It’s been a busy week on the commodities and economic front with fears that Greece will leave the Eurozone putting a damper on commodity prices. In addition the popular story that China is slowing down still keeps popping up its head. The positive for Australia is that the combination of these two stories, plus the recent RBA interest rate drop has resulted in the AUD/USD dropping below parity for the first time in 2012

**** China’s investment boom starts to unravel 14 May 2012 Financial Times ****

In an unguarded moment in 2007, the man anointed to take over next year as the helmsman of the world’s second-largest economy revealed his doubts about China’s economic growth statistics

The country’s official gross domestic product figures are “man-made” and therefore unreliable, Li Keqiang told the US ambassador at the time, adding with a smile that he regarded them as being “for reference only”.

When evaluating the speed of economic growth Mr Li, who is expected formally to replace Wen Jiabao as China’s Premier next March, said he focused instead on three sets of data – electricity consumption, rail cargo volumes and disbursement of bank loans.

If Mr Li’s assessment is correct the Chinese economy is in a lot more trouble than headline GDP figures have indicated until now.

Less closely watched economic data released in recent days, including figures for electricity, rail cargo and bank loans, have all shown a steep drop in activity that appears to have caught policymakers by surprise.

**** BASE METALS: Copper Sinks To 4-Month Low On Greece Worry (Dow Jones) ****

NEW YORK (Dow Jones)–Copper futures sank to the lowest price in four months on Monday, as worries about political upheaval in Europe pushed investors to cut their holdings of the growth sensitive industrial metal on the chance that demand would falter.

The most actively traded copper contract, for July delivery, fell 2.6%, to settle at, the lowest settlement since Jan. 10.

European and U.S. stock markets slumped Monday after Greece’s latest attempts to form a coalition government failed. New elections are seen as increasingly likely, causing some to worry that the turmoil there could jeopardize Greece’s international financial backstop and perhaps push it out of Europe’s monetary union.

“Early weakness persisted all day as equities and commodities felt the weight of a possible Greek exit from the European Union,” traders with RBC Capital Markets said in a note. “No matter how you slice it, the global economy looks to have stalled again in the face of slowing Chinese demand and the ripples of a European debacle.”

**** Spark in Sales of Cars and Trucks Drives U.S. Economy Bloomberg **** By Shobhana Chandra and Timothy Homan – May 13, 2012

Car sales that are running at the fastest pace in four years are poised to reverberate through the world’s largest economy as a spillover into production, profits and jobs for Americans may be starting. Auto purchases have exceeded a 14 million annual rate in each month this year, the strongest performance since early 2008, according to Ward’s Automotive Group. Government data show motor-vehicle output contributed half of the first quarter’s 2.2 percent economic growth

Facts of the week. China’s chicken population is easily the worlds largest, being twice that of the number 2, the U.S.A


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