2

With a whimper

With bearish sentiment growing in the stock market, shifting to an intelligent defensive position is paramount in order to prepare for the next uptick. In many respects, equities should be a good buy: earnings multiples are low, gearing is low, interest rates are not especially high. The market is pricing in some significant weakness, and,

Latest posts

23

Can the oil stabiliser work?

So, last night oil got thumped, down 2%. Given the fall, and the prospect for further weakness, I thought it might be useful to ask, where oil might head to and what the implications are for this price trajectory. The stakes could not be higher. There’s an opinion at large that the current slowdown in

1

Money supply growth tumbling in China

The People’s Bank of China has published the latest set of monetary statistics for May 2011. At the end of May, M2 money supply reached RMB76.34 trillion, increasing by 15.1% yoy, lower than 15.3% yoy growth last month, and continued to dip below the pre-crisis average growth rate.  The market consensus looked for a 15.5%

10

June 14 links: Gathering gloom

Down: $US, ore, energy, CRB, gold, metals, grains, Up: euro, Aussie Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Is Greece Lehman II. NYT Greece downgraded. WSJ Dr Doom reappears. Bloomberg And on Europe. FT Week ahead for Dow. Calculated Risk US banks to cut Treasury holdings. FT, Alphaville US Treasury liquidity. Doug Noland Global policy sinking. Gavyn Davies Labour Left wants bigger mining tax. SMH No! Says Forest.

23

Churn baby, churn

Last week, Delusional Economics posted an article entitled The market needs churn, which showed that the rate of issuance of new loans is a leading indicator for house prices. A follow-up article was posted by Delusional Economics the next day, confirming their findings (see The secret to house price rises). Delusional’s posts inspired me to

36

The Block crumbling

The television hasn’t been to kind to the housing market recently. Sure the constant re-runs of Location, Location, Location, Selling Homes Australia and Grand Designs have been streaming out of the box, but more recently David Koch has been on breakfast TV informing the masses that housing was not going at all well. This was made

5

Australian Market Weekly Wrap

The S&P/ASX200 Index closed the week slightly lower at 4562 points, a 0.4% fall, extending a 400 point or 8.2% loss from the mid-April high of 4971. This move is identical to the February/March Japanese earthquake correction signaling very high volatility in the local bourse. SPI Futures put the opening price for the market on

66

Bull, muddle, bear?

The problem with finance and economic analysis is that it mostly relies on history. Their bias is the assumption that nothing is new; that everything will or should, return to a norm. They are ahistorical, in other words. So let’s try something a bit different. Scenarios of the future. We will begin with a report

12

Australian Dollar Weekly Wrap

The Aussie is closing the week looking like it is finally going back toward the recent range low of 1.0440/50 sometime next week. As you can see in the chart below this week’s move has reinforced the 1.0750ish region as the top and we now need to see where the real bottom to this range

14

Weekend reading: Crushed

Rocket: $US Up: ore Crushed: energy, CRB, gold, metals, euro, Aussie, S&P Flat: grains Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Financial contagion. Calculated Risk Time to panic for the US. New Economic Perspectives (h/t Naked Cap) ECRI WLI falls again. WSJ Stocks have just begun fall. Zero Hedge Sigh, I agree… Germany digs in on Greece. Bloomberg Emerging markets shifting from tightening. WSJ Or are they?

0

Trading Day: a reversal in risk?

The S&P/ASX 200 opened sharply higher, reacting to the first up day in six on overseas equity markets, and at midday is up 15 points or 0.34% to 4564 points. Asian markets are generally up, with the Nikkei up over 1.2%, the Hang Seng continuining its decline, dropping 0.5% and Singapore and NZ steady. Other

150

Mining’s new cold war

So, we are about to enjoy another batch of mining advertisments on our televisions and in our cinemas. Given the political motivation of the last round of ads in 2010, addressing the then proposed Resource Super Profits Tax (RSPT), I thought it might be worthwhile taking a look at this new generation of ads and

59

A super question (updated)

Reader, Bamboozled, recently left a comment on my “Trouble with Funds Management” post, asking what direction to go with her super: I’m a 30 something trying to consolidate a sizeable sum spread across 4 funds into something that resembles a reasonable super bet. At the most basic level I have 2 lots of dosh in corporate

73

The baby boomer conundrum

The ageing of the large baby boomer generation is viewed as a huge problem for government finances in the developed world. A working paper released last year by the Bank for International Settlements (BIS) forecast large and rising future costs relating to the ageing of their populations unless drastic measures are taken to curb the rapid growth of health care and pension obligations (see

8

Equities spotlight: Bluescope Steel

Following on from this week’s article about the affects of a carbon tax on equities, today we shine the spotlight on Bluescope Steel. The Business Bluescope (BSL) is one of Australia’s leading suppliers of metallic coated and steel building products and is the owner of the Port Kembla steelworks.  BSL is also one the world’s largest

38

Leading the world

It’s interesting how within an hour or so of the release of the Productivity Commission Report yesterday that commentators were lining up on both sides of the debate to use it to justify their positions. I thought it would be useful to point out what the report doesn’t say and therefore the conclusions that can’t

33

Uncle specufestor, a success story

Rightly, the bogan hates being told what to do, hates having its movements restricted, and hates feeling obliged to anyone. This is an important reason why it loves purchasing investment properties; so it can tell someone else what to do, restrict their movements, and have someone feel obliged to them. This free-thinking, independent creature is

8

June 10 links: OPEC buggered

Up: $US, ore, energy, CRB, gold, metals Flat: grains, euro, Aussie Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece US house prices to keep falling. Shiller Bye bye US middle class. My Budget 360 (h/t Naked Capitalism) Output slack. Tim Duy US traded deficit. Calculated Risk Corn rocket. Zero Hedge ECB to hike again? Zero Hedge Monstrous risks in emerging markets. Reuters China’s SMEs face cash crunch. FT Gas

82

PC Report endorses carbon pricing

The much anticipated Productivity Report into carbon pricing is out. The full executive suymmary is available here. I will provide full analysis tomorrow. In the mean time, The Australian  reports that: The report found Australia is currently spending between $44 and $99 per tonne on carbon abatement policies in the electricity generation sector. …“As a proportion

7

Macquarie capitulation?

Macquarie Group is trading at less than a third of its peak and, to make matters worse, Citigroup has issued a sell recommendation. Morningstar has, by contrast. issued a buy, but we will come to that later. At first glance the fundamentals look OK. The forward dividend (unfranked) is 6%, the forward earnings multiple is

0

Trading Day: no reaction to jobs

The S&P/ASX 200 opened higher, shrugging off bad job data, and at midday is up 10 points or 0.2% to 4546 points. The correction has now wiped off just over 9% of price in the ASX200, just below the conventional 10% level of a complete correction. Asian markets are mixed, with the Nikkei down over

8

Full time jobs by state

Below find the state by state break up of full time jobs, all seasonally adjusted. Weakness in NSW, QLD and SA is not sufficiently offset by gains in VIC and WA for a total fall of 22,000. The RBA’s adjustment to Quarry Australia continues apace.

3

Employment trend at zero

Well…there is now no doubting the message that the NAB Business survey employment index and the recent turn in the ANZ job ads survey have been sending: employment has softened considerably.   Today’s employment data was up 7,800 in May against the markets expectation of +25,000. But the sting was both in the break up between full

24

Full time jobs down again

  MAY KEY POINTS TREND ESTIMATES (MONTHLY CHANGE) Employment increased to 11,444,200. Unemployment decreased to 588,400. Unemployment rate steady at 4.9%. Participation rate steady at 65.6%. Aggregate monthly hours worked increased to 1,602.5 million hours. SEASONALLY ADJUSTED ESTIMATES (MONTHLY CHANGE) Employment increased 7,800 (0.1%) to 11,440,500. Full-time employment decreased 22,000 to 8,027,100 and part-time employment

24

Monthly chartathon

The Reserve Bank released its latest Chart Pack yesterday. As a technical analyst/chartist, I prefer a visual representation of data and have always found this series of charts fascinating. The whole pack can be downloaded here (1.28 mB or so) or viewed by section here. Although it covers many areas, I’m going to look at

36

No taxes, cheap houses

Following my recent post, Blame your leaders, in which I explained why high house prices are partly the result of high property taxes I was asked by a voice of sanity in my household: “How can you keep a straight face and propose that one of the demand driven causes of driving up house prices, is

23

China’s great iron ore pile

I won’t lie, the iron ore price has been making a goose of me for almost two years. At various points my forecast for big falls has almost been right but in total I have been clearly wrong. My prediction has been frustrated by tear away fixed asset investment in China, new market dynamics and

4

Has the RBA killed the dollar rally?

Over the past 8 trading days the Aussie has essentially traded a 1.0590-1.0770 range as the competiting forces in currency land played out. Friday’s spike after non-farm payrolls on the back of the euro’s bounce has not been sustained and as I write the Aussie has bounced off the bottom of the range overnight and

11

Global energy amusement

On the day that OPEC trashed Ben Bernanke’s greatest hope of a bounce in the US economy, we offer the following global energy roundup from BP, chock full of interesting detail on production and consumption of oil, gas and coal. Makes for hours of scary reading! (h/t Zero Hedge)