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Tax Reform euphoria saw the Dow hit it's 70th high for the year today and leading iron ore stocks went up with it. Leading iron ore stocks, $RIO, $BHP and $VALE have been receiving a boost with China's clean air program, we also got positive election news for miners in Chile.

BHP IronoreChina pushing demand for BHP iron ore, at least thtat's the hope.

The last few months of 2017 has seen risk thrown out the window with risk-on the theme, stock markets are at record highs, the crypto craze has been bewidlering and commodities are being touted. Just last week Goldman Sachs put out a broad recommendation on commodites.

Today's Big Iron Ore ADR Stock Moves at the close Dec 18 2017

1. Vale $VALE $11.55 +0.38 + 3.36%

2. BHP Billiton $BHP $38.42 +0.59 +1.56%

3. Rio Tinto $RIO $49.88 +0.73 +1.49%

With the Chile news we also saw Freeport-McMoRan $FCX $241.91 +0.37 +2.18% 

For the premium iron ore companies the impetus comes from a number of sources.

1. China is making large inroads to clean air reform, to the point they have now a shortage of coal. With iron ore the higher quality gra,des are being sought. The highest grades of iron ore come via BHP Billiton $BHP and Rio Tinto $RIO

2. Sebastian Pinera won the Presidential election in Chile which is seen as a positive for miners with his more conservative policy. $Vale, $RIO and $BHP have exposure to Chile.

3. Investment banks have been pushing clients into commodities and talking up China drawing speculative money to the sector. Goldman was just the latest Freeport-Moran $FCX also rallied with copper and Chile positives. 

4. With the move to commodities there has been a bottoming of the Australain dollar which has seen those dolalrs being put to work in the ASX with mining leaders like $BHP and $RIO.

5. The bullish mania that has gripped stocks in America with the tax bill which will see corporate tax fall to 21% in 2018 with the passage of the Republican Tax Cuts and Jobs Act.

From here it should be understood this is year-end window dressing and the world economy has not backed up the strong global expectations of analysts and momentum investors. How much froth is in the market? Keep an eye on cues from the $AUDUSD exchange rate with the copper and iron ore spot prices over the coming 4-6 weeks.

From the Traders Community Research Desk


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