The argument I heard simply put (bear in mind I am far from an expert so simply is all I can do) was that due to the current freeze up in credit, commodity/metal prices have suffered on fears of a serious slow down. I guess if you or industry can’t borrow to build houses, planes or cars (whether that be the final product or the raw materials) demand will suffer.
So the bailout which should get the credit markets and the ability to borrow moving again should help commodity/metal prices substantially i.e. increase demand again. I guess the fact commodities etc were heavily sold off the day the bill failed to pass is evidence of this. I would think the bailout would cause a strong rally in commodity/metal prices short term anyway if for no other reason than traders/hedge funds buy up.
After that it will come down to the “real” state of the world economy. Hope that makes sense it was one point of view I heard that I believe so short term it should be very good for FMG and the resource sector that has been oversold in my opinion at this juncture anyway. After that I guess its anyones guess.
FMG Price at posting:
$4.73 Sentiment: Buy Disclosure: Held
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