Record iron ore production in Western Australia, highest copper production at Olympic Dam, even oil production was slightly above guidance, and yet BHP's share price dropped by another gutwrenching 2.5%, or $1.26, today, after yesterday's drop of $1.37. What's going on?
BHP opened at $49.40, and at one time in the morning was selling as low as $49.16, before closing at $49.24 - far from its 52-week high of $51.91 - despite BHP's CEO assuring us that "BHP is in great shape."
These sort of stock market slides are big one-day moves, but how worried should we be? Are we in crash-and burn-territory? Of course, the coronavirus infection news isn’t encouraging, and there will be blood on stock markets for a few weeks, but it won’t be like 2020.
I’m not an epidemiologist (I even have trouble pronouncing it!) and can’t say what the virus will do, but short-term worries about the Delta strain of the coronavirus will eventually give way to an economic boom.
But don’t take my view on it; let’s see what billionaire investor Bill Ackman said to CNBC overnight. This famous investor isn’t worried about the spread of the delta variant and doesn’t see it as a significant threat to the economic reopening. He actually thinks it could speed the pace to herd immunity! "I hope what it does is that it motivates anyone who doesn’t get the vaccine to get the vaccine. I don’t think it’s going to change behaviour to a great extent," he said.
And he threw this one in: "You are going to see a massive, in my view, economic boom ... We are going to have an extremely strong economy coming in the fall." Which is the northern hemisphere's autumn. He could be right, he could be wrong, or plain crazy! Let's wait till then and collect the massive (and fully franked) dividends in the meantime!
