Black Monday

[IAK]

Aussies stocks sinking .......http://www.businessinsider.com.au/au...ng-fast-2015-8

[Daytr]

What I'm saying is the Western World effectively stopped buying post 2008 & China replaced that demand on its own.
However that demand from the West has never really returned as their economies still struggle.
If you look at what China buys now in regards coal, iron ore, copper compared to say 2006 or 2008, the actual tons are still dramatically higher.
However coal consumption very recently seems to be dropping. Not many people realize that not only are they generating a lot more nuclear and green electricity with solar and wind, but they also did a huge program of work upgrading their grid with heavier duty transmission cable and smart copper switches. This meant they lose far less in transmission and that they can also divert their power production where its needed far more efficiently. Just this upgrade alone is meant to save them burning something like 150M tons of coal a year. They also have switched or shut down in favour of gas which produces about half the emissions of coal.

I agree completely that over supply was/is a significant issue. Econ 101 with the old supply and demand graphs right! You are essentially just adding another point to the list I made though as to why none of this should be considered noise.

Not sure I agree with you regarding the implication that reduced western demand is a bigger driver than Chinese. Oil prices are a different kettle of fish and I agree that Chinese demand as been only a small factor driving prices down. On the other hand, agriculture, metals (this is the big one), & coal have been significantly affected via reduced Chinese demand. I believe the world bank recently cited reduced Chinese demand as the main driver for declines in metal prices.

Anyway I think you can go back and forth on the reasons why commodities prices are declining, but the point is a faltering Chinese economy will be damaging to equity markets and it appears as if we are seeing that play out.

[ratkin]

Good that kiwis are so chipper, but seriously why is out market going up? By rights the DOW should have had a decent bounce today. Lets see if the Aussies are little more realistic

Seems they are

[twotic]

What I'm saying is the Western World effectively stopped buying post 2008 & China replaced that demand on its own.
However that demand from the West has never really returned as their economies still struggle.

For sure mate, I don't disagree at all. As I said China was one of the main reasons world economies/ equity markets managed/recovered as well as they did post 2007, but as soon as that (Chinese driven) economic stimulus starts to waiver the consequences are obvious.

Perhaps you mistook my post as one which blames the market down turn entirely on China. Of course that is not what I am saying. I actually think we probably agree on most things here. Couta hasn't replied re his outlook on the Chinese economy in the medium term. What do you think? Will they be able to manage the debt levels well enough to avoid a major correction in equity markets?

[Beagle]

I agree with the main thrust of what Daytr has been saying. The main issue seems to be getting reliable economic date out of China as the authorities tend to want to "massage" that data for their own interests.

According to a recent CNBC report diesel demand out of China actually decreased which is a fairly ominous sign I would have thought and is certainly incongruous with official Chinese authority economic indicators.

I think the decision to devalue the Yuan is a real concern and signals all is not well within China.

Further when you look at the precipitous and sustained drop in the oil price the demand for this most widely used world-wide product simply isn't there which indicates the bear market has already well and truly taken hold.

China's growth has dramatically slowed, of that there is no doubt...how the world comes to grips with this in terms of its effects on world-wide GDP growth, (if any), and the secondary effects of the strain this puts on the banking system in terms of exposure to countries and major companies that cannot make money where commodities are presently priced, remains to be seen.

Take the prop of China's previous strong growth away from the banking system still riddled with systemic legacy problems from the GFC and what have you got...a big problem !

[Daytr]

Agree Roger, its just difficult to know in regards debt levels especially at a regional level etc.
But compare it to the US, sure they have far more transparency, but their State governments in a lot of cases are up to their eyeballs in debt as well, let alone the Federal government. One thing China has at its disposal that the US doesn't is massive reserves, built up from huge surpluses.
Sure China is not easy, but that's mainly because of the lack of transparency than any real knowledge of massive debt issues.
They talk about a credit bubble in China & perhaps that's the case. But is it anywhere near the league of the Western World?
Not sure. Obviously GDP per capita is a lot lower there as well, but its growing rapidly.
If you want to look at a developing country that has structural issues, look no further than India.
Many claim India will be the next China, which I find almost comical.
India when I last checked only had 30 million tax payers! Or around 2-3% of the population.
Its amasing they can afford anything!

[arc]

I have been watching the numbers fly past on the screens and there seems to be something wrong with this situation.
In a crash there are almost no buyers, everyones lining up to sell
In a correction there are lots of sellers and reluctant buyers

At the moment there are lost of sellers, and lots of buyers. Some buyers are taking multi-thousand$ packages 30k's 50k's...
There is of course lots of smalll amounts crossing with the street buyers running for cover and shedding their holdings.

Comments please: Why is it that sooooo many buyers are active, considering we are supposed to be going down. Is it just the "buy when everyones selling- sell when everyones buying" concept.

[nextbigthing]

What do you feel they are buying Arc? Divvy payers or a range of shares?

[arc]

Well I must admit I have selfishly been following my own holdings rather closely... ( gee I wonder why...) Its both div's and top50's
Example , even as AIA continues to fall there are willing buyers in the wings...
PGW doesnt even care about the fall.. business as usual, but is that because of the x-divy on friday?
SCL has barely even sneezed.
XRO is still doing the lead balloon thing

I get the feeling that this "correction" is not going to last long.
But as always folks be your own judge!


edit: just got this email
http://www.wsj.com/articles/the-worl...mal-1440552939

[flying]

To answer Arcs question notice carefully why are the banks are taking a hammering. It is because they are not expected to make big profits it the future on house sales. The 1870 plunge in banks share price and where the housing market ended up makes for interesting reading. If houses go south where do you stick your money??