Good afternoon
Happy New Year to everyone!! And this one could be happy, indeed - at least from a financial perspective!
The world is seeing concerted growth in a way not seen for many years...manufacturing around the world is booming....industrial production is strong....and the US have cut taxes ( whatever we might think about that) - what a scenario for our resources space!
The supply side is looking good as well - sharply reduced capex for new projects and exploration over the last few years since I think 2013 have brought the pipeline of large, new mines coming into production over the next 2-3 years to a trickle - and electric vehicles will require an increasing amount of many conventional metals like copper/nickel over the next few years - probably rather from 2020 onwards, than immediately.
I think this got to be the most constructive outlook in years - even shared by people, who are not "professional" resources bulls like myself!
The main risk for markets might well be stronger inflation than expected. Excessive - though obviously successfull! - money printing around the world might finally catch up on us. But even this would probably be bullish for commodities.
That leaves a major political crisis as risk - and this might well happen. I have to say, though, that things looked much riskier a few month ago, than today - except perhaps for Trump getting a real problem. That might be nice - but most probably, would be taken taken badly by markets.
The only thing which worries me is the fact, that everybody is getting bullish - this seems to be consensus!
And as I indicated a few times late in December, I think demand for battery metals will only start seriously in a few years time, when sufficient infrastructure will have been built, and when the large car producers finally will have a larger variety of models with better batteries for sale. The pricing of many stocks in the sector does not factor this in, I fear.
While the US are freezing, Sydneysiders are sweating! New South Wales probably only avoided energy-outages, as the worst of the heatwave hit on Sunday, when energy consumption tends to be quite a bit lower than during the week. The theme will be with us for some time to come.
Nothing to report as yet from the micro-side!
Have a nice evening, and a good start to the year!
WS