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Australia Caught in the Headlights
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Author Australia Caught in the Headlights
rffrydr
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PostPosted: Fri Aug 10, 2007 6:13 am    Post subject: Australia Caught in the Headlights Reply with quote

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Aussie punters are as ignorant of bear markets as the first explorers were of monotremes. All local equities do is go up. This has created an investment environment as unique as the platypus, the country's famous egg-laying mammal. But the All Ordinaries index is now suffering the same panic selling that has gripped markets round the world, and is 7 per cent off its July high. Last week's news that two Macquarie Bank funds faced significant subprime-related losses has not helped. How might Australia's bullish investors cope with a more prolonged slump?

Things could turn ugly. Much of the market's recent strength is due to an expansion of valuation multiples - earnings growth has lagged annual index gains by about 10 percentage points over the past four years. Some of the demand has been created by Australia's compulsory pension scheme that pours an additional ADollars 20bn-ADollars 30bn into domestic equities every year. These assets now account for two-thirds of the market's ADollars 1,590bn capitalisation. But new and existing funds could quickly shift to bonds or even cash. And a global downturn would hit financial and resource stocks hard. These two sectors account for 60 per cent of the index.

Falling share prices might eventually lead to a wider range of popular investment products. Unlike continental Europe, few structured funds are offered in Australia. Most investors would laugh at the idea of paying for capital protection. The same goes for hedge funds. Why pay expensive management fees when cheap index trackers return more than 20 per cent per year? The demand for diversification will also increase if the domestic market continues to struggle. Institutional fund managers are already building up their international teams in anticipation of higher overseas weightings.

But it is Australia's real economy that could be hit hardest. With the broadest equity ownership in the world, consumption is as linked to shares as it is to house prices.



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rffrydr
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PostPosted: Tue Jun 02, 2009 8:32 am    Post subject: Reply with quote

Back to '07....this it getting rich:

http://stockcharts.com/h-sc/ui?s=FXA&p=W&b=5&g=0&id=p22975041341
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PostPosted: Sat May 09, 2009 7:18 am    Post subject: Reply with quote

Australia surprises with DROP in unemployment and central bank rumblings of tightening. The China commodity-commodity currency may have brought them through the cycle.

http://stockcharts.com/h-sc/ui?s=FXA&p=DAILY&b=5&g=0&id=p93093279832
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PostPosted: Wed May 06, 2009 10:27 am    Post subject: Reply with quote

My best of all possible worst scenarios came to past, the carry with the yen evaporated, and the best (worst) the aussie could do was 63 cents. Now comfortably above 75 cents I will not challenge this stalwart again:

Australian retail sales

Published: May 6 2009 09:11 | Last updated: May 6 2009 15:47

Quote:
Hurrah! Fiscal stimulus works – at least Down Under. Retail sales rose 2.2 per cent in March, buoyed by government handouts, more than compensating for the 2 per cent fall in February. Give the people money, it seems, and they will spend. That theory has not worked elsewhere. Shoppers across the globe are far more fragile; even in China, where government largesse is unstinting and official retail statistics obediently strong, surveys of the biggest shops paint a more subdued picture. Nominal sales at the top 10 Chinese retailers shrank almost 7.5 per cent in the fourth quarter, according to Access Asia, a research company specialising in the sector.

Australians are clearly something of a special case. Consumers in the lucky country really have lucked out recently: 450 basis points of interest rate cuts in the past eight months, cheaper petrol, lower taxes and money from the government as part of its plan to pump-prime the economy. As a result, household disposable income was up 14 per cent in nominal terms, or 10 per cent in real terms, over the year to the fourth quarter of 2008.

So much for the good news. Australia lags the UK and US economic cycle so worse is to come. Rising unemployment, at 5.7 per cent in March, will tame shoppers’ spirits. Wealth destruction – household net worth is down 10 per cent, the largest annual decline in several decades – will also take a toll. Consumers are squirreling away more money – 8.5 per cent of disposable income in the fourth quarter, up from zero a year ago and negative rates before that. Their caution is not shared by the central bank which this week opted to leave rates on hold on the basis that “much of the effect (of monetary easing) is yet to be observed”. Perhaps. But recent drops in house prices and employment suggest some uglier changes are yet to be observed too.

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PostPosted: Wed Mar 04, 2009 7:46 am    Post subject: Reply with quote

No rate cut but no depression either in the land of the world's dearest home prices:


http://ftalphaville.ft.com/blog/2009/03/04/53181/australia-confounds-the-pundits/
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PostPosted: Tue Oct 07, 2008 11:52 pm    Post subject: Reply with quote

http://futuresource.quote.com/charts/charts.jsp?s=AUDJPY%20A0-FX
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PostPosted: Wed Sep 03, 2008 10:39 pm    Post subject: Reply with quote

BCA looking for another rate cut by the RBA before the end of the year:

http://www.bankcreditanalyst.com/public/story.asp?pre=PRE-20080903.GIF
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PostPosted: Tue Sep 02, 2008 10:19 pm    Post subject: Reply with quote

Becomes a headline:


http://www.bloomberg.com/apps/news?pid=20601087&sid=a5MRppll8k2Q&refer=home
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PostPosted: Sun Aug 03, 2008 4:02 pm    Post subject: Reply with quote

Reserve bank of Australia is expected to stand pat tomorrow - but traders now expect cumulative cuts of 70 bps over the next 12 months:

http://www.bloomberg.com/apps/news?pid=20601087&sid=auI6rtC_0Tng&refer=home
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PostPosted: Wed Jul 23, 2008 11:15 pm    Post subject: Reply with quote

Crunch comes to the hard-carry trade as NZ cuts:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMyd5BhF9snY
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PostPosted: Wed Jul 23, 2008 2:29 pm    Post subject: Reply with quote

Looks like parity is gonna remain what it is...a fantasy.
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PostPosted: Sat Jul 19, 2008 11:55 pm    Post subject: Reply with quote

Australia now also taking aim at short-sellers:

http://online.wsj.com/article/SB121643420922567403.html?mod=googlenews_wsj

Quote:
The U.S. isn't the only country seeking to rein in short-selling during volatile times. Australia, too, is trying to impose tighter regulations on the practice, which has been blamed for exacerbating a selloff on the country's stock market.

Lawmakers in Australia are proposing rules that would require short sellers to disclose more about their positions in order to prevent market manipulation. The legislation is part of an effort to overhaul the country's financial regulation and comes amid a severe downturn in Australian shares that has pushed the benchmark S&P/ASX 200 index down 24% this year.
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PostPosted: Sat Jul 19, 2008 2:42 pm    Post subject: Reply with quote

As discussed before, the concept of no-doc loans and overleverage within the consumer is not a unique feature of the American economy:

http://www.theage.com.au/national/banks-lean-on-staff-to-push-loans-20080719-3hy4.html
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PostPosted: Thu Jul 17, 2008 10:20 am    Post subject: Reply with quote

I wanna short this again; bearish on sky-high coal and iron ore--neither of which could ever be described as "peak." But this is one of the last carry-trades. Mrs. Wannabee keeps buying. May have topped on upthrust after distribution. Post if you see an opp. For now watching Cleveland Cliffs.

http://futuresource.quote.com/charts/charts.jsp?s=QAD%20U8

If it's not the prices that drive new supply...it's merger mania:

http://d2cft.volantis.net/d2c/0.0?feed-article-id=9c69aede-5399-11dd-8dd2-000077b07658
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PostPosted: Thu Jul 17, 2008 9:47 am    Post subject: Reply with quote

hello from oz

on the AUD not sure if any of you are technically oriented however fib targets sit just over parity and the 50% level from pre issue was tested a couple of nights ago.

Most likely scenario is a bit of consolidation before a final move higher (at this stage)

Regards
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PostPosted: Tue Jul 15, 2008 5:17 am    Post subject: Reply with quote

Parity beckons just like you said rffrydr. Shocked
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