Icarus banks and miners soar towards Delta and iron ore Sun

XJO is soaring on Icarus wings today at another all-time high:

The two main drivers are obvious. The CBA bubble is inflating at an alarming speed after its result, dragging other banks with it. The US curve steepening is a factor even as Australia crashes into deep recession. Crazy times:

Mining is enjoying a day off recent declines even thought Dalian has erased all overnight gains:

BHP is more richly valued now than it was when iron ore was $70 higher! RIO is slightly down. FMG is down more heavily:

QE does some wild things to asset prices.

Houses and Holes
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  1. Even StevenMEMBER

    CBA is overpriced. Might it go to $120? Sure, it’s possible. I’ve seen expensive things become more expensive plenty of times.

    Do I think it’s a good bet? No.

  2. CBA isn’t really a bank so much as a building society is it? I mean what does it do?
    It’s not a very complicated or value adding business is it, so why is it so expensive to buy?
    It’s not a tech giant or a pay later than after you get your pay tomorrow sort of business is it?
    So my real question is why is the share price of CBA so high?
    Oh, that’s right OZ has compulsory super so it has to go somewhere & all the punters like banks cause they do tax credits!
    So we have overpriced financial institutions because we have compulsory super? What could possibly go wrong?

    • Even StevenMEMBER

      I don’t think it quite works that way.

      Fundamentally the bank share prices are mostly supported by their earnings (evidence: PEs are stretched vs historical levels but little wonder given term deposits pay close to zero).

      The key question is whether long term their earnings are sustainable. Will credit growth be maintained? Will their margins be maintained?

      But it’s not really anything to do with Super.