This commodity price chart squares with what RBA Governor Glenn Stevens has said about Australia at this point in history. Namely, the increase in the terms of trade and in commodity prices is historic and “structural”. If that’s the case, then this period where the Aussie market is influenced by debt woes in Europe and America ought to be transitional. There ought to be a point at which Australian stocks are more correlated to Asian and Chinese growth.
--But we don’t seem to be at that point yet. We seem to be at a point where credit writedowns and the contraction of global credit are leading investors to be pretty bearish about growth. You don’t pay a lot for stocks when you aren’t convinced they’ll grow earnings.
