Browning Newsletter
The authors of the Browning Newsletter which, veteran subscribers will be familiar with, are embarking on a new project directed at the Australian market. Their aim is to product a quarterly letter and the attached white paper is the first one, aimed at testing the waters so to speak. Here is a section:The authors of the Browning Newsletter which, veteran subscribers will be familiar with, are embarking on a new project directed at the Australian market. Their aim is to product a quarterly letter and the attached white paper is the first one, aimed at testing the waters so to speak. Here is a section:
With good water availability and good precipitation, the Australian grazing regions in South Australia, the Northern Territory and Queensland will be plentiful, the grazing regions along Western Australia will grow from IOD-created rainfall in the northern part of the province but will be poor in the southern part. Flood risks will lower mining yields along the northern part of Western Australia as well as create a higher property risk and insurance claims along the eastern shores. Finally the eco-friendly infrastructure in South Australia and Victoria have taken damage from recent flash floods. Look for the country to pursue investment opportunities into updating the infrastructure technology to handle more severe weather after repairs have been made.
One of the reasons the value investors get interested in stocks following a big decline is because it is relatively easy for a share to double from a very depressed level. The next doubling is usually when awareness has increased and new investors come in with a view to pushing prices higher overall.
The mining sector went through a deep correction where companies were forced to cut exploration and development budgets in order to manage their exposure to a falling price environment. The result is that they are going to be shy about spending a lot of money for the next few years and therefore cashflow should improve. That is part of the reason share prices have been rallying so strongly this year. As economic growth picks up that could well continue into next year before additional new supply comes on line.
Weather events like floods have the capacity to affect iron-ore production in particular, since so much global supply emanates from Pilbara. Nevertheless substantial damage would need to be inflicted to do more than temporary damage to infrastructure.
The ASX/300 Resources Index has held a progression of higher reaction lows since early this year and has now broken the medium-term progression of lower rally highs. A sustained move below the trend mean would be required to question medium-term scope for additional upside.