....a newsletter has issued a short call on iron ore, with an opinion that iron ore stocks are in for a sharp correction. At the end of last year, I had called BHP $50 as the peak and for months now, saying that BHP is in for more headwinds this year.
....no bazooka stimulus from China means iron ore price will drop below $100/Ton and perhaps even to $80/T.
....My opinion is that China would do everything possible to get access to cheap commodities as it faces deflation which means resource stocks (excluding gold) could face a protracted winter hibernation.
...there's no other way of saying that if you buy resource stocks (excluding gold), you're buying China, i.e you're buying a bet that China will re-invigorate its economy, not writing off China's resolve which they have ample of but the new China is not all about generating wealth and strong economy but maintaining social balance. The old days of building, building. building is over.
I am going to reiterate that call and say that BHP Group [ASX:BHP], RIO Tinto [ASX:RIO], and Fortescue Mining [ASX:FMG] have seen the peak for this cycle and will sell off at least 20–30% over the next 6–12 months.
