Resources Meltdown Discussion

Dropping AUD is good for companies that earn in USD. The lower the Aussie goes, the better it is.

Julia said:

Perhaps consider a total of "X" dollars in the market. Much of that was invested in the financials. Then the bad news keeps coming globally on the financials, including on our home front, and investors pull their funds out of the financials and pour them into resources. Obviously the SP of the resources rocket as this happens over now quite a sustained period.

Then, perhaps because of the attractive yield on especially the big banks, at the first faint glimmer of good news on the financial front, many investors think, whacko, it's all good again for the banks so the funds come out of resources and into the financials.

Doesn't really have to be more complicated than that, does it?

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I don't believe however, that the smart money will be heading into financial s until the housing market gets close to a bottom in the US....The only ones that stupid are the US Treasury and the Federal reserve!

Cheers,


CanOz

CanOz said:

I don't believe however, that the smart money will be heading into financial s until the housing market gets close to a bottom in the US....The only ones that stupid are the US Treasury and the Federal reserve!

Cheers,


CanOz

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but where is it going to go? if commodities are being dragged down on recession fears, then earnings will slow on pretty much everything discretionary?

i think a bit of rotation is going on and some hedge funds are in the cross hairs of a few people. seen natural gas - looks like a forced fire sale resulting from a failed hedge fund.

definitely think this will keep going and funds will pile back in.

I'm surprised that no one has mentioned the olympics. I believe it's possible that short term demand for metals from china will decline due to the olympics. The forced shutdown of many factories and power plants will perhaps put china into an economic downturn.

Will be interesting to see how this pans out Anyone else have any thoughts on this?

Fenis - I've been thinking that all day myself. I know a lot of this sell off was caused by price reductions on the London Metals Exchange - hence it makes perfect sense that if those that consume the materials are NOT consuming those materials for a matter of MONTHS (remember we have the special olympics following the standard one) I'm sure that the supply and demand ratio's would slip towards there being an excess of supply.

All in all it still doesn't make any sense to me what-so-ever.

The only thing I fear is that when the Olympics are said and done, and the world's attention leaves China, the Chinese might allow their stock market to correct itself in an attempt to contain rampant inflation and an overheating economy....

Julia said:

Perhaps consider a total of "X" dollars in the market. Much of that was invested in the financials. Then the bad news keeps coming globally on the financials, including on our home front, and investors pull their funds out of the financials and pour them into resources. Obviously the SP of the resources rocket as this happens over now quite a sustained period.

Then, perhaps because of the attractive yield on especially the big banks, at the first faint glimmer of good news on the financial front, many investors think, whacko, it's all good again for the banks so the funds come out of resources and into the financials.

Doesn't really have to be more complicated than that, does it?

Click to expand...

Im with Julia...if we remember back to Feb and March the flow was the other
way around, from the financials to the miners.