Gerdau also significantly increased production last quarter thanks to a slew of recent acquisitions and the inauguration of a new blast furnace at its Gerdau Acominas unit in Brazil.

Output of raw steel products like steel plates rose 26.2 percent to 5.64 million tonnes, led by a 39.1 percent increase in North America, where Gerdau completed its takeover of Chaparral Steel. In Brazil, output climbed 15.8 percent.

With Brazil's economy growing at its fastest pace in decades, Johannpeter said Gerdau is looking to increase production further to keep up with demand. Gerdau's board recently approved plans to invest $277 million to further expand capacity at its Acominas unit to 5 million tonnes annually in 2010 from 4.5 million tonnes currently, he said. (yes yes but this will create over supply in the coming End of Days scenario as we enter a post modern Mad Max world) (However it is positive for metallurgical coal - ahem)

"The Brazilian economy is in a new phase of growth and this project fits into that outlook," Johannpeter said. (all lies - hedge fund computers can look ahead 6-9 months and see the end of the Brazilian party)

So once again let's review - the current thesis is "reverse decoupling" of America from the rest of the world. We will rebound, and the rest of the world will crumble. We use a ton of commodities but not enough to support prices like the rest of the world. Nope. So commodities will deflate since all they are is a bubble, and you need to sell the stocks.

Absurd? Perhaps. But that's the thesis and to go against it will cause you to lose money. Until "they" reverse the thesis and say "time to buy these darn cheap commodities". When will we know it's time to change course? The charts will tell us. And the chart below says "not yet" - each return upward to the 50 day moving average the past 5 weeks is simply a time to sell and then short. When that stops working - it's time to be bullish.

No position