Australian (ASX) Stock Market Forum

The official "ASX is tanking!" panic thread

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notting said:
"Chinese copper inventories stood at 1.9 million tons at the end of 2010, more than the US consumes in a year, .
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Isn't that because most of USA's doodads are made in china? Woundn't it be better to compare it to chinas rate of consumption?
 
Tysonboss1 said:
Isn't that because most of USA's doodads are made in china? Woundn't it be better to compare it to chinas rate of consumption?
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Take a look at this article from Michael Pettis, a well known and "on-site" China macroeconomic commentator and professor...

http://mpettis.com/2011/05/looking-for-debt/

He [the trader] said that on March, clothes makers, food manufacturers, and others who have never bought copper before were massively buying copper from the tariff-protected warehouses, in Guangdong for example. The warehouses are in China, but tariffs on the goods there haven’t been paid yet, and any purchase from one of these warehouses is regarded as an import.

These enterprises purchased copper just to get L/C financing, in which banks finance the purchase of the imports for 90 days. This costs the buyer 30 bps. If they defer repayment to 180 days, they pay an additional 40 bps. The import is settled in dollars, which means that the buyer has a dollar liability due in 180 days, but can sell copper today for RMB. The interest cost for the L/C is around 1.4% annualized, so that even when LME copper trades at a premium to Shanghai copper, the all-in borrowing cost is greatly mitigated by the low cost of L/C and any RMB appreciation.

The reason that banks love to do this business – and markets have become so competitive and rates so low – is that 1)the transaction is off the balance sheet, and 2)bank clerks get paid a direct commission on the L/C. The more they do, the more they earn personally.

This process stopped a month ago because the PBoC intervened to prevent more copper-based financing.
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That was printed May 2011...the article goes into great depth on the issue.

EDIT: The point is (sorry, I forgot to write the point) the vaunted Chinese "copper demand" isn't what it seems at all, certainly not being imported for productive purposes.
 
I don't believe we are in the clear just yet until we clear that 78.6% retracement area. As is likely in a five wave sequence it is a hurdle that has to be overcome to complete the sequence prior to the resistance around both wave 1 and 2.

The XJO closed right on the line today.

Hesitation around this level may not be a positive indication.

Just my :2twocents

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Tysonboss1 said:
So how many months supply do the have inventory.
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Who knows. Point is, most of the inventory is held by companies who don't use copper to produce things.

"Clothes makers, food manufacturers, and others who have never bought copper before were massively buying copper from the tariff-protected warehouses, in Guangdong for example"
 
sinner said:
Who knows. Point is, most of the inventory is held by companies who don't use copper to produce things.

"Clothes makers, food manufacturers, and others who have never bought copper before were massively buying copper from the tariff-protected warehouses, in Guangdong for example"
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It would just interesting to know how long it would take the people who are using copper to burn of the inventory if all those speccy players sold off their holdings,

In regards to people holding the metal that don't actually do anything with it or consume it, to me that sounds a bit like gold.
 
Tysonboss1 said:
It would just interesting to know how long it would take the people who are using copper to burn of the inventory if all those speccy players sold off their holdings,

In regards to people holding the metal that don't actually do anything with it or consume it, to me that sounds a bit like gold.
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Lol, this made me chuckle and nod my head in agreement. Gold is probably the most expensive useless item in the world. Though it does have uses, it does not justify the price imo. Oh well, let the good times roll!
 
Looks as if the market has fully priced a Europe fix for the coming sunday, anything less i think market will react negatively.

Till we get confirmation of trend change i wait and watch.
 
lenny said:
Looks as if the market has fully priced a Europe fix for the coming sunday, anything less i think market will react negatively.

Till we get confirmation of trend change i wait and watch.
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Indeed.

A fallback or full blown Tank is not out of the question as of yet. Personally I wouldn't like to run the weekend risk, as would many others; expect Friday consolidation as per usual.
 
Interesting now looking to the US tomorrow - will Apple provide a boost?
some seriously negative stuff being said about China isn't there?

Today I sold the market early, then made the stupid mistake of calling 4,200 as the bottom and thought we'd get a dead cat bounce.

Sold the ASX at 4,190 now it will probably rebound massively :banghead: I should leave this stuff to those who know more LOL
 
lenny said:
Looks as if the market has fully priced a Europe fix for the coming sunday, anything less i think market will react negatively.

Till we get confirmation of trend change i wait and watch.
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I'm unsure exactly what people are expecting to come out of europe. There is literally nothing that they can say or do that fixes their problems. They may 'print' some more money, which simply "kicks the can" and worsens the problem. IMO if the market had correctly priced in europe we'd be sitting at 3500 or less;)
 
young-gun said:
I'm unsure exactly what people are expecting to come out of europe. There is literally nothing that they can say or do that fixes their problems. They may 'print' some more money, which simply "kicks the can" and worsens the problem. IMO if the market had correctly priced in europe we'd be sitting at 3500 or less;)
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Any specific reason for 3500?
 
young-gun said:
I'm unsure exactly what people are expecting to come out of europe. There is literally nothing that they can say or do that fixes their problems. They may 'print' some more money, which simply "kicks the can" and worsens the problem. IMO if the market had correctly priced in europe we'd be sitting at 3500 or less;)
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I don't think that we have seen the end of this yet, nor are we aware of what is really going on.

Finland is the most financially secure of all of the Eurozone countries, they stand out from the rest for both their financial security and their geographical location from the rest of the countries involved.
They are being asked to provide support to financial basket cases such as Greece and they are refusing to get involved any more than they have to.
They are actually threatening to pull out of the Eurozone group if any more pressure is applied, if they bail out this could be the beginning of the end for the Euro group.

The public service run social welfare basket case known as Greece is also threatening to withdraw, if that happens then it could take down the economy of Germany and any other lenders so they have no choice other than throwing more money at it, a bit like lending to a drunken gambler really.

I don't think that we have seen the end (or the actual reality) of this European situation just yet and the only white knights are those that are already in deep due to lending.

My :2twocents
 
Boggo said:
I don't think that we have seen the end (or the actual reality) of this European situation just yet and the only white knights are those that are already in deep due to lending.

My :2twocents
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And now Moody's are about to downgrade France's credit rating !
 
Boggo said:
The public service run social welfare basket case known as Greece is also threatening to withdraw, if that happens then it could take down the economy of Germany and any other lenders so they have no choice other than throwing more money at it, a bit like lending to a drunken gambler really.
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Speaking to few Greeks friends in Greece that I know, they don't want the Bailouts and haven't wanted help since 2009 but the Government insists that they need it. There have been a handful of wealthy Greeks who have made quite a bit of money out of this mess and the average man has not. The Greeks don't have the Centrelink benefits we have here(only a pension of $300-$400 euro's a month in their 50's) but they do have a high public service force that needs to cut back as they cannot sustain that at present. It's(Greece) main heartbeat is small business which is crumbling at present.

The Greeks have always had a hap hazzard economy, devaluing the Drachma when it suited them. And it did them fine. However, I wonder if the Government in 2000 realised their days were numbered(and flexibility cut) when they joined the Euro? Did Spain, Italy or Portugal realise either? I don't think they cared. Or maybe it was done on purpose?;)

The biggest problem is not if the Greeks default but the ramifications that follow. The Germans and Dutch who lent the money in the first place(and were paid quite well when the Greeks paid a majority back in buying German exports) insured themselves against a default to my knowledge. The banks in the US took the other side to that transaction. Not good for the US.

Best to let them default like Iceland and Argentina. They are OK and so will the Greeks be if they go back to the Drachma. And if the Euro is as strong as they say it is, well it's current members will be fine. But you see, the others are rumbling now. Ireland will be the next whipping boy and then Spain, Italy and Portgual.

It's the domino effect the IMF is worried about not the default of one country.
 
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