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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
nipper
post Posted: May 6 2019, 12:11 PM
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In Reply To: early birds's post @ May 6 2019, 11:10 AM

Stairs and escalators !!



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
early birds
post Posted: May 6 2019, 11:10 AM
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https://www.cnbc.com/2019/05/05/traders-bra...iff-threat.html

risk always there , don't understand as why the market goes up and up last few weeks .
now, seems everyone is heading to the exit door???




Said 'Thanks' for this post: nipper  
 
nipper
post Posted: May 3 2019, 02:41 PM
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QUOTE
US Economy
"It is fair to say that I think labor inflation [in the US] is going to continue to be a challenge. We will continue to look for ways to be as efficient as we can in our restaurant operations to try and help mitigate any of that inflation. But I think that's going to be a continuing challenge for us and the industry."
Kevin Ozan, CFO, McDonalds Corporation


QUOTE
China/US Trade
"There’s an improved trade dialogue between the U.S. and China, and from our point of view, this has affected consumer confidence on the ground there [China] in a positive way."
Tim Cook, CEO, Apple Inc




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
early birds
post Posted: Apr 29 2019, 05:53 PM
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RBA weighs alternatives to a cut
There are several reasons why this more targeted approach to supporting the weakest component of the Australian economy may be preferred to an outright cut.

Industry participants believe the central bank and banking regulator are considering a targeted alternative to a cut to the official cash rate, which would involve lowering the minimum 7.25 per cent interest rate banks use when assessing a home loan borrower’s repayment capacity by 50 basis points to 6.75 per cent.

This would improve the average home buyer’s borrowing capacity by more than 5 per cent and increase demand in the weak housing market, which was a key driver of the low March quarter inflation numbers (newly built house price inflation declined by 0.2 per cent while rental inflation was very soft at 0.1 per cent).


In December 2014 the Australian Prudential Regulation Authority (APRA) introduced the minimum 7 per cent interest rate on all home loan serviceability tests as a part of its suite of “macro-prudential” constraints to cool ebullient housing activity, which ultimately precipitated the correction that commenced in late 2017.

According to mortgage brokers, more than 90 per cent of banks apply a further 0.25 per cent buffer to this minimum benchmark.

With Australia’s 10-year government bond yield only 1.8 per cent, financial markets are not pricing in any material RBA rate hikes for a decade (this yield proxies the average RBA cash rate over the next 10 years plus a term premium to compensate for interest rate volatility).

The average discounted new home loan rate in Australia has been just 4.5 per cent since the RBA’s last interest rate cut in August 2016 with many borrowers paying as little as 3.4 per cent today.


A standard two percentage point buffer above contemporary discounted home loan rates implies that a prudent serviceability test could be carried out at a much lower 6 per cent level, well below the 7.25 per cent level assumed by most lenders.

Mortgage brokers say that reducing the minimum serviceability rate from 7.25 per cent to 6.75 per cent would boost the maximum borrowing capacity of a two-income household earning gross wages of $160,000 annually from $870,000 today to $915,000.


There are several reasons why this more targeted approach to supporting the weakest component of the Australian economy may be preferred to an outright cut to the Reserve Bank of Australia's cash rate.

First, the federal budget is now in surplus on all key measures and there are good grounds for policymakers to assume that fiscal rather than monetary policy is better placed to provide any extra stimulus, especially when the latter is approaching its conventional limits. Inevitable pork-barrelling as part of the looming election further reinforces the case for the RBA to wait and see what role fiscal policy has to play.
Second, commodity prices remain very high, and notably above Treasury’s conservative budget assumptions, which means the budget will likely continue to deliver larger surpluses than are presently expected.
Third, recent economic data out of the US has surprised on the positive side with first quarter GDP growth of 3.2 per cent (annualised) beating all forecasts (consensus was much lower at 2.0 per cent). It is likely that once presidents Trump and Xi agree on a trade deal, global growth will rebound after a period where it has been stymied by tariffs and the trade impasse between the world’s two largest economies.
Fourth, if the RBA cuts its cash rate further below the current record 1.5 per cent low, it will fundamentally undermine deposit-takers’ net interest margins, which could threaten financial stability at a time where banks’ returns on equity face a multiplicity of headwinds. The interest margins banks realise on their transaction accounts, which normally charge no interest, are constrained by a 0 per cent lower bound. Put differently, it is unlikely that banks will start charging negative interest rates on these accounts to preserve the spread between the cost of sourcing funding via these deposits and the interest rates banks earn on their loans.
Finally, there is an argument that the RBA should preserve its monetary policy ammunition – and further cuts to borrowing rates that are already at historical lows – for a time when the Australian economic faces a real crisis, such as a long overdue recession.

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each to their own. to me the rate cut won't help aussie housing market as RBA rate is the lowest in history.


 
nipper
post Posted: Apr 24 2019, 01:16 PM
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QUOTE
Australian shares reclaimed an 11-year high on Wednesday after better than expected earnings on Wall Street propelled US stocks to a record high, and disappointing inflation data increased the likelihood of a Reserve Bank rate cut.

The S&P/ASX 200 Index was trading 69.9 points, or 1.1 per cent, higher at 6389.3 at midday.

QUOTE
"As the global stock market rally continues seemingly unabated, it has taken on a slightly different complexion," said Morgan Stanley chief investment officer Mike Wilson. "With the Federal Reserve abruptly pivoting on its monetary policy earlier this year, investors have assumed additional interest rate hikes are on hold indefinitely. We're back in a late cycle expansion and such periods can be attractive for equity markets."
-- ah! Markets and economies.... inextricably mentioned in the same sentence, though not causally linked



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Apr 7 2019, 11:40 AM
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Last week recession talk, this week green shoots appearing biggrin.gif

QUOTE
Spring has sprung in the Northern Hemisphere and green shoots are appearing everywhere, even in seemingly dormant economies.

Key points:
Green shoots emerging in the global economy as key industrial surveys point to a widespread pick up
Markets are increasingly discounting the chance of recession
Chinese stimulus and a resilient services sector are offsetting problems in global manufacturing

In a matter of weeks, activity across a broad range of industries has picked up and talk of recession has been more muted.

On top that, some global anxieties seem to be easing. "Known unknowns" — such as the US-China trade war and Brexit — look like being shifted into the "known knowns" basket.

The big investment bank, JP Morgan's keenly watched global "all-industry output PMI" increased for the second successive month in March, as did its "new orders index".

The PMIs — or Purchasing Managers' Indexes (ISMs in the US) — survey businesses on a monthly basis, collating data on such things as new orders, output, exports and employment intentions.

A result above 50 represents expansion, the higher the number the greater the activity. A PMI below 50 shows things are going backwards.

Right now global PMIs are not only showing expansion, the rate of expansion is accelerating. Not surprisingly global GDP is picking up too.

Just as one swallow doesn't make a summer, two solid months of global PMIs don't necessarily usher in a growth spurt or ward of a slowdown — but it is at least promising, according to JP Morgan's economics team.

It should be pointed out the global PMI gain has largely been supported by two factors: strong performances by the services sector, rather than manufacturing, and a rebound in activity in China.

Australia has so far broadly missed the global PMI bounce.

PMIs, while still positive are near six-year lows and forward-looking new orders are getting weaker. The construction sector variant, the PCI, is contracting.

Still, there were heartening signs last week in the retail sector, while the monthly trade balance ballooned to almost $5 billion in February on the back of some furious shovelling and pumping in the resources sector.

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QUOTE
Markets on Friday's close:
ASX SPI 200 futures +0.5pc at 6,195, ASX 200 (Friday's close) -0.8pc at 6,181
AUD: 71.1 US cents, 63.3 euro cents, 54.5 British pence, 79.3 Japanese yen, $NZ1.06
US: Dow Jones +0.2pc at 26,425, S&P500 +0.5pc at 2,893, NASDAQ +0.6pc at 7,739
Europe: FTSE +0.6pc at 7,447, DAX +0.2pc at 12,010, EuroStoxx50 +0.2pc at 3,447
Commodities: Brent oil +0.8pc at $US70.34/barrel, Gold -0.1pc at $US1,291/ounce, Iron ore $US93.00/tonne


read more - https://www.abc.net.au/news/2019-04-07/gree...ection=business



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 


blacksheep
post Posted: Mar 24 2019, 10:57 AM
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Global markets tumble as US recession warning flashes 'yellow'
By business reporter Stephen Letts
Updated about an hour ago
QUOTE
It might not be the perfect indicator of an impending recession, but when long-term interest rates slip below short-term rates it is big worry.

The week in finance:
US/China trade talks resume (Thursday)
Australian private sector credit expected to show another step down in home loans (Friday)
RBA speeches on housing (Tuesday) and currency (Wednesday)

As global markets swooned on Friday, that's exactly what happened; the dreaded inverted yield curve popped up on bond traders' screens.

For the first time since 2007, US Treasury 10-year note yields sank below three-month Treasury bill yields.

In other words, the market is betting on things getting worse in the US before they get better.

There were a few drivers.

The Federal Reserve was noticeably far more cautious in its commentary last week, shutting the door on anymore rate rises this year and halting the program to run down its massive quantitate easing program.

Then there was the increasingly vexed issue of global manufacturing.

The key US IHS Markit manufacturing survey came in much weaker than expected, hitting a two-year low.


QUOTE
Markets tumble
Having held out for most of the week, on Friday key Wall Street indices tumbled around 2 per cent, the Nasdaq was down closer to 2.5 per cent.

Over the week, US stocks slipped 0.8 per cent, while Europe was down more than 2 per cent. Most Asian markets went the other way, gaining a bit, or a fair bit in the case of China.

The ASX200 put on 0.3 per cent. All that and more appears likely to be erased when the market opens on Monday.

Markets on Friday's close:
ASX SPI 200 futures -0.8pc at 6,133 ASX 200 (Friday's close) +0.5pc at 6,195
AUD: 70.8 US cents, 62.6 euro cents, 53.6 British pence, 77.8 Japanese yen, $NZ1.03
US: Dow Jones -1.8pc at 25,502 S&P500 -1.9pc at 2,801 NASDAQ -2.5pc at 7,643
Europe: FTSE -2pc at 7,228 DAX -1.6pc at 11,364 EuroStoxx50 -1.8pc at 3,306
Commodities: Brent oil -1.2pc at $US67.08/barrel, Gold +0.3pc at $US1,313/ounce, Iron ore $US86.50/tonne

So should we worried about the inverted yield curve? Perhaps a bit, but not enough to retreat into the foetal position just yet.

"This is clearly a concern given that past yield curve inversions have preceded US recessions, but there are several things to allow for, AMP Capital's investment strategist Shane Oliver said.

For one thing, it does sometimes send off false signals, and there is often a considerable lag before a recession sets in.

"So even if it becomes decisively inverted now, recession may not arrive till mid next year and historically the share market has peaked three to six months before recessions, so it would be too far away for markets to anticipate," Dr Oliver said.

"However, Friday's falls in US and Eurozone shares, weak global PMIs, the risks around flattening or inverted yield curves and ongoing trade risks do highlight the significant risk of a correction in share markets after their deep 'V' rebound from December lows."


read more - https://www.abc.net.au/news/2019-03-24/glob...ection=business







--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Mar 21 2019, 01:07 PM
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In Reply To: blacksheep's post @ Mar 21 2019, 01:00 PM

Unemployment drops below 5 per cent for the first time in eight years
QUOTE
Key points:
4,600 jobs were created in February, down from the 39,100 in January
Unemployment rose in NSW and Victoria, and fell in other states and territories
The slide in the unemployment rate under 5pc takes some pressure off the RBA to cut interest rates

read more - https://www.abc.net.au/news/2019-03-21/unem...ection=business



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Mar 21 2019, 01:00 PM
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The sudden shift that should have all of us worried about the global economy
QUOTE
The markets’ responses to the latest US Federal Reserve Board’s interest rate and balance sheet decisions were telling. The immediate reaction of the share market was to mark stocks up, before a more considered assessment sent them back down. Bond rates eased and the US dollar slid against its major trading partners’ currencies.

The nature of the Fed’s announcements – a majority of the members of its Open Market Committee expect no rate increases this year and the Fed plans to end the shrinking of its balance sheet by the start of October – ought to have been positive for the stock market. Instead the Dow Jones index ended more than half a percentage point down.

It was only six months ago that a signalling by the Fed of three rate rises in 2019 and a more aggressive winding down of a balance sheet still swollen by the central bank’s response to the financial crisis helped spark a dramatic plunge in stocks.

That sell-off, and the effects of the Trump administration’s trade policies on both financial markets and the US economy, has had a profound effect on the Fed, whose officials made a quite abrupt transition from hawks to doves at their January meeting. They’re even more dovish now.

read more - https://www.smh.com.au/business/the-economy...321-p5163x.html

From Daniel Lacalle
QUOTE
Fed lowers GDP estimate to 2.1% for 2019 vs 2.3% in Dec, and for 2020 from 2% to 1.9%.

Inflation from 1.9% to 1.8% for 2019, and from 2.1% to 2.0% for 2020.

This does not warrant halting rate hikes and tightening, so the underlying message is "the downgrade cycle will continue"

QUOTE
Central banks are suppressing volatility and disguising risk, which may lead to a nasty correction as macro and earnings data remains weak.

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--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
mullokintyre
post Posted: Mar 15 2019, 11:05 AM
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In Reply To: blacksheep's post @ Mar 14 2019, 02:30 PM

Kouloulas is not one of my favs when it comes to macro economics.
QUOTE
Get set for lower interest rates.

That will be great news if you have a mortgage, terrific if you have a business overdraft and fantastic if you are a soon-to-be first home buyer looking to take advantage of the current lull in the housing market to step into the market.

It will not be good news if you are relying on interest income to enhance your cash flow with terms deposit rates set to fall even further in response to the lowering in official interest rates.

Such is the recent run of economic news that lower interest rates are almost inevitable over the next few months.

Headlining the bad economic news was the fact that GDP per capita fell by 0.1 per cent in the September quarter last year and fell a further 0.2 per cent in the December quarter. This heralded a per capita GDP recession or two consecutive quarters of decline.

Disconcertingly, the per capita GDP recession may not end here given the way the March quarter has kicked off, with flat retail sales, a slump in new building approvals and weakness in various business surveys.

In simple terms, the economy is in need of resuscitation in the form of some policy stimulus to ensure it gets off the floor and can start to grow at a strong and sustained pace.

It has been evident for three years that the Reserve Bank of Australia has missed its inflation target by a wide margin and that there was scope for it to reduce interest rates if other economic conditions deteriorated.

Lower interest rates will see inflation higher and if there is enough stimulus from lower interest rates, the RBA will get inflation back to target.


Perhaps he missed the experiment in Jpan , Europe and the USA with low interest rates.
Whatever the outcomes of dropping interest rates , inflation was not one of them.
Economics. 101 .
Fail.
Mick






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