ASX200 to 8000 points?

Bullish commentator Clifford Bennett was recently interviewed and restated his opinion that the ASX200 is on its way to a “100% rally”, and will end up “above 8000 points” in 2 years time. Given this forecast is also some 16% above the historic high reached on 1st November of 2007, and others have continually called for a new rally and bull market in stocks, I’d like to examine the probability of the Australian share market reaching such euphoric highs.

Predictions and Assumptions

Predictions about stock markets are easy to make. Given the inexorable rise of developed world equity markets since ca. 1875 of approx. 6% per year, it takes only the most ardent uber-bears (e.g Marc Faber) to predict any sort of terminal decline in share prices.

But predictions are based on at best, thoughtful assumptions, or at worst, hope. Let’s look at the set of assumptions required to achieve the 8000 target level within 2 years as stated by Mr Bennett:

  • 15% earnings growth, compounded PLUS 30% expansion in current trailing PE (price earnings) to ca. 15.5 times
  • if the ASX8 (top four banks and top four miners) continues to provide 99% of all earnings growth whilst the remainder of the ASX50 lags, then housing credit and commodity prices must at a minimum continue at their present levels
  • if we assume above, then an expansion in PE ratios for the ASX8 would require an increase in investor sentiment OR an expansion in housing credit growth and a rise in commodity prices of approx. 20-50% from current levels
  • in the absence of the above the rest of the ASX50 must provide ca. 20-30% plus earnings growth from current levels

What are the current conditions?

  • trailing PE ratio for the ASX200 is 12.6 and the All Ords is 12 (as of close yesterday)
  • forecast earnings growth for FY12 is between 11 and 13%, whilst FY13 is forecast at 9 to 12% (with PE ratios forecast to stabilise between 10 and 11)
  • earnings per share for the non-top four miners and banks are almost 20% below 2008 levels, even though net levels of profit is up. This is due to the extremely dilutive capital raisings of early 2009 to pay down debt, which impacted Return on Equity (ROE) significantly (doing so reduces that return to the cost of the debt paid off)

Note that earnings growth forecasts have not yet included the results of the big four banks AGM’s where further guidance is provided (actually just 3 – CBA not included in this round due to reporting calendar).

A heady set of assumptions and conditions to overcome, but there are three core “memes” that seem to have the bulls excited:

  • 1. An average PE of approx. 15 times earnings is reasonable and the current level is well below historic averages
  • 2. The market has priced in exogenous and endogenous risks i.e overcompensating from the risk of a Euro crisis and a disleveraging Australian household
  • 3. Earnings growth will increase due to continuing demand for resources from China and emerging markets and steady growth of household credit

PE of 15 is not the average – its 11

In my Australian Share Market Report, I noted:

When considered within a historical context however, a PER of 11 is not so unusual nor very low at all.
The maximum PER attained during the 1969-1982 bear market (using the All Ordinaries Index) was 11.7 whilst the trimmed mean was 8.4 times. During the 1982-2007 secular bull market, the trimmed mean was 15.1, approx. 30% higher.

I’ve updated the chart above to include last month’s PE and the current PE ratio of 12.1 times for the All Ords plus a 10 year moving average of the PE ratio.

As has been argued on MacroBusiness before, the case for an “average PE ratio of 15 times is reasonable”, only relates to the previous secular bull market, namely from the mid 1980’s to 2007. This level has been shown to be an aberration, as even in the post WW2 boom market Australian stocks were priced at just over 14 times earnings only twice, and during the last secular bear market of the 1970’s, averaged 8-9 times.

It wasn’t until 1984 when the full effect of the demographic push of the Baby Boomers combined with a once in a century bubble in credit did they exceed 12 times earnings.

From Wilson HTM

Not only is a crucial demographic change going against this meme of “15 times earnings is reasonable”, but so does the continued unwinding of credit, including households, corporates and investors. As I have explained previously as part of a multi-factor macro model for Australian stocks:

One of the key factors in a new bull market in stocks, just like property, is a propensity for investors to borrow more on expectation of higher earnings – alongside a move to higher price/earnings ratio premia, reversal from a lower interest rate environment and the “lazy balance sheet” theory. Margin debt deleveraging began in the December 2009 quarter and has accelerated, averaging 3.4% quarterly or over 12% in the last year.

The corporates are truly deleveraging, undergoing a massive round of capital raising in 2009 to extinguish debt, and then returning funds to shareholders again by undertaking share buybacks. This is the opposite of true bull market conditions, when corporates struggle for cash to expand earnings (and bonuses) and rely on raising equity – the diluting effect hopefully overcome by increased returns – and borrowing as much as they can (and sometimes more).

With corporate gearing at 30 year lows, with debt/equity ratios below 30% and IPO’s activity muted alongside increased buybacks (the only way for corporates to enhance lazy Return on Equity (ROE)), this driver on PE premia is completely absent.

Companies have deleveraged and conducting buybacks whilst margins stabilise with tepid recovery.

Market Pricing in Risk? This is not March 2009

It is completely true that the sound and fury of the mainstream media (you know when they are frothing when updates are turned into a minute by minute blog) has blasted fear and uncertainty – after the fact – into stock market investors. This has self-perpetuated in a 20% or 1000+ point correction from the April high at 4971 points to the late September close at 3863 points on the ASX200.

As I stated last week, other equity markets have fared worse, but the main markets of Germany and the US are well above their bear market low:

The DAX is off 24% from its May high, but still 58% above its March 2009 low (i.e around 20% annualised)
The FTSE is off 12% from its high, still 53% above its March 2009 low.
The French CAC-40 is off 25% from its high, but only 24% above its March 2009 low.
The Nikkei 225 is similar – also 23% from its high, but only 24% above its March 2009 low.
As for the US, the SP500 is only 10% off its high, and some 80% above its March 2009 low.

The magnitude of the falls for US equity markets in particular, is less than that of Greece Crisis 1.0 in May 2010. As I’ve shown repeatedly, 20% plus corrections are the norm for all bear markets (defined as a market which has not exceeded the recent bull market high e.g 6700 points on the ASX200), as are the subsequent 10-20% bear market rallies.

This is not a “pricing in of risks” – this is a Tom Jones correction – not unusual at all, just highlighted by the interconnectedness and fragility of worldwide equity markets. Notably, their PE ratio correlation is increasing:

The only market that appears to have priced in the real risk to global growth – a slowing down China – is the Chinese equity market, represented by the Shanghai Composite index, which is starting to resemble the aftermath of the late 1980’s stock market bubble of Japan’s Nikkei 225, down some 60% from its nominal high:

Earnings Growth

Finally we come to earnings growth. It is perceivable that investors could increase current PE ratios based on a perception of “value” and that markets have fallen “too far”, even without considering future expectations of earnings.

But unfortunately this is where irrational investor behaviour diverges from the fundamentals. As I explained above, the median forecast for earnings growth is 11 and 13% for this financial year and 9 and 12% for next financial year. This is well below the 15% compounded required to meet Mr Bennett’s forecast.

The graph below from the RBA explains why you should be sceptical of current’s brokers earnings forecasts:

The ASX8 – the four banks and top four miners (BHP-Billiton, Rio Tinto, Newcrest and Woodside) – are the only listed companies within the top 50 stocks by capitalisation providing meaningful profit growth (i.e that actually impacts the “E” in PE for the market).

This concentration of earnings risk means any ructions to housing credit growth (and particularly banks vulnerability to wholesale foreign funding) and commodity prices (particularly coal, iron ore, gold and oil) via a terms of trade shock will have significant impact on the ASX8 ability to lift up the rest of the market, who are struggling with tight margins and reluctant consumer spending (on a GDP per capita basis) due to the entrenched disleveraging of the Australian household.

How does a 8000 point target visually fit in with the range of probabilities I considered in my report, where a 15.5 times PE was considered the highest range?

History, demographics, macroeconomic analysis and a prudent risk assessment is on the side of the realistic PE range of 9.5 to 11 PE.

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      • evidence? of the future? i’ll stick to predictions based on incomplete knowledge and will be quite happy to be proved wrong with the evidence of time…

        my prediction: 2500 by the end of 2012.

        Come on, predictions are what economics is all about! howe else are economists meant to say ‘I told you so’ when right? (and if wrong, just sweep those predictions under the carpet). Get involved! haha.

      • one step at a time but 4300 to be taken out in a matter of days then rally back to 4500 within a few weeks is my best guess. easy money to be made between now and then. a move past 4500 will depend on the data but if its as good for stocks as its been lately and 4500 gets taken out then 5000 is the top of the range. maybe “pretty likely” is the wrong thing to say. can i swap that for “more likely” please?

      • That’s a fair assessment in the short term GB, but the thrust of this analysis is a medium to long term perspective.

        Technically speaking, just below 5000 points is the major resistance level after taking out 4500 and could occur within 6-12 months, as has happened in other 20% bear market rallies.

        e.g March to May 2008

        What Bennett is arguing for is a new secular bull market with a 100% rally coming out of a cyclical bear market, similar to June 2003 onwards, where the market doubled.

        None of the macro conditions exist for that to occur.

  1. Revert you may well be right but what sort of a depression?
    These CB’s are all going to print in the face of high inflation. To do otherwise is to pull the disaster lever and which one of them is going to want to go down in history as the bloke who did it?

    Thanks Prince. I just think the one thing you are missing is the infaltion/printing scenario which looks likely from my little bar stool.

      • Revert2Mean,

        So you say impossible based on depression on the one hand, and on the other you say printing leading to collapse.

        Can you tell me what stocks do in a currency collapse? Would certainly not be impossible. Worse case scenario – ala Zimbabwe – we could see 800,000,000 or more.

    • Not missing it – interest rates to counter asset price inflation is part of my model.

      Deflation is more of a concern (for stocks) – annualised rate in OZ is now 1.2%

      Remember, destruction of debt outweighs any amount of money printing. QE1, 1.5 and 2 don’t even cover a fraction of the debt destroyed since 2007, and with more haircuts to come (Greece for sure, Spain likely, Italy possibly….) it would take tens of trillions in printing to affect inflation, particularly in the EU.

      Having said that asset price inflation can still be affected by lax CB monetary policy with negative interest rates and the perception that money printing/asset swaps is inflationary.

      The Aussie equity market to be in a bull market condition requires a different point in the interest rate cycle (i.e which turned over a year ago, even though nominal rates haven’t changed).

      • The global financial system is now wobbling & primed to veer into either difficult-to-manage inflation or deflation, or a nasty mixture of both (asset price deflation, essentials inflation). This is going to be one of the most difficult periods for the world’s economy, ever. Add to this the steadily increasing energy prices and depletion, and then the steadily worsening climate situation (floods in Northern Ireland and Bangkok today, jawdropping droughts elsewhere, another year of floods predicted here in Oz this summer, etc etc), and you can see we are primed for a smackdown of epic proportions.

        Predicting blue sky futures in equities in this scenario is sheer onanism, a nasty indulgence.

      • Prince,

        Have you looked at the historical debt destruction events? Except for Japan, inflation always wins the day and the destruction of debt becomes more and more irrelevant at a faster pace.

        This doesn’t happen overnight, but it could gather steam before you know it.

  2. My prediction is that 99% of predictions are wrong, and the others are only “correct” in the same sense that a stopped clock is right twice a day.

  3. Thanks Prince.

    I think once the EU announce some “agreed bailout” then all markets will go wild, and ASX 200 at 5000 (8000…I don’t think so) is likely, but for how long as the EU situation is not sustainable given their debt and fiscal conditions, and then the markets start to focus on the US, and more cracks will open IMO.

    Charlie Aitken said this yesterday:
    “The ASX200 itself has got to a very critical technical level. The downtrend from the April highs (@4255), where we went tactically bearish, will break today. Then we will head to the next technical level of 4477 where we will reassess our risk on trading strategy.”

  4. rob barrattMEMBER

    So, ( as an untrained economic ignoramus) to summarise from previous MB articles with a bit of Mish Shedlock thrown in:

    1) Europe on brink of Euro collapse;
    2) American cities declaring bankruptcy;
    3) Chinese RE Ponzi moment just pulling in to the station (with 6000 miles less rail);
    4) Iron ore in free fall;
    5) Baby Boomer’s stop spending.

    Clifford Bennett announces significant market growth..

    Have I missed something? Has a PE ratio now been redefined as a recursive incremental function of itself?

    • Exactly. There are many (most?) people desperate to see the stock markets keep ascending, because all their eggs are in that basket.

      Wishful thinking will crash into reality and reality will emerge unscathed.

      • rob barrattMEMBER

        Not as mad as it sounds taken in isolation
        There’s no reason why the BB Grey Nomad and skiing accessory markets can’t improve in the short term, until their pensions run out…
        The problem is with the other 99.9% of the economy..

  5. Excellent piece. You have succinctly described the inconvenient (for the bulls) truth about the state of equity markets.

    At the risk of repeating myself, the 80s and 90s were two of the three best returning decades of the last 110 years. And provided two of only three periods in history where double digit real annualised returns were achieved. This is not the norm.

    Setting future expectations on the assumption of a continuation of the environment of the 80s and 90s is very dangerous indeed.

    Interesting also to look at the Chinese market. Is it trying to tell us something?

  6. ASX at 8,000???LOL! We are about to enter a long recession, and I mean LONG recession. We will be lucky if the ASX is at 2700 by the end of next year.

  7. Great article Prince.

    Not sure how Bennett gets MSM oxygen — actually yes I am, it is all about delivering content. The quality of the content is irrelevant.

    Bennett has also predicted the Dow the triple in the next 3 years (actually in about 2.3 years because his prediction was made about 0.7 years ago)

    • It’s not MSM oxygen, it’s Switzer. A show worth watching on the Sky News channel simply because it’s wrong so much more than it’s right.

      Switzer lives in the bizarro-land of the perma-bulls – most of guests are extremely bullish, with the occasional bear, like Steve Keen (and the interview is normally full of Switzer telling Keen that he hopes that Keen is wrong). The general format is: Switzer’s guest talks their agenda, if it’s bullish Switzer generally agrees as he asks Dorothy Dixers, then Switzer begins his daily rant about how crazy the RBA is for not dropping rates to near zero.

      As an example, at the start of the current bear rally Switzer had a guy from Macquarie Group on who he introduced (seriously) as “always being right”. The guy from Macquarie then went on to talk his own book and say that the current rally is actually the start of a new bull market, and that the Euro crisis was as good as sold. When Switzer bought it hook, line and sinker, the almost incredulous Macquarie guy said: “That’s why I love you Switzer, you’re always bullish.”

      • There are some good interviews on Switzer from time to time, John Hewson is always interesting, and its always interesting to hear from the bullhawks as much as the uber bears to understand their rationale.

        Although I would like some more hard hitting questions, given the time allotted for the interview.

        MacroBusiness TV anyone?

        • Yes please! With interviewers who understand their subject matter who can have 15min interview (like Max Keiser with a little less ‘financial terrorist’ talk).

        • But the good interviews (which are sadly in the great minority) generally come about from the interviewee being interesting, despite of Switzer’s questioning. It can be a rather frustrating show to watch, as for the good bits you have to watch a lot of dross.

          Personally, I got sick of watching Switzer rant to every guest about the RBA.

  8. Yep, this is a ridiculous call. The epitome of Futureboom! But uber-bear calls might not be the right response, yet.

    What makes Australia interesting it that we still have gunpowder left to prop up the housing market and for more general fiscal stimulus.

    Imagine things get really bleak in Europe/US/China going in to next year. We should all be thinking what Swanny and the RBA would do and to what lengths they’ll go to ‘manage’ and slow debt deflation in property.

    • Even today we are seeing an amazing turnaround on the ASX — apparently due to the forthcoming interest rate cut.

      • Hehe,it is too. That’s a great counter-counter argument. Maybe I was thinking exactly like the market there, factoring in interest cuts, QE3, further FHOGs. We all know what the policy levers are now and in ’08 we didn’t.

        Sheesh, this to hard. I’ll just go with the S&P under 600 and the All Ords under 3000 within four years.

        • The policy levers, or should I say “lever” in 2011 is the same as that which was available in 2008, or in all other crises of capitalism. “Print more money!” Except this is no longer working so well. Debt saturation, resource constraints and intensifying infrastructure disasters (natural and man-made) are all contributing factors here.

  9. Nice report Prince. I’m getting tires of the so-called “experts” saying stock PE’s, house price valuations, interest rates etc “are currently at historical averages”

    When their selected frame of reference is 20 years of the biggest credit-fuelled boom in history, why do they think they are even close to getting it right? Bit like saying banana’s are going cheap at $7, I suppose. Short memories in this game.

    On another note, this Clifford Bennett fellow has an average record, at best – another economist with no better than a ‘flip of the coin’ strike rate. I personally wouldn’t listen to anything he has to say.

    To that point, there seems to be an ever-increasing number of mainstream economists making what seem to be ‘out there’ claims. I guess the theory behind this is if you make enough of them, one may come true – and you’re the next Peter Schiff or Marc Faber. And if they don’t come true, hell, in a couple of years no one’s going to even remember, because it was wrong!

  10. Within the coming 5 years, 800 is more probable than 8,000. Wild predictions are easily assembled:

    The unfolding dissolution of the European economic order will knock the ASX in half all by itself.

    Further downgrades of the US Government, the unavoidable consolidation of US public finance in the context of renewed recession and the associated dislocation of the US economy, will knock another 50% from what remains.

    Beyond that, as the China capital investment boom ends in deflationary panic, capital flight, confiscation and political suppression, the ASX will give up yet more of its value, bottoming around 620 points in September 2013, more than 90% below its all-time high.

    At this time, the ASX forward P/E will be less than 7.0, the AUD will be at USD0.35 and the RBA’s overnight cash rate will be 0.5%. Oh, Malcolm Turnbull will be Federal Treasurer…..:)

      • I am pretty sure about Turnbull….Could be that Joe Hockey will be PM in a minority Liberal Government supported by Bob Katter, Tony Windsor and Tony Crook. (Tony Abbott will be Acting Minister for Fierce Denial, Political Fraud and Spontaneous Combustion.)

        I think the other three processes are very likely, and the ASX will fall deeply if any one of them takes hold.

        In the 1930’s global output fell about 25% (I think). A similar fall is possible now because of the deflationary effects that can accompany accelerated debt/deficit reductions and widespread banking failures. In the past, we have seen competitive devaluations and attempts to export inflation. If debt compression takes hold, I think it is possible we could see a reverse process occur – rounds of competitive deflation, as countries compete to achieve fiscal stability. Such a process would generate self-reinforcing contraction across economies. Imagine if all the Euro economies and the US attempt to achieve fiscal balance at the same time. The impact on output would be overwhelming, but it looks to me like this could readily kick in.

        Political intransigence in the US and what I think of as “dishesion” (the process by which a compound breaks apart into its components) in Europe already have a logic that seemingly cannot be reversed.

        All this is made so much more likely by the loss of popular trust in currencies and confidence in the integrity/competence of politicians, regulators and monetary authorities. We have been shielded so far in Australia and while I hope I’m wrong, I can see it coming.

  11. Thank you briefly….now my day is entirely wrecked I can go home! 🙂
    Turnbull as Treasurer MIGHT be an upgrade. I think Turnbull a decent sort but…I heard him answer a question on immigration on which he said…’To stop immigration is just silly because then you’d have no growth.’
    So it’s the same old bring em in, park em around the cities, sell em stuff and have more debt!!
    Mind you that is the nearest thing I’ve heard to a policy from the LIbs!

    Anyway thanks again prince…noted your comments re inflation.

  12. Thanks for a great post Prince.

    If you are interested, I’ve put in the link below for an aggregate value index of the ASX20 companies which combines them together and treats it as if they were a single company – as a proxy for the XJO.

    It is something that I’m still working on and am looking to constantly improve.

    I think that right now the market in total is fairly priced. Assuming that earnings hit their forecast targets over the next two years, then I think that current market value could sustain 4,600 on the XJO.

    Am I optimistic that consensus forecasts will be met? No. I’m not. I think there are earnings risks to the banks and also to the iron ore producers. I’m not sure if retail will get significantly worse from here because I don’t think we have enough information to tell yet.

    Therefore, I think that consensus forecasts could be a bit too optimistic and that current market levels are about fair – 4,200-4,300.

    People are pretty negative, which is why we have seen this short-term rally happen as there were way too many bears.

    Too many are talking about deflation, however the political solution to the problems at hand has been, and will continue to be, inflation. We either default big time or we inflate our way out. The latter is the route that we are taking.

    It won’t happen over-night, but currencies should increasingly lose purchasing power to real assets – which does include stocks.

    Therefore, 8,000 is actually possible if we did have a significant currency crisis in the next two years – which is possible. All currencies are at risk, the AUD is no different, as they are linked to the debt.

    So given that current value is fair, in my view, and that overall currencies should decline, I think there is – on average – a positive bias. This goes against the grain, but even if the economy is doing poorly, stocks could still hold up in purchasing power terms.

    My prediction (if anyone cares) is that some sectors will do well as others do poorly (i.e. banks & iron ore), but overall we have a relative positive bias due to currency decline against real assets.

    If we didn’t have the currency issues, then I’d be saying that the market stays relatively flat with 20%+/- swings and ending up maybe 10% over the next year or two (4,600 on the XJO).

    However, given that I think the currency issue will be a factor, you could increase this by (lick of the finger) 20-25%. So I can see flat to up market, including down swings, in real terms but in nominal terms I can see the market could potentially hit 6,700 over the next two years.

    So in summary – overall neutral in real terms and likely positive in nominal terms.

    • Very interesting report Macros – my colleague Q Continuum and I have valued the ASX50 in aggregrate in the past using a similar technique.

      And interesting views – although I disagree about the overriding inflation meme.

      Almost all professional economists and financial commentators are worried about inflation – I can count less than on one hand those who consider deflation – of asset prices that is – a concern.

      I agree about the consensus forecasts – a little too optimistic, as they historically always are and we are likely to see downgrades from the AGM season, although a rate cut might help here. Cyclically, its too late IMO.

      • Prince,

        Thanks for the feedback.

        I mean inflation in the form of currency collapse – which I don’t think is the main-stream economist view.

        I don’t listen to ‘professional’ economists and commentators any longer – just too tired to hear constant noise and parroting that is not based on fact. I welcome Macrobusiness – because regardless if I agree or disagree with every single point – the views are real and don’t bow to the constant pandering that the mainstream is involved with.

        Btw, Macrobusiness is the only Australian based media that I pay regular attention – these days I try to keep my sights on the global picture because I think invariably that is what will drive us in Aus.

        By currency collapse, I mean the theme – not necessarily the event – as I truly have no idea how that would look like in the financial world today. If we lived in a world of non-intervention then I agree that deflation would be inevitable. However the world is going through competitive currency devaluation. The world govt’s are not allowing another Lehman event to happen.

        Europe is trying to find a ‘fix’, but the reality is that they have no money. Either it all collapses or they print their way out. They are trying to find money right now; they don’t want to print Euros but they are more than happy for the IMF to print dollars for them.

        Whilst I can see deflation as a possible event, it is just unlikely based on the interventions that we have seen thus far. There is no way I can see them change their ways – in fact I think they will become increasingly desperate – which is the hallmarks of hyperinflation.

        The whole derivative structure is so big and so messy that even if we had wide scale deflation, there could still be a loss of confidence in currency. In no way can I see this playing out anything like the 1930s as we have complete fiat paper money system, we have a gargantuan derivatives system linked to that paper via US treasuries which are effectively the reserve currency, governments have already been printing money and nobody wants to have a strong currency.

        Happy to change my views if I see dramatic changes to what is happening globally, but it has all been pointing towards what I’m saying so far. I’m watching those issues and don’t really care about the CPI right now because I don’t think it means a whole lot in this environment.

      • Prince,

        Another point.

        If we saw wide-scale deflation – what would happen to the banks and ability to pay that debt?

        With the US banks moving their derivative exposure over to their retail bank arms (Bank of America), a deflation scenario would wipe out deposits. I think as soon as it is perceived to be possible, you would see a bank run. In the US. Money would move out of banking. I don’t think you would see hoarding of physical paper currency, I think there would be an exodus to hard assets. Currency would devalue and money velocity could increase rapidly.

  13. Prince, this has been a great post. Lots to think about.

    Macros, I wonder about your “deflation” process. Your outline sounds more like an inflationary cycle to me: dumping cash to buy “hard assets” and currencies losing value.

    The classical understanding of deflation is that falling prices of goods and services, commodities, and declining incomes, profits, rents impel people to hold cash, on the basis that today’s cash will be worth more tomorrow. So there is an incentive to hoard and the flow of cash declines. If we anticipate that future incomes may fall, we can foresee that debts will become more difficult to service, so borrowing dries up, investment declines and contraction becomes self-mobilizing.

  14. briefly,

    I’m absolutely aware of the definition and application of deflation.

    My point is that cash is not a safe-haven and the circumstances that we face are not typical.

  15. Predictions, predictions……..

    I liked the comparison of present day China to that of the Japanese bubble that was in the 1980’s.

    I think that scenario will play out.

    Which leaves us to ponder the really precarious situation that the Australian economy is facing, now that we are left almost entirely dependent on the Chinese led mining boom……