Jump to content

The Inflation thread


kahuna1

Recommended Posts

In reply to: kahuna1 on Wednesday 05/10/05 10:13am

Dear Kahuna,

though I have seen you posting some that you feel inflation to be balanced by falling oil prices and not so pressing I feel yesterdays september numbers reiterate my views on compounding(or snowball effects). You yourself have posted how fertilisers and insecticides are hydrocarbon derived. What time lag do you expect for that to filter through to the numbers? First , the bayers, monsantos and incitecs have to notice that the rising oil prices have squeezed their margins. They, unsure of the future direction, do not increase prices to fully cover costs and profits, but it shows in their end of year results.

Then the bosses are under pressure, they(in revenge or desperation) determine to squeeze it all out of someone next year, and do. The farmer doesnt notice all his input prices going up as oil rises for these are delayed. He too takes a hit but either goes bust or puts up the prices. How long do you think this might take to filter through?

The processed foods, tin cans, pet bottles, glass also have these delayed rises. Last year the bottle makers complained of a hit to profits with oil costs, but that years pricing wasnt a patch on last years, or the last quarters.

The transport and refridgeration costs have delays that are shorter, but the tolls and patricks have contracts with drivers that might take 6 to 9 months to be flowon. The truckies have been screaming. Road blocks on the pacific highway and all that.

Woollies and Coles generally have contracts for their supplies. Do you think these are monthly or quarterly?

It comes out of everones pockets untill they wake and charge for it.

That is the time we see it in the numbers. It will take up to a year or two for this sort of oil based paradyn shift to become part of the balance/dynamic. No other economist has reckoned with this that I can see.

 

An interesting side effect seem the holiday hobby farm. The newcastle herald this week has about three times the for sales adds for farms and acreages compared to the last three months average(and at a substantial discount). I suppose the pitt street nouveau rich, since the start of october are feeling overextended. While the markets were still booming how could property collapse. No need for a forced sale, take it easy. But with things under pressure the first thing to go is the holiday farm, especially if it is going to take tanks full of Gasoline or diesel to get there and back. How soon all of this stresses the banks waits to be seen, and they, without branch managers on the ground, peering and poring over their numbers in their airconditioned offices might take some months to apologetically say they have had a rise in underperforming loans.

 

Time will tell

AOZ

Link to comment
Share on other sites

  • 1 month later...
  • Replies 146
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Posted Images

From the November issue of The New Internationalist

 

ECONOMICS

Petro- provocation

The likely fallout for the US when Iran dumps petrodollars next year

 

The current reasons for US antagonism towards Iran extend well beyond its publicly stated concerns regarding IranÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s nuclear intentions. In mid-2003 Iran broke from tradition and began accepting euros as payment for its oil exports from its European and Asian customers. This move threatens international demand for and the liquidity value of the US dollar.

 

Saddam Hussein attempted a similar bold step back in 2000. But after toppling his regime the Bush Administration quietly reconverted IraqÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s oil transaction currency back to the US dollar ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ which had the rather adverse effect of wiping out 13 per cent of IraqÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s oil export profits (due to the euroÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s higher valuation over the dollar in mid-2003).

 

Now Iran is about to compound its ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¹Ãƒƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“offenceÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢. In 2006 Iran intends to set up an oil exchange (or bourse) that would facilitate global trading of oil between industrialized and developing countries, most likely pricing sales in the euro, or ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¹Ãƒƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“petroeuro.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ At the moment, the vast majority of the worldÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s oil is traded on the New York NYMEX (Mercantile Exchange) and the London IPE (International Petroleum Exchange), both of which are operated by an Atlanta-based US conglomerate. These oil exchanges transact US dollars.

 

Without a doubt, a successful Iranian oil bourse will create a shift away from US dollars and towards euros in the oil market. The drop in demand for petrodollars would cause the value of the dollar to plummet further, undermining the position of the US as the global economic leader. Ultimately it will also force the US to change significantly its current tax, debt, trade, and energy policies, all of which are severely unbalanced.

 

But present international developments mean that any US retaliation against Iran will also carry significant consequences. On 28 October 2004, Iran and China signed a huge oil and gas trade agreement valued at between $70 and $100 billion. China currently receives 13 per cent of its oil imports from Iran, and with this deal the Chinese Government effectively drew a ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¹Ãƒƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“line in the sandÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ around Iran. China is a major exporter to the US, and its resulting trade surplus means that it has become the worldÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s second largest holder of US currency reserves (Japan is the largest holder with $800 billion, while China holds over $650 billion).

 

US intervention in Iran ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ including any aerial attack on suspected nuclear facilities ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ would put pressure on the Chinese to abandon their support of the dollar. If really upset by an attack on their principal oil export partner, they could afford to show their displeasure by suddenly unloading perhaps $300 billion of their surplus US dollars. The immediate effect would create a global dollar crisis, if not a dollar crash, which would be likely to force Russia and OPEC to abandon the dollar for a monopoly ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¹Ãƒƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“petroeuroÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢.

 

It is conceivable that such US aggression towards Iran could provoke other industrialized nations to abandon the dollar in droves. Indeed, Russia and Venezuela have already expressed interest in moving towards a petroeuro system for oil transactions. A desperate punitive collective switch to petroeuros would ultimately render the US Navy in a similar state to the once-mighty Soviet fleet ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ rusting in port due to a collapsed economy.

 

William Clark is the author of the recently published book Petrodollar Warfare: Oil, Iraq and the Future of the Dollar (New Society Publishers, British Colombia, 2005).

 

 

Link to comment
Share on other sites

In reply to: marathon on Wednesday 07/12/05 12:26pm

QUOTE
It is conceivable that such US aggression towards Iran could provoke other industrialized nations to abandon the dollar in droves. Indeed, Russia and Venezuela have already expressed interest in moving towards a petroeuro system for oil transactions. A desperate punitive collective switch to petroeuros would ultimately render the US Navy in a similar state to the once-mighty Soviet fleet ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ rusting in port due to a collapsed economy.

 

Alarming!!!

Link to comment
Share on other sites

  • 1 month later...

US Stockmarkets down at present.

 

Dow gives up its gains for the year

Nasdaq faces biggest one-day slump since Jan. 2005

 

 

By Mark Cotton, MarketWatch

Last Update: 1/20/2006 2:53:39 PM Data provided by

 

NEW YORK (MarketWatch) -- U.S. stocks plunged Friday afternoon, with the Dow Jones Industrial Average turning negative for 2006, after oil prices hit a four-month high and General Electric Co. and Citigroup Inc. disappointed with their fourth-quarter earnings.

 

A cautious outlook from Motorola also weighed on sentiment.

 

The Dow Jones Industrial Average ($INDU) was trading near its low for the session, down 170 points at 10,710. The blue-chip index is on track for its biggest one-day decline since April 2005, and is now below 10,717.50, the level at which it closed out 2005.

 

The Nasdaq Composite Index ($COMPQ) slumped 45 points to 2,256, the worst one day performance for the tech-rich index since January 2005.

 

The S&P 500 Index ($SPX) dropped 19 points to 1,266.

 

"The market was overdue for a short term pullback and a combination of rising energy prices and some high profile earnings misses have provided the catalyst," said Michael Sheldon, chief market strategist at Spencer Clarke LLC.

 

"Over the short term, it will be important for the Dow to hold above support around 10,700," Sheldon added. "If that fails to hold, the next level of support looks to be around 10,600, representing a roughly 50% retracement of the Oct 2005ÃÆâ€â„¢ÃƒÆ’ƒâ€Â ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒ¢Ã¢â‚¬Å¾Ã‚¢ÃƒÆ’ƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’‚¡ - Jan 2006 market advance.

 

Sheldon notes that the last time oil prices were at current levels, the Dow was down around the 10,400 level.

 

Tracking the broader market for equities, decliners had a more than 2 to 1 advantage over advancers on the New York Stock Exchange and the Nasdaq. Volume was 1.56 billion on the Big Board, and 1.81 billion on the Nasdaq.

 

By sector, semiconductors ($SOX) and airlines ($XAL) were two areas of the market posting the biggest declines. Networkers ($NWX), computer hardware ($GHA) and software stocks ($GSO) were also sharply lower.

 

Energy ($XOI) and oil services ($OSX) were notable gainers, helped by the strength in oil prices.

 

Oil surges past $68

 

A fresh rise in oil prices continued to unsettle investors as they worry that higher energy costs will eventually dampen future earnings growth.

 

Crude futures surged past $68 a barrel as political tensions surrounding oil-rich Iran and Nigeria raise concern exports from these countries could be disrupted, leading to supply constraints. Fallout from Thursday's terror threat from al-Qaida lent further support.

 

The benchmark February contract was up $1.52 at $68.35 a barrel in New York trading. March becomes the lead contract at the close of Friday's session. See Futures Movers

 

On the currency markets, the dollar was mixed. The euro was up 0.1% at $1.2099. Against the Japanese yen, the greenback fell 0.1% to 115.37. See Currencies

 

Gold futures ended lower on the day, and slightly lower on the week. The precious metal still remains at elevated levels, benefiting from its reputation as a safe-haven investment in times of rising political tensions. The volatility in energy prices has also been drawing investors to gold. See Metals Stocks

 

Gold for February delivery was down $5 at $554 an ounce, off a morning high of $568.50. On the week, it dipped 0.5%.

 

Meanwhile, bonds edged higher as the weakness in the stock market sent some investors looking for safer investments in fixed-income instruments. A stronger-than-expected consumer-sentiment survey also left some investors wondering whether the Federal Reserve might not be pushed to raise interest rates higher over a longer period to keep the economy from overheating.

 

The benchmark 10-year Treasury note was last up 1/32 at 101 with its yield at 4.37%. See Bond Report

 

In a light day on the data front, consumer sentiment improved in January, according to researchers at the University of Michigan. The consumer-sentiment index rose to 93.4 in January from 91.5 in December, above the consensus forecast of Wall Street economists calling for a reading of 92.6.

 

Dow stocks in focus

 

Shares of General Electric (GE) slumped to a three-month low, down 4% to $33.31 after the industrial conglomerate's quarterly revenue fell shy of analyst expectations, but an upward revision to the bottom end of its 2006 outlook was helping put a floor on losses. See full story.

 

Separately, GE and Hitachi (HIT) are planning to jointly bid for nuclear-technology group Westinghouse, the U.S. unit of British government-owned British Nuclear Fuels, The Wall Street Journal reported.

 

Citigroup ©, another Dow component, fell to a more than two-month low, down 3.8% at $46.12 after the banking and financial-services giant posted earnings from continuing operations that missed Wall Street estimates. The bank noted a challenging interest-rate environment and competitive pricing conditions during the December quarter. See full story.

 

As for another earnings report of note, shares of Motorola Inc. (MOT) fell 7.2% to $22.59 as forecast-beating fourth-quarter earnings were offset by disappointment among some investors that the maker of mobile phones didn't raised its financial outlook. See full story.

 

Also in the headlines, Google Inc. (GOOG) shares briefly fell below $400 for the first time in nearly two months after it said late Thursday it will fight an attempt by the Bush administration to force the company to turn over to the Justice Department information about what its users are searching for on the Internet. The stock was last down 7.2% at $405.10. See full story.

 

Ford Motor Co. (F) was in focus on a media report that it may cut 25,000 jobs or more over four years in a bid to stem North American losses. Details are expected on Monday. The carmaker's stock fell 18 cents to $8.04.

 

On the deal front, groceries and drugstore group Albertson's Inc. (ABS) said it has received an offer from a consortium for the purchase of the entire company. The stock was up 1.1% at $24.13. See full story.

 

Also, diversified industrial group Danaher Corp. (DHR) said it has agreed to buy U.K. company First Technology for around $634 million, topping an offer from Honeywell International (HON). Danaher's shares fell 80 cents to $54.80.

 

 

 

Mark Cotton is a reporter for MarketWatch in New York.

 

Link to comment
Share on other sites

In reply to: nizar on Saturday 21/01/06 07:10am

It was purely a local event prompted by stocks going ex-dividend after reporting their full year profits. There were no further reasons for buying the stocks and so selling entered the market.

 

We will see the same thing happen in March, particularly amongst stocks that provide less than optimistic Outlook Statements. SUch stocks will be punished the way Toll, Pacific Brands, Zinifex & Healthscope have been punished in recent days.

 

In this market, negative news or negative outlooks will see prices smashed. This is what is happening in US right now. Our market is priced to perfection, but people will keep buying BHP & RIO until those companies have something bad to say.

 

People should panic selectively tomorrow http://www.sharescene.com/html/emoticons/smile.gif Not all stocks are going to be smashed just because the Dow dropped 200pts. Australia is in a resources "sweet spot" at the moment and only fools would sell blue chip stocks for no reason, or just because the Dow dropped 200.

 

As for speculkative stocsk - that is a whole new ball game. I wouldn't be taking fresh positions in any of them at this stage.

 

Coop

Link to comment
Share on other sites

  • 2 months later...

We have been in a low inflation/interest rate environment recently despite high commodity prices, according to the experts due mainly to cheap imports from China and other developing countries and increasing competitiveness and deregulation caused by globalisation.

 

Yet there are worrying signs in the economic data released this week that inflation might be rearing its head again. I would be interested in others thoughts on this topic.

 

 

Link to comment
Share on other sites

QUOTE (dee27 @ Saturday 22/04/06 11:24am)

To answer the thread's question: When oil reached $100 or significantly higher than now

 

After this happens, there will be a recession and demand for everything will go down, commodity prices will go down, company profits will be less, and the glocal stockmarkets will see a massive correction, unemployment up also, exports will be down due to decreased demand...

 

But gold - http://www.sharescene.com/html/emoticons/biggrin.gif will go up..

 

But even though commentators such as Jim Rogers say that historically commodity bull runs last for btw 15-23yrs, these correlate inversly to global equity markets... now we have both - so something should give..

 

I would say commodity producers would be the way to go for big gains during commodity bull runs...(eg. Poseidon nickel in 1970s), but now we also have high oil prices - and if that curbs demand - that may ruin everything ?

 

The oil spike in 1980s was only short-lived, but speculators/economists/commentators say because of China and India's growth, the demand side of the equation is permanently changed forever. To quote some1 (i forgot who): "When the coastal people of china decide they want to have the same % of automobiles as Korea, and they number 165million+, we'll need 2 more Saudi Arabias pumping flat out"..

 

http://www.miningmx.com/energy/479408.htm

 

Thoughts ?

Link to comment
Share on other sites

In reply to: nizar on Saturday 22/04/06 12:01pm

Thanks for the interesting response Nizar.

 

I think oil at $75 (aussie petrol $1.40/litre) is probably already causing a fair bit of pain to both consumers and company profit margins. If oil heads to $100 (aussie petrol $2.00/litre) as some are predicting, then things will get quite ugly along the lines you mention in your post.

 

 

 

 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...