ELWell I could be wrong!However, continued weakeness in base...

EL

Well I could be wrong!

However, continued weakeness in base metals is a sign that all is not well. There are increasing reports that base metal prices will fall over the next 12 months. The LME Ni price seems to just get weaker (and stockpiles larger), a bit odd when a turnaround was expected by December. Copper and nickel represent a very substantial proportion of BHP's profits (in fact about 75% of last year's increase in BHP's profits came from Cu and Ni).

BHP's share price has factored a rather high forward PE ratio relative to where it has been in the last 2 or 3 years.

I simply do not trust this idea of BRICs decoupling from USA/Europe, at least not for the next 5 years.

A contraction in financial liquidity has a negative impact on the real economy, and that is what is now happening worldwide. Northen Rock in the UK is a good example of what can happen, and Centro is another case.

Back in the 1980s (or was it the 1970s), Japan had a habit of agreeing to certain prices/tonnages for Australian coal and iron ore and then later when conditions were more favourable to them they simply "negotiated" the prices down during the currency of contracts. I expect the same would happen by steel mills in China (after all China is using the Japanese trade model).

But I will probably be proved wrong, again, and the boom will just continue all next year.

loki