While BHP results of US$8.65b attributable profits was 30% higher , it was much lower than analyst consensus published by Bloomberg at US$9.91b and even UBS forecast of US$10b. Revenue was flat.
Much of our focus lately has been on the US and prospect of a US recession but what about China? How has the tariff debacle been impacting China? With limited information coming out of China, much of this is opaque but we know that latest industrial production figures have dropped sharply and they have responded to indirectly reduce interest rates domestically. We can expect that the going is tough there although as a central Government, they have lots of ammunition to ensure their economy doesn't seize up and they would be doing everything they can on that front. Like the US, China's banking system is also at the precipice due largely to non creditworthy loans (majority from past boom ) or zombie loans and their shadow banking system.
China having it tough now will have an impact on BHP and Australia, no doubt about that and I think resource stocks have seen their best outing in recent times. The risk to Australia no doubt is real in economic terms as we now have to deal with potential fallouts in both West and East of the globe, that is why this time is more precarious than 2008 GFC when we managed to avoid a recession.
