Well there it is. The ASX200 is down nearly 2% on the open this morning as a bath of blood continues to overflow, down to 4900 points and below the 2015 intrasession lows:
BHP is down a whopping 4% to below $16 a share and taking out a new 12 year low:
Fortescue in death throes, down nearly 6% to $1.53 and on its GFC lows:
But don’t be alarmed!
Bank stocks are doing fine. Well, kind of. They’re also down 2% or so across the board, but the financials index remains strong.
Although the last two years of price appreciation are about to be taken out.
Time to buy the dip?
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Macro Afternoon
Markets are sliding into risk off mode today
I’m thinking if the CCP comes out with an appreciated RMB today we might see another hopium rally, we’ll know in about 20 minutes!
Obviously a few betting on a bounce around 11.30.
Huh?
So when renminbi is lowered it’s bad for world trade? Thought we could buy more trinkets. China sells more…. more world trade.
Why is it only “good” when the AUD goes down, but not good for China when they devalue?
moreso because it is a sign that the chinese economy is weaker than portrayed. Plus you have the whole carry unwind trade which sucks liquidity out.
Maybe buy the dip and sell the rally? 7 days up followed by 7 days down.
Traitor!
I mean, trader!
You’re doing a great job in LVO’s and DLS’s absence CB. Yeah, I know I’m a suck-up, but I appreciate the effort you’re putting into this blog… and into the addition of the GIFs to the comments feed… 🙂
As LoC said, kudos. But so much so for the west’s traditionally quiet business Christmas/New Year, you are actively recording this ‘end of times’ as it happens. Something to reflect on with grandchildren on your knee.
I agree with LoC. I quite enjoy the schooling I get from you via these trading focused articles. Just a tad more explanation for us dummies would help but that is just me being lazy. 🙂
“..I appreciate the effort you’re putting into this blog…”
I agree. Especially given the crankiness of some of the bloggers.. I’d suggest a bex and a good lie down for some of these guys, but I’d probably be accused of political correctness!?
XGD +1.7% 🙂
This is starting to remind me of the crash leading into the Bear Sterns bankruptcy. Terrible start to the year with no respite then the dead body of Bear was brought out .
I suspect there has been a death somewhere in the world economy just waiting to find out who now.
From what I have seen it looks like the Euro Dollar contraction.
The Fed may be about to restart the printing press sooner then later.
The smartest guys in the room have been thinking that for while
http://images.businessweek.com/bloomberg/pdfs/BN_0850499D_041015_19334.pdf
Soros is also smelling 2008 again http://www.cnbc.com/2016/01/07/soros-its-the-2008-crisis-all-over-again.html
Sadface
Read The Big Short Too Late
Options Strategist too late
Trying madly to get options turned on on account
Best I can do is ASX: USD and ASX: BBOZ for now.
+1
Also try CROC:US for a little more leverage
Please explain. This is a US listed security?
(Can only invest in Commsec ASX funds or overseas if I use Saxo Capital Markets)
Rio on the LSE is ÂŁ17.39 (2.09) = $36.35 (currently $40.23) a 11% arbitrage
BLT/BHP on the LSE is ÂŁ6.52 (2.09) = $13.69 (currently $15.65) a 14% arbitrage
I think people underestimate how far these babies have to fall. When China demand for steel worsens, and protectionist barriers arises, as it inevitably will – even BHP and Rio will cut production!
I remember telling an ex-work colleague that BHP would get to below $12ps around five years ago, and rubbished me on the point. Which is fair enough given the outlook (I was only four months away out of jumping from all my mining holdings) – what did hurt was that he basically didn’t want me to email anymore (aka “technical issues” terrible excuse I know…).
This is the truth – when you are in the business of making money – the last thing you want to hear is bad news. Even my close friends rubbished what I predicted. And I respect that – what they fail to remember was I made the majority of my monies going long… surely that must have raised some alarm bells.
BTW, Rio at $21-22ps would be nice – vested interest of course… so beware.
One other point – when this mining crash reaches the bottom (assuming you could pick it – which is unlikely) even then, I wouldn’t be buying in.
And all, those wanting mining super taxes – you are all idiots… you talking about things you do not understand. And I suspect, never will…
Super profit taxes are a good fit for the mining of non-renewable national assets. Elevated prices for those assets are a national bounty and needs to be sufficiently nationalized rather than being mostly privatized.
You might not understand super profit taxes.
Idiotic argument – lets super profit IT, because all the new billionaires are software producers!!!
hangon – lets super profit everyone because we can!!!!
Your an idiot because if a mining company can not make a profit on good times – its going elsewhere. its simple math really.
Soon Austrealia won’t many a manufacturing industry, and if you had your way, nor a mining industry. Lets super profit the agricultural industry – so we really won’t have a recovery!!!!
I get sick of the negativity on this website sometimes. people think they are so smart and have such foresight. But none have any good ideas – none have any vision.
You cast around stones as if it matters… I know, lets get our PM, MT to have an entrepreneurial focus, lemonade stands for all… small business creation. Oh hang on – how many businesses did our MT create? Lots of capital raising’s – mining companies mostly???? How many actually survived -??? One??? None???
Clever countries protect certain industries – S. Arabia oil; US IT/manufacturing; Japan electronics, Germany cars – Australia??? nothing…
err calm your tits RT.
Youve gone from a disagreement about RSPT to “idiot” in one foul step.
Take it back a notch please – there is some truth to your side of the argument, and you can present it a bit better than just spewing up….
I spew up your PC focus Beck – thats what I spew up… thought provokes, and sometimes offends…
I litany of no-thought. Truth is, without H&H, this blog site would be nothing.
“Your an idiot”
That never gets old.
your edited first post was a good one. 2nd diatribe not so much
protection yes – and a good way to protect industries like mining is to nationalise them at the extreme, or reduce the extraction rate to maintain rarity/control supply. Something the Saudis are screwing up in the extreme.
A RSPT is not the best way to do it, its a means within. Was far far to late of course and yes we all understand mining is literally boom and bust (well you do, and some others, but not most of the mining community or Treasury), so taking the cream off the top is indeed a bad idea.
But not when the vast majority of profits are in the hands of corporations that pay almost zero tax or royalties AND when it jeopardises by systemic risk – ala Western Australia.
And Im not PC. Not by a long shot. I have a high tolerance level, but I dont respect a lot of views. Theres a subtle difference there. Tolerate the views, but if they dont make sense, why respect them?
HnH has another two weeks off – maybe you need a holiday too?
boy that escalated quickly – https://www.youtube.com/watch?v=FONN-0uoTHI
An RSPT was needed to help adjust Dutch disease, or put another way giving the owner of the raw commodity a commensurate return on their ownership. RT you need a break, take two years.
If there is anything that should be taxed for super profits, it is the fruits of the finance sector, which should be done via a reduction in the capital gains discount among others.
It doesn’t make sense to dis-incentivise the resource sector. You are right though RT re: protecting vital sectors. We seem to have been more interested in setting ourselves up as a poster boy for de-regulated free markets while others around us continue to more pragmatically protect their most economically and socially important sectors. One imagines that particular sector in Australia is now the property construction sector.
Becker: “err calm your tits RT. Youve gone from a disagreement about RSPT to “idiot” in one foul step.”
I know definitions evolve over time, but it seems political correctness has changed a lot from when I was growing up!
“We seem to have been more interested in setting ourselves up as a poster boy for de-regulated free markets while others around us continue to more pragmatically protect their most economically and socially important sectors.”
Absolutely nailed it.
RT makes a good point. I mean, if we discourage mining companies, they’ll take all our dirt and go somewhere else.
What a blowhard.
What an intellect…
No need to be like that. I helped you get the greater than/less than symbol usage right. A little gratitude for bailing you out on that repeated failure would be polite.
If I can also help with the preening and bloviating you should grateful
Lol…gold! >.<
Brilliant comment, in the face of all the short-term idiocy on this blog advocating new taxes every month to raise revenue for the pigs at the trough in Canberra .
“And all, those wanting mining super taxes – you are all idiots… you talking about things you do not understand. And I suspect, never will…”
If these clowns want a mining tax, or a carbon tax, then when there is a mining bust, or global cooling emerges, do the same idiots propose a mining subsidy and a carbon subsidy ?
Why not just bloody leave things alone and stop meddling for a change ?
The utopian socialists keep looking for problems, then suggesting we are one more regulation or tax away from fixing everything and world peace and prosperity will emerge.
They’ve never heard of spontaneous order or self-organising markets. Thick as a brick.
Oh, there’s plenty of mining subsidies already. They’d just look greedy if they asked for more.
Oh, wait…
Brilliant comment
Ah, anything but. It was an ignorant rent seeker comment.
Resource prices are cyclical. Always have been, always will be. When resource prices are high for long periods of time it creates ‘Dutch Disease’ – it makes our dollar go up, it makes wages go up, it takes resources away from other industries. It causes other industries to go under while the resource rent seeker go on wild spending sprees, profit taking (which would be ok if they actually used that money to ride out the troughs – but they spend it like crazy and go bust in the bad times leaving us to clean up the mess) and pushing up stupid asset classes like housing!!!
So a ‘mining tax’, if done correctly (and not by an incompetent KRudd & Labor) would produce a couple of outcomes – it helps smooth out the economy to keep other industries alive so we have something to survive on when the resource bust comes along, as well increasing the government bank balance (or a sovereign wealth fund like Norway) to help pay for the damage clean up, the unemployment, and to stimulate the economy at times like these. The stuff in the ground is a sovereign asset – and taking a clip when the prices are above historical averages to smooth out the economy is a completely different situation to a normal profit tax.
You don’t understand what the carbon tax was for (and what it was achieving) and why it is completely different than a mining?
They’ve never heard of spontaneous order or self-organising markets.
Sure they have. They just don’t like the inevitable fascist and oligopolist outcomes and understand markets are a means, not an end.
I’m kicking myself for not shorting GMA last Friday when I was looking at it. Down 5% today. Still, I suspect it has much further to go.
I know! I was looking for it to push above $2.80 before I jumped in. I’m sure there’ll be another rally, though probably won’t get that high again.
My finger was poised at $2.75 – looks like I’ll have to wait for the next bounce.
Guardian is saying we are rooted
http://www.theguardian.com/business/2016/jan/11/australia-bet-the-house-on-never-ending-chinese-growth-it-might-not-end-well?utm_source=esp&utm_medium=Email&utm_campaign=GU+Today+AUS+v1+-+AUS+morning+mail+callout&utm_term=148989&subid=11538367&CMP=ema_632
That article could have been written by H&H himself !
Mining tax would have been good but they cocked the implementation up. That along with a general land tax replacing income and company tax and we may be able to drag ourselves out of this mess.
I’d rank removing the GST and payroll tax above income and company taxes, but in general agreement.
Don’t tell RT, his blood pressure is seriously high today.
Well if the share market is not performing then its time for the holdout mums and dads to jump into real estate.
Its a gold like safe haven don’t you know.
Just out of interest, what’s the longest run of down days on the ASX?
What prices are the likes of OSH, STO, WPL and ORG likely to bottom at?
STO is worth $0 at the moment until they raise capital
Ha! Many people will suffer brown finger finding out. I value ORG and STO at zero. Banks are exposed to LNG too.
“Soon Austrealia won’t many a manufacturing industry, and if you had your way, nor a mining industry. ”
It doesn’t seem to matter, the mining industry is doing a perfectly acceptable job at doing itself in. I agree that we may end up with nothing, but that might just be what happens when you bet everything on H&Hs.. Capitalism can be a, brutal, cyclical witch..
On my Dad’s advice, I entered the stock market for the first time in Nov 2007. I think we picked the start of the GFC to the day. His stockbroker, a man much younger than me, advised BHP as a “no brainer”. I paid around $46.70 per share. It plunged over the next six months, then recovered and I was able to exit at around $46.20. To see it at $15.59 today is shocking. That over 75% less than I paid for it 8 years ago!!! Living and learning 🙂
Yea I concluded a while back that most commentators on MB just want to whing, as much as I might wish it was an economic blog looking for unique Aussie solutions I know deep down that it’s just the glass-half-full crowd looking for a place to vent their spleen.
The never ending Robin-Hood meme gets really tiresome, Find some sector that’s doing well and propose new special situation taxes….like increased taxes are a solution to anything…feed my welfare beast….opps it’s hungry again …feed the beast…it’s grown..feed the beast….it’s politically powerful ..feed the beast. Forget that, IMHO real change wont happen in Australia till popular opinion shifts to a starve the beast meme…At least that’s a strategy. For those that don’t realize it Australia without welfare could be an Income tax free country. Free for everyone, think about it for a minute No income tax none what-so-ever no CGT discussions, no negative gearing discussions / distortions, a whole slew of problems/injustice fixed with just one small change.
Wrong place.
Yeah sure and watch that extra disposable income get consumed by the global corporate “Australia Tax” through increased prices on everything.
Could be good for those not needing any kind of medical care (ever!), those not needing to educate their children or them selves and infantile arsewipe Ayn Rand disciples, but im pretty sure your narcissistic little brain fart would be [email protected] for 90% of the population in the long run.
Do you trully believe what you just posted or are you just spruking for yourself? (Honest question)
A fast track to massive income and wealth gaps, social stratification, crashing class mobility, generational and deadly poverty and an even more oligopolistic marketplace seem like a strange definition of “fixed”.
Hmmmn ……I got out of RE investment six years ago. Saw the writing on the wall back then. It will end in tears imho. I have never invested one solitary cent on the stock market and probably never will. I do not trust any financial advise though I enjoy listening to the blurb just as I enjoy listening to the occasional Good Book quotes from my dark suited visitors. It is soul soothing just to listen sometimes. I am not attempting to be smug just honest.
If you have super, you’re in the share market.
If so, it’s easy to put your money in cash if you think the share market will dip anytime soon.
I know non financial people who have beat the market by moving their super back and forth between cash and growth stocks over the last 7 years.
True story.
Makes many of us look like fools.
If you have super and it’s in cash then you are not in the sharemarket. And you’d be pretty happy about that. Today. 🙂
Nope, 25 years ago decided super was a con with too many people having access to the funds……proved to be correct.