Iron ore price, page-17285

Given some transfer of capital from financials to mining early this week after Westpac’s disappointing results, NAB have just doubled down with profit being 13.6% down on last year and well below consensus. It will be interesting to see what will happen today.

Without going into a whole spill on the effects of the economy, a banking sector reeling from low credit growth and compressed margins in the loosest monetary policy settings we have seen, doesn’t bode well going forward. Rates can always decrease by another 25 basis I suppose, which is in effect a 33% decline in the cash rate (0.5 New from 0.75 former) and we can artificially put the economy into a few higher gears.... (I wrote an article on LinkedIn about some of these issues)

Puts pressure on the AUD as a side effect and amplifies mining profits even more.

Add in franking credits and you have an unstoppable cash printing machine. Well beyond anything you would get in the bond market even if you slap on a massive risk premium.

It’s a joke that we tend to discount the benefits of franking credits in equities (especially when calculating P/E ratios) but with salaries, it’s pre tax, with commercial property, cap rates/net yield but residential property, gross yields tend to be quoted more often than not (which is like revenues only)

The macro environment for IO we have discussed on here many times is flowing along nicely with cost curves increasing unless you have the technology in place drive large scale efficiencies, lack of new (not replacement) large scale projects coming online, grades and depletion becoming an issue at existing mines, and of course dam management, which will plaque the industry for the foreseeable future. Demand is still going from strength to strength.

In the meantime, it looks like we are going from strength to strength

Cheers