Iron ore
On the assumption I read the below quote right, Mike Henry of BHP pointing to the end of the China boom (here in context of iron ore) should more than worry those that are very long the big 3 (BHP, RIO, FMG) which you overwhelmingly tend to find as the concentrated holdings in advice land.
I am absolutely sure that the next decade doesn’t look anything like the prior decade, given China’s population is now in decline.
And in general, I don’t think commodities are a winning bet in a buy and hold sense, because supply always finds a way to catch up.
There’s too much at stake for it to not.
Same is true for lithium, or whatever commodity is “hot right now”.
In terms of spirit, however accurate, it does seem to be up there with Matt Comyn’s comments about “our NIM peaked back in October, and industry-wide loans are being written below the cost of capital”. As in, that’s a jump-the-shark type moment for embedded expectations.
Update
Some have asked what is “jump-the-shark”. It is a reference to an old TV show, but the meaning is now taken as “when something has gotten as good as it can ever get, and it’s all downhill (meaning to get worse) from here”.
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