The Bull shall Return

YOUNG_TRADER said:

We're through as far as I can see, XJO gapped up above 5100 this morning

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I wasn't surprised about this morning given the DOW overnight but it has retreated back around 5120. See what this afternoon brings.

MIT

YOUNG_TRADER said:

We're through as far as I can see, XJO gapped up above 5100 this morning

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I dont think we are through unless we close above 5082 today and advance for another 2 days in a row next week. It would be great if it close at around 5200 by Tuesday

There is strong resistance around 11300 for the Dow dating back to 99.

... and down it goes.

Since I can't edit. Looks to be mostly 3M that's pulled it down.

It seems like theres no stopping China!

Looks like the stronger for longer Resources Theory is holding up!

China says feed me I'm hungry!!!!!!
Austalia should keep all this inflation mumo jumbo quiet and feed the great Red Dragon all the Iron Ore, Oil, Uranium, Zinc, Copper, Nickel heck whatever it needs!


China’s Exports Just Keep Booming: So Too Car Sales
July 11 2006 - Australasian Investment Review – (AIR)

China has just recorded its biggest ever trade surplus: a record $US14.5 billion ($A18.7 billion) in June as exports surged.
That was up from May's figure of $US13 billion and came on the back of a 23 per cent jump in exports, compared to June 2005.

Exports totalled $US81.3 billion in the month, while imports rose 18.9 per cent to $US66.8 billion.

China's surplus with the rest of the world has jumped a massive 55 per cent to total just over $US61 billion for the six months to June, which puts it on track to easily top last year's record of $US102 billion.

This surplus has risen despite paying more for products like coal, iron ore, oil, copper, aluminium, zinc and a host of other commodities.

The 3.5 per cent revaluation of the Renminbi, China’s currency, a year ago has had no impact

The Chinese government however is trying to curtail the economy: reserve requirements have been lifted on property deals, interest rates have been increased and banks told to lend less.

Another sign of this hot economy was also given yesterday with the latest figures for car sales.

They rose almost 50 per cent in the six months to June: the China Association of Automobile Manufacturers reported total sales in the June half of 1.8 million units, up 46.9 per cent from the first half of last year.

The increase was equal to around 11 months of car sales in Australia, from all sources.

Recent figures have shown a continued revival in sales following a slump in early 2004. Vehicle sales rose 21 per cent last year and 15 per cent in 2004 after that early slow down.
The surging car sales is a symptom of the boom across China (just wait until the pollution from all those cars is added to the existing levels of pollution in the country.) which is causing problems for the government.

And all that Australian iron ore, aluminium, copper and zinc being used in all those cars: its one very good example of what our exports to China will continue to boom.

The foreign exchange earned from booming exports has seen China's reserves to $US 875 billion (more than a trillion $A), the world's largest: an updated figure is due for release within the next week.

In turn the immense liquidity has financed and continues to finance this investment boom, car sales and the soaring level of consumer purchases.

Chinese demand has driven the boom in commodity prices over the past 18 months, which in turn has lead to an outbreak of inflation in countries like the US, in Europe and here in Australia.

It's not the only reason: Iran, the Middle East generally and North Korea are helping unsettle oil markets and drive prices higher but that strong Chinese demand (and rising demand from India and indeed the US and Japan) have helped underpin commodity prices.

Some analysts expect the trade surplus to reach $US130 billion by December (that would be around $A180 billion at current values for the Australian dollar).

The trade surplus will accelerate in the next six months as retailers in the US, Europe, Australia and elsewhere take delivery of goods for the big end of year holiday period when retail sales peak.

But while Americans are benefiting from the low-priced Chinese products, American manufacturers are not happy. They are continuing to lobby for controls or extra duties on Chinese imports because of China's controls on its currency.

But like so many muddle heads, these US businesses are missing the point: labour cost, plus the rising use of new technology, is why Chinese products are still cheap, not a relatively fixed currency.

China is running a huge trade surplus with the US (it was $US200 billion last year); it’s a mid-term election year with the campaign for the November poll about to swing into top gear: watch out for more China bashing.

China has done it again!


Its growth has beaten all economists estimtes!

Are we all most over the wall of worry stage?



Copper prices rise as China's economy grew more than forecast
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Copper prices rose in London and New York as the economy of China, the world's largest consumer of the metal, grew at the fastest pace in more than a decade.

China's economy expanded 11,3% in the second quarter, the nation's statistics agency said today. That beat the 10,4% median forecast of 30 economists surveyed by Bloomberg News. The growth rate may signal increased appetite for copper, according to Kevin Norrish at Barclays Capital.

“All the data signal usage of copper in China is pretty strong,'' said Norrish, a metals analyst at Barclays in London. “We've seen inventory drawdowns of copper both in metal and concentrate.”

YOUNG_TRADER said:

China has done it again!


Its growth has beaten all economists estimtes!

Are we all most over the wall of worry stage?



Copper prices rise as China's economy grew more than forecast
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Copper prices rose in London and New York as the economy of China, the world's largest consumer of the metal, grew at the fastest pace in more than a decade.

China's economy expanded 11,3% in the second quarter, the nation's statistics agency said today. That beat the 10,4% median forecast of 30 economists surveyed by Bloomberg News. The growth rate may signal increased appetite for copper, according to Kevin Norrish at Barclays Capital.

“All the data signal usage of copper in China is pretty strong,'' said Norrish, a metals analyst at Barclays in London. “We've seen inventory drawdowns of copper both in metal and concentrate.”

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I would buy all this if I could not remember the previous mining slide after the boom in the 1970's. When I read what was written then it still makes me want to buy, however, I know the next boom was decades away.

Inflation is rising in the UK, report out today, and interest rates are set to rise and mining stocks fell on the LSE.
Increasing interest rates may take the UK and US up to 6%; This may well see a decline in demand from Europe and USA, and the boom in China is set to slow.

Mining stocks on the ASX will open lower in a few minutes.

noirua said:

I would buy all this if I could not remember the previous mining slide after the boom in the 1970's. When I read what was written then it still makes me want to buy, however, I know the next boom was decades away.

Inflation is rising in the UK, report out today, and interest rates are set to rise and mining stocks fell on the LSE.
Increasing interest rates may take the UK and US up to 6%; This may well see a decline in demand from Europe and USA, and the boom in China is set to slow.

Mining stocks on the ASX will open lower in a few minutes.

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See I'm curious, do most people acknowledge that the World is an ever changing place?

If so then surely they must realise that scenarios are not going to play themselves out in similar ways if they are driven by different factors,

For example what was the Worlds Population in the 1970's?

What is it now?

What % of the worlds population are trying to purchase basic goods?

How long did the last mining boom last?

How long has this one been going?

The boom in China has been set to slow for the last 2 yrs, the US dollar has been set to collapse for years, the US and AUS housing market has been set to collapse for years,

While I acknowledge and give merit to the fact that some commodities (Copper and Nickel and even Gold) may be too high, they are not that far off an avg price for the next 5yrs, ie Copper avg of $2.50lb, Nickel avg of $10lb etc

The construction of roads/highways and Infrastructure in China and India (which will soon be on the headlines of news as the west is simply un-aware of the level of expansion over there) will take many years to finish

For now it seems we are still climbing the wall of worry phase!

YOUNG_TRADER said:

See I'm curious, do most people acknowledge that the World is an ever changing place?

If so then surely they must realise that scenarios are not going to play themselves out in similar ways if they are driven by different factors,

For example what was the Worlds Population in the 1970's?

What is it now?

What % of the worlds population are trying to purchase basic goods?

How long did the last mining boom last?

How long has this one been going?

The boom in China has been set to slow for the last 2 yrs, the US dollar has been set to collapse for years, the US and AUS housing market has been set to collapse for years,

While I acknowledge and give merit to the fact that some commodities (Copper and Nickel and even Gold) may be too high, they are not that far off an avg price for the next 5yrs, ie Copper avg of $2.50lb, Nickel avg of $10lb etc

The construction of roads/highways and Infrastructure in China and India (which will soon be on the headlines of news as the west is simply un-aware of the level of expansion over there) will take many years to finish

For now it seems we are still climbing the wall of worry phase!

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Good post YT. Some sensible talk and I agree.
... and BTW most of my mining stocks have all opened higher.

I still reckon we are a long way off the ASX200 going back to its previouis all time highs and so the bull market that started back in march 2003 is over imo assuming that an uptrend is a series of higher highs and higher lows.

We'll go sideways with a fair bit of volatilty from here the way I see it, but if XJO falls below approx 4800 then the downtrend that started back in May will be confirmed.

Some positive comments from Bennie Bo over in the US combined with suprise earnings upside seems to be kick starting US Equities,

Lets hope Middle East can stay out of the headlines for a bit so we can finally resume the Bull!


Most Basemetals up 4-6% (Zinc doing really well)

Oil down to $72 a bl (get down there!)

Gold held $620 support and now around $640 ish


Should be a good day tomorrow if gains hold overnight!

The 1970's boom was categorized by the rise in the oil price that moved to oil shale ( Central Pacific and Southern Pacific were two particular stocks that rose 30 to 40 fold before collapsing ). Oil rose from US$2 per barrel to around US$30 per barrel. The smallest sniff of oil and a minnow bounded ahead.
Every mining stock rose dramatically and the smallest glimmer of hope and stocks raced ahead. Every tip sheet was covered with mining stocks and little else. ( One stock, Meekatharra Minerals ( Felix Resources ) rose to $12.00 ( equivalent to $120 ), Endeavor Resources ( St Barbara ) rose from 2 cents to $2.00 ).

Every one thought this could never end and future forecasts were made far above the 1980 price. It indeed came to an end as oil slipped down to US$12 per barrel and every commodity plunged.
An oil strike was treated as a liability and a copper or silver find as being hardly worth a light. Most of the mining minnows were picked up by the mining giants at a fraction of their former values or just evaporated.

The crash in 1987 finished off many of the survivors and hardly a name - amongst the smaller resource and mining companies - survives to this day.

This is an answer to Y_T's post, number 69 - the bull is here already, hopefully it will stay.

Y_T:

Looking at the time on your post 72, do you ever sleep or is your "Wall of Worry" keeping you awake

Hopefully you are up drafting your informative posts for the following day.

blueroo said:

Y_T:

Looking at the time on your post 72, do you ever sleep or is your "Wall of Worry" keeping you awake

Hopefully you are up drafting your informative posts for the following day.

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Had a late one last night, went out LOTUS bar, was good, they had a Miss Indy competition on last night, my girlfriend didn't seem too impressed with the scantly clad lases on stage but my friends and I were

p.s. I think the Miss Indy finals are on next Wednesday (again at Lotus Bar, Toorak Rd Melb)

blueroo said:

Y_T:

Looking at the time on your post 72, do you ever sleep or is your "Wall of Worry" keeping you awake

Hopefully you are up drafting your informative posts for the following day.

Click to expand...

Oh and 'money never sleeps' GG

The fundamentals of the Commidity Super Cycle have not changed, if anything they have gotten stronger, why?

Well the one clear msg I am drawing from the Resource Sector in relation to new projects/supply is Cost Blow Outs, Delays, Lack of skilled people, lack of infrastructure, lack of this, more delays that etc,

So the fact that the underlying demand from 'Chindia' is still there combined with the even tighter supply conditions makes me assert, while the Bull has been held in the pen for much longer than I thought, when he finally gets released he is going to charge!




Rest assured, the commodities boom is alive and well.

History shows us bull market cycles last an average 17 years.
It is therefore statistically unlikely that the end is near.
Keep in mind, this bull market in commodities started in 2001.
In other words, it's still only 5 years young.

More importantly, the fundamentals are as bullish as ever.

India has 1.1 billion people, and there's 1.4 billion in China.
In other words, 2.5 billion people are on the economic move !!!

Let's put that into context.

In 1804 the world's population reached 1 billion.
It was 123 years later, in 1927, that the total reached 2 billion.
It was circa 1948 when we hit 2.4 billion.

In other words, this particular tidal wave of people is equal in
number to the entire population of the world just 58 years ago.

Forget the historical dynamics of commodity cycles.
Never before has there been a situation quite like this.

2.5 billion people are determined to urbanise and industrialise.

It's not a question of suppliers catching up with demand.
It's really a question of whether there's enough in the ground !!!


Stronger for longer!

This mornng it was reported in the Fin that China had taken over from Japan as the second largest user of cars. 14 million new users this year by memory. They are due to take over from the US somewhere around 2020. India will be closing in around then as well.

I'm with you YT.

EXPECT TO SEE MORE OF THESE IN THE HEADLINES!


Rio lines up a $10b year
4th August 2006, 20:15 WST


Mining giant Rio Tinto is on track to crack the $10 billion profit barrier for the first time this year, after the unstoppable China-fuelled resources boom powered the Anglo-Australian mining giant to a record $4.98 billion profit in the June half.



Rio’s monster first-half net earnings of $US3.79 billion ($4.98 billion) smashed analysts’ expectations by about $US300 million, further proving that the mining boom is showing few signs of slowing despite sharemarket volatility and increased global tension.

The result comes two weeks before Pilbara rival BHP Billiton is due to hand down what is expected to be a record Australian full year profit of more than $13.8 billion, and coincided with a record $259.9 million interim profit by Australian bauxite and alumina producer Alumina.

Speaking from London, Rio chairman Paul Skinner drily described the period as “an excellent six months” in which net earnings jumped 75 per cent, and total revenue rose almost 30 per cent to $US12.11 billion.

And all the signs pointed to the good times continuing on the back of rampant economic expansion in China, which accounted for 14 per cent of Rio’s total sales, as well as continuing growth in other Asian countries ”” especially Japan ”” and in the US and Europe.

“Although we have seen increased volatility in financial markets, underlying demand for our products remains strong, and we remain positive about the outlook for the global economy and our markets,” Mr Skinner said.

“China remains very important. The economy there continues to grow rapidly ”” above 11 per cent in the second quarter ”” and our view is that the demand outlook for China remains very positive.”

Mr Skinner said Rio was continuing to invest heavily to meet that demand. Its $US3 billion commitment to expand its Pilbara iron ore operations was “fully reflective of that intention”.

Rio’s juggernaut iron ore division was a standout performer in the half, as higher prices dwarfed the impact of five cyclones to push profits 40 per cent higher to $US955 million.

Chief executive Leigh Clifford said iron ore’s footprint was growing daily as work continued on a rolling expansion to lift export capacity in the Pilbara to 200 million tonnes a year by 2008, when the $US1 billion Hope Downs venture is expected to start production.

Studies were also under way into a further expansion of port capacity at Cape Lambert from 60 million tonnes to 80 million tonnes a year.

Remarkably, given the immense cost pressure being felt across the industry, Mr Clifford said all of Rio’s expansions were “on time and on budget”.

“That doesn’t mean there are not cost pressures . . . it’s just that our construction teams ”” particularly those in WA ”” are alert to those,” Mr Clifford said. “It’s a reflection of a very capable team who properly estimate and take account of the efficiencies that are available.”

Record prices also more than doubled profits at Rio’s copper operations to a staggering $US2.01 billion as gross margins topped 55 per cent.

Rio’s other divisions did not miss out. Energy (coal and uranium) profits jumped 22 per cent to $US377 million, aluminium profits leapt 81 per cent to $US369 million, titanium minerals earnings rose 10 per cent to $US137 million and diamond profits rose 14 per cent to $US113 million.

After promising in February to return $US4 billion to shareholders by late next year, Rio said it had already returned two-thirds of that amount and was considering new initiatives.

Denying that position indicated Rio had run out of investment ideas for its mountain of cash, Mr Clifford said $US5 billion was already committed to project development while “conceptual projects” worth $US10 billion were being evaluated.

“So we have tremendous organic growth opportunities . . . I can assure you the cupbard is far from bare,” he said.

Rio shares jumped $1.49 to $76.15 ahead of the result.

Rio shares jumped $1.49 to $76.15 ahead of the result.

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They dropped $1.65 on Friday.