do not expect this tactic to end soon and thus the Saudis will keep pumping oil in excess of demand.
  • 28. A Mixed Bad of Benefits and Pain
  • 29. The China woes help the West in that they make consumer goods less expensive.
  • 30. However, commodity producers in the USA are hurting just like the folks in Brazil or Australia.
  • 31. The New York Times reports that the chill in commodity demand hits America’s heartland.
  • 32. A thousand miles south of this gritty steel town on the Mississippi River, West Texas oil rigs have shuddered to a halt.
  • 33. Seven hundred miles north, mines in the Iron Range of Minnesota have been stilled.
  • 34. The drilling rigs, with their deep underground pipes, once consumed much of the steel that Granite City’s blast furnaces could produce, while the mines supplied the raw material.
  • 35. So now, more than 2,000 workers at the mammoth United States Steel plant not far from St. Louis are waiting to see if they will be next.
  • 36. This month, the company warned them it might be forced to idle the plant.
  • 37. Layoffs could begin around Christmas.
  • 38. Caterpillar is laying workers off and the oil boom in the western Dakotas is slowing down.
  • 39. While China woes help the West it is a mixed bag of benefits for consumers and pain for those whose work it is to produce now-unwanted commodities.