Big oil and gas rocket on nothing

You gotta love contemporary markets. Some random central bank of a busted currency declares it’ll print, putting monetary pressure on commodity prices to fall, but dirt producer equity leaps because it offers a paltry and fleeting yield. It’s investment distortion 101!

And so, BHP is up 2%, RIO is up 1.6% and FMG is up 3.5%:

Of the three, only FMG is at a new high which is perhaps telling about the durability of the rally. As to when FMG heads back down, it’s breakeven is at $38 now and with iron ore still at $51 it’s making a handy $2 billion. A break below $50 for iron ore would be a nasty psychological blow one would think, then falls with each further spot retracement. At a guess! Dalian has opened down 1 point at 365.

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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.