How far does the mining bust have to run?

Despite MB tracking the iron ore, coal and LNG booms far more accurately than any other entity that I know of, we’ve often been labelled “doomsayers” and “pessimists”. It’s true that MB has been bearish on all of the bulk commodities for a long time but it’s becoming increasingly obvious that we have not been bearish enough.

We all know that commodity prices have been under pressure for four years now. That deflation has been the result of three interlocking forces:

structural adjustment in China pulling demand just as commodity expansion accelerated;
cyclical recovery in United States leading to less monetary easing and a stronger US dollar, and
de-financialisation as the first two unwind the prior great commodity hoarding cycle.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.