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Clear and Present Danger: Australia to be hit as Chinese economy unravels; The iron ore price will continue to tumble, causing significant issues for Australia
Topic Started: 5 Sep 2014, 03:22 PM (7,332 Views)
newjez
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miw
5 Sep 2014, 08:19 PM
I wish I knew. I wish I fucking knew.
Strange things like this started happening during the early days of the GFC. Normal rules seemed to get trashed, and the markets seemed to form their old rules. I guess no one really gives a toss about the price of ore in the short term if you can get a decent return. The smart money is just looking for a temporary home, away from all the other shit that is happening.
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At the end of the day markets aren't rational, so there's no way to tell exactly how they will behave.
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miw
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newjez
5 Sep 2014, 08:58 PM
Strange things like this started happening during the early days of the GFC. Normal rules seemed to get trashed, and the markets seemed to form their old rules. I guess no one really gives a toss about the price of ore in the short term if you can get a decent return. The smart money is just looking for a temporary home, away from all the other shit that is happening.
Yeah, but terms of trade are dropping. The AUD should be headed for US$0.80.

My guess is that the interest rate spread with the USD and Euro is the key. Which would mean that the AUD will drop like a rock the moment people reckon they know when the Fed will lift rates by 25 bp.
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newjez
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miw
5 Sep 2014, 09:03 PM
Yeah, but terms of trade are dropping. The AUD should be headed for US$0.80.

My guess is that the interest rate spread with the USD and Euro is the key. Which would mean that the AUD will drop like a rock the moment people reckon they know when the Fed will lift rates by 25 bp.
Nail on the head.

What do you think the implications of that could be?
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miw
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newjez
5 Sep 2014, 09:09 PM
Nail on the head.

What do you think the implications of that could be?
It will give me an opportunity to buy AUD which I haven't had in a while, and it will be a shot in the arm for a hell of a lot of businesses in Australia.

Which will drive up house prices. :to:

More seriously, it could start as early as tonight. Analysts are forecasting an NFP number of 225k. If it shows up at 250k or above (possible but I think unlikely) the stock market will get singed and the AUD will drop by as much as a cent.
Edited by miw, 5 Sep 2014, 09:22 PM.
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b_b
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John Frum
5 Sep 2014, 06:57 PM
Its called a viscious cycle numbnuts. I just had to dumb it down so you'd understand.
Obviously not dumbed down enough - you don't even understand it. Perhaps you can explain in detail how a $20 drop in iron ore affects the wages of the local pharmacist ?
Ex BP Golly
5 Sep 2014, 06:57 PM
The mining investment boom added 30% to the average wage over the last decade.
Agree . As per my initial post, we have the manages the end of the capex cycle. Whether the iron ore price is $30 or $130 does nit change that.

So I reiterate my initial comment. Unless you own mining shares the fall in iron ore price matters little to Australia.
peter fraser
5 Sep 2014, 07:23 PM
and if our assets were not for sale (specifically talking RE and property related assets including productive assets such as mining, ports, rail etc) would our dollar then fall, and if so how significantly?
IMO probably very little.

Foreigners like aud assets because we have low inflation, stable government, rule of law and recognised financial institutional arrangements. Out of 200 countries around the world, that's pretty rare. That us why the us, uk, can etc all have a CAD. It's because foreigners desire to save in stable countries and currencies. And that is actually a good thing for us.

Flawes whips himself into such a frenzy over something he does not even understand.
Edited by b_b, 5 Sep 2014, 09:55 PM.
(S – I) + (T - G) + (M - X) = 0
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peter fraser
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b_b
5 Sep 2014, 09:46 PM
Agree . As per my initial post, we have the manages the end of the capex cycle. Whether the iron ore price is $30 or $130 does nit change that.

So I reiterate my initial comment. Unless you own mining shares the fall in iron ore price matters little to Australia.
OK but to manage the end of the capex we need to allow our dollar to fall and reduce interest rates. How do we achieve that without causing a housing boom?
Any expressed market opinion is my own and is not to be taken as financial advice
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Perthite
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Matters to WA...

Your just plain wrong.

All the labour intensive smaller miners go under.... ouch.
Edited by Perthite, 5 Sep 2014, 10:42 PM.
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newjez
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miw
5 Sep 2014, 09:17 PM
It will give me an opportunity to buy AUD which I haven't had in a while, and it will be a shot in the arm for a hell of a lot of businesses in Australia.

Which will drive up house prices. :to:

More seriously, it could start as early as tonight. Analysts are forecasting an NFP number of 225k. If it shows up at 250k or above (possible but I think unlikely) the stock market will get singed and the AUD will drop by as much as a cent.
You don't think inflation might be an issue?
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Ned Flanders
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b_b
5 Sep 2014, 05:47 PM
Not too many people I know use iron ore to buy TV's.
I think you being dense on purpose. Almost everyone uses iron ore to buy TVs, because we don't manufacture TVs in Australia. We sell iron ore to China, and buy TVs in return.
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