a good day today

Lifted by the rising oil prices of

the geopolitical

tension took off in the middle East.

But today's bias aside 's been

a miserable year for anyone

exposed to the industrial metals.

Slow down in Chinese demand

trashes the price of everything from

iron, copper and nickel.

Here we got one measure of the effect

of China weakening industrial methods

here in red.

You can see just how appallingly badly

they done.

And the Brazilian rial, the blue line

of both done appallingly.

And more recently Brazil had a little bit of

rebound that's come as fears

about emerging markets of receded

somewhat

but the broad ______ clear,

Brazil is a major exporter commodities

suffers when commodity prices fall.

Really shouldn't be a surprise.

But questions since the summer

has been how far this reflects the reality

of what's underway in China.

Of the equity bubble popped

in the currency was devalued a little

those who believe that China headed for

painful hard landing gain the upper hand

Those prices stabilized investors' notice

that the Chinese are still going to

work and buy iPhones. Hopes for

soft landing returned in emerging market

as a whole.

rallied in October outpacing developed

markets.

This month's been rather more mixed

not least because the renminbi has resumed

its weakening like not particularly

dramatically.

And merging market stocks have pulled

back even as their currencies the

renminbi aside but mostly held up

Third option starting to looking

increasingly appealing though.

As I discussed in August China could have

something of a ________ in economy

Hard on the outside and soft on the inside.

On here I put the main Chinese survey

of manufacturing and services

and fifty her is the dividing line

between growth expansion here

and contraction are down below.

Manufacture shrinking has been for

a little while.

That the growth of services has slowed

as come down a bit recently

I should tell this is

Both of these lines are three- month

moving averages. Because it's quite

a volatile series. Uh well...

That growth has slowed somewhat

it is still growing.

For the moment, looks as though

China's efforts to rebalance its

economy away from exports and

heavy industry and towards consumption

are working.

Problems for investors is to find

something with that idea is

already fully priced in

It's possible that the industrial metals

would fall even further as the

manufacturing side and the heavy

industry in China's economy

continues to shrink.

After all, in real terms price of many

industrial metals still more than double

where they were before China's imports

really took off in the early 2000.

That was tot happen you see

sharp falls hurting both emerging market

reliant on commodity production

and of course the share prices of miner

who already bombed out.

After fall in prices of more than a third

in the past year for industrial metals

and even more than many mining stocks

better on further price drop does

need very strong conviction.

That's probably pretty hard to get

anything that relates to China and

particularly the lack of trust in data.

In other side, companies exposed to

Chinese consumers into mystic growth

quite hard to find out outside China

Those inside China already look

extremely expensive compared to

the state- owned Bahamas which

dominate the country's old-line

industries. Try to grappling with some

very severe debt problems trying to

follow a route which other developing

countries failed to navigate smoothly

may if all this goes wrong, still

ended a much broader crisis.

This moment, it looks as though

the market are betting on

being reasonably likely to have a

successful transformation.

But at the same time,

markets are beginning to recognize

even achieving such a difficult economic

______ would be tough for those who

prospered by supplying the old China.