There are plenty of shrills piling on the poor 1Q numbers by Joy Global this AM before the market opened. I have to wonder when the “masters of the obvious” will acknowledge that we didn’t learn anything new today from JOYG that we didn’t price in 3 months ago.
We have made changes to our Emerging Money Global Index to reflect changes in underlying prices of the components based upon our view of the remaining 2Q investment and allocation dynamics for these multinational companies who count EM as key to their revenue and growth vision.
BHP Billiton is the grand-daddy of the miners: largest, best balance sheet, and most diversified. Last night they reported earnings that beat by 12% and added a handful of goodies that investors are applauding in the stock price this AM, and may read through to the entire beleaguered sector.
The Aussie dollar is off 1.4% over the last 2 days and through key support at 101.80. We have been talking this trade for a few weeks now and from April 11th (eve of the Gold plunge) now -3.5%.
Iron ore exports from Brazil and Australia fell 28% and 8% respectively in November. Spot prices are at a six week low and pressured to shrink for the rest of the year thanks to flaccid Chinese demand.
Iron Ore (IO) has run from $86 per ton to $122 per ton with expectations that prices will hold at this elevated level. According senior resource analyst at Mine Life Pty in Sydney, Gavin Wendt told Bloomberg Network “Prices will stay about where they are now until 2013,”
Before Friday’s pullback emerging markets were at their highest levels since May of this year compared to domestic markets. Emerging markets have been riding a slow but steady reversal of the summer move lower.