IT IS VERY IMPORTANT TO DIFFERENTIATE within the commodities and resources sector because there is definitely a very hard landing and liquidation cycle under way in China. Longs of industrial metals in general should be avoided; however, some commodities, such as oil and grains, are less influenced by China. In commodities like uranium and solar, China is just getting started. Then there is a question as to whether a Chinese panic and capital flight will benefit precious metals [China and Silver].Read it at Zero Hedge
The Central Banks Will Save You! – and other Hooks to Avoid
By Russ Winter
While I still don’t believe China will reach hard landing territory this year, GDP may very well end up below 7% for 2012 and is heading lower. The commodity and energy sector have taken a beating over the past six weeks, which presents some opportunities for investors. As the chart shows, China only consumes just over 10% of the world’s oil. Further economic deterioration in the US and Europe will push oil prices lower, but it’s hard to envision prices falling back near the lows of ‘09 without another serious global recession.
At this point, the US majors (CVX, XOM and COP) still look a little pricey, especially compared with their European counterparts (BP, E, TOT). These European oil plays offer dividend yields over 5%, 6% and 7%, respectively. Read the rest of Winter’s piece as well for his potentially actionable ideas.
Disclosure: I’m long BP, E and TOT. This is not a recommendation to buy/sell any of the stocks listed above. You should do your own homework and/or consult with an investment advisor before making any investment decisions based on these comments.
Predictions for 2012
Hugh Hendry - China Will Be Last Shoe to Drop