Extending the scope of base-metal bearishness.

Perhaps seen as a bright spot this week, Australian jobs numbers grew and unemployment dropped. In recent years, amidst the employment downturn in major economies, Australia's job market remained firm. With that, though, comes firmness in wages. And with that comes firmness in costs even if the overall economic picture is softer. That's what has happened in Australia's manufacturing sector and what is beginning to happen in the export sector.

New rent and carbon taxes imposed on the resource industries add to the cost pressures. Global commodity prices in general are beginning to reflect a sustained downshift in economic activity. The question is whether Australia can adapt to accommodate the eventual impact on its economy, or if they plan to go headlong into whatever comes at them (which is normally reserved for government officials and central bankers.)

Commodities Essential. 11 May 2012

Trade Essentials.

No new recommendations or adjustments at this time.