To get to salvation, though, you must take the road of repentance. We'll have a look at the major landmarks along the highway. But first, to more pedestrian matters.
The S&P/ASX 200 closed at its highest level since September 2008. That's a 61.5% recovery from the March 6th, 2009 close of 3,145. But it's still 25% below the all-time closing high of 6,748 from March 2012. There is work to do!
By contrast, the Fed-inflated American indices are about to make all-time highs. The Dow Jones Industrials are just 0.9% away from an all-time high. The S&P 500 is 2.2% off its record high. It won't take much for both to take out new highs this week.
Does it all feel a bit déjà vu? We say that because today's papers report that Marius Kloppers will depart his position as the Chief Executive of BHP Billion on May 10th. He'll be replaced by Andrew Mackenzie, head of BHP's non-ferrous division. The 'Big Australian' reports its numbers today.
But here's a question for you: do commodity producers still have the juice to send the whole market higher, like they did back in the glory days? BHP probably doesn't, at least not today. The company reported a 43% decline in first-half profits to US$5.7 billion.
Poor Marius Kloppers had unlucky timing. He replaced Chip Goodyear in July of 2007, just when everything started to go downhill for the world. Kloppers pursued some high-profile mergers and acquisitions. Some of them got done (on-shore US shale gas being the main one). And some did not. And now he's leaving just when everyone says things are getting better.
But truth be told, the profit margins may never be as good again for the bulk commodity producers. The main cause of the lower profit figure is obviously lower commodity prices. The stronger Australian dollar didn't help. A second-half recovery in commodity prices will help a bit. But would it help enough for BHP to be valued as a growth stock again?
It's interesting to us that BHP has put a non-ferrous man in charge of the company. Rio Tinto has done the opposite. Sam Walsh, Rio's new CEO, is an iron-ore man. Rio is going back to basics. BHP, it would seem, is banking on profit growth outside iron ore and coking coal. And either way, the global financial apocalypse has claimed the scalps of the CEO's of Australia's largest commodity companies.
Carve it in stone: the Iron Age is over.
The unions know it. The Australian Workers Union (AWU) will launch a national campaign to promote coal seam gas in Australia, according to yesterday's Australian. The AWU is looking at billions of dollars of potential capital investment, which equates to a lot of jobs. It's also hoping some of Australia's new-found gas reserves will be set-aside for local manufacturing industries. Cheaper energy could help Australian manufacturing be more globally competitive.
Finally, must one pass through repentance before reaching salvation? Well, this is a working theory, and we haven't even defined what we mean by 'financial salvation' yet. But we can get to that later. It does seem pretty clear that you'll never reach that destination unless you repent of your evil ways beforehand.
And that brings us right back to the current stock market rally. It is not based on repentance. The bust that began in 2007 was based on borrowing future growth through credit. It was also based on rampant speculation, fraud, and deceit by a big chunk of the financial industry. Some people have gone to jail for it, some people may go to hell for it, but very few have repented for it.
Of course, with Ben Bernanke pontificating over financial matters with his periodic press conferences, there's no imperative to repent. Bernanke is preaching the gospel of speculation with borrowed money. In fact, with central banks all around the world selling the equivalent of financial indulgences - monetary policy designed to benefit banks and speculators - the rally is really a celebration of sins past.
Or, if you prefer non-spiritual analogies, the market is acting as if the crisis never happened. Has anyone learned everything? Or have we all accepted a new financial religion: to get along we must go along. Don't fight the Fed and don't bother using your brain. Salvation is for the dead. More tomorrow.
Regards, Dan Denning for The Daily Reckoning Australia