From The Australian comes David Einhorn who is not going to join the Australian Government any time soon:
The founder of Greenlight Capital is downbeat on $US43 billion mining equipment maker Caterpillar, he told the Sohn Investment Conference in New York, a forum for investors to present their best ideas.
He said iron ore and coal are the two key drivers of Caterpillar’s business.
“Iron ore is in structural oversupply with more supply set to come online in the next few years,” he said.
“Until 1997 steel was a sleepy alloy. Over the next 16 years, production more than doubled and 95 per cent of that was in China.
“Australia and Brazil earned 80 per cent margins digging up one of the most plentiful elements on earth and shipping it to China.”
But now China is transitioning from an investment-driven to a consumer-focused economy.
Don’t be ridiculous, David, iron ore volumes and prices are going to continue to rise to the ends of the earth, or at least until July 2, 2016.
For balance, here’s Mark Mobius applying for a job in the Australian Government at Bloomie:
Mark Mobius is piling into commodity stocks in China, saying that a rebound in raw-material markets is only getting started after prices sank too far and that gains may be extreme.
…China’s commodity producers, which were the worst mainland equity investments over almost a decade, have led this year’s rebound as China boosted stimulus and local investors swarmed into the nation’s futures markets, with bets on everything from steel bars to cotton. The Bloomberg Commodity Index rallied for a second month in April, and assessments are stacking up that the worst of the rout is now over, including from industry veteran Tom Albanese, a former head of Rio Tinto Group.
“We have already seen how both commodity prices and the commodity stock prices went down too far, beyond realistic assessments,” Mobius said. “We can now expect movement on the upside to be extreme in percentage terms. If there is a move down, there is a good chance that we would increase.”
