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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
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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nipper
post Posted: Mar 15 2019, 09:01 AM
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In Reply To: triage's post @ Mar 14 2019, 09:37 PM

QUOTE
So the end result is that the newly arrived are undercutting wages and business profits for the already established locals..

- that's always been the case. The issue for the "family business" is whether their children/ grandchildren go on to become doctors lawyers accountants, or if they remain in ghettos with clan loyalty, toxic homeland politics and other funny practices.



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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

Said 'Thanks' for this post: Pendragon  mullokintyre  
 
triage
post Posted: Mar 14 2019, 09:37 PM
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In Reply To: mullokintyre's post @ Mar 14 2019, 07:19 PM

Mick

There's lots of this ...

https://www.abc.net.au/news/rural/2019-03-1...orkers/10900850

and this ...

https://www.abc.net.au/news/2019-03-14/fran...tation/10900582

(what I don't think is pointed out by that Senate report is that buying a franchise is commonly used by new migrants as a way of buying themselves and their family members jobs - they are easy targets for the franchisors because the new migrants are ignorant of local business practices and laws).

So the end result is that the newly arrived are undercutting wages and business profits for the already established locals.



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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mullokintyre
post Posted: Mar 14 2019, 07:19 PM
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In Reply To: triage's post @ Mar 14 2019, 04:53 PM

Given that the GDP per capita is falling, one can only assume that most of the "capita" arriving in recent times are non productive, or the population overall has become less productive.
Neither is a great outcome.
Mick




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triage
post Posted: Mar 14 2019, 04:53 PM
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In Reply To: nipper's post @ Mar 14 2019, 04:31 PM

Well for lots of the locals things are (relatively) grim already. Pretty much the only reason why this country has been growing in recent times is because the ATM government has effectively thrown the doors at the airports open and is letting in just about anyone who can get a visitor visa and an airticket. All those extra arrivals means the aggregate figures keep going up but the locals are not seeing any improvement in their personal circumstances.

Of course when the aggregate recession hits many of the newcomers will choose to leave which will push the aggregate GDP down even further.



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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nipper
post Posted: Mar 14 2019, 04:31 PM
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In Reply To: blacksheep's post @ Mar 14 2019, 02:30 PM

There's been a flurry of articles about this per capita recession because we haven't had the more traditional one for a while (Australia being a "miracle of the developed world"!) . Thanks for posting that, blackie; I think the novelty will be forgotten when a "real one" rolls through. Sometime soon, according to my bunion.



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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: Mar 14 2019, 02:30 PM
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In Reply To: mullokintyre's post @ Mar 14 2019, 02:02 PM

According to The Kouk
QUOTE
Stephen Koukoulas@TheKouk
Mar 8
I understand it's hard for some economic traditionalists & conservatives to embrace the "per capita recession", but as a measure of individual living standards, per capita GDP growth is superior to headline GDP growth. When per capita GDP falls for 2 quarters, it's a bad thing


extract from Business Insider article
A history of recessions around the world, in one chart
QUOTE
Have you ever wondered how your country compares to others in terms of economic growth? Look no further.

Courtesy of Paul Bloxham, chief Australia and New Zealand economist at HSBC, here’s a fascinating chart showing the GDP growth performance of various major nations all the way back to 1960.

(see link for graph)

It’s a beauty, right?

For clarity purposes, the areas of red indicate when a country has experienced a technical recession, defined as two consecutive quarters of negative real GDP.

While periods of growth — shown in green — have dominated, each individual nation has a widely differing fortunes over that period — some have enjoyed long periods of uninterrupted growth while others have fallen into recession on a regular basis.

In particular, there is a smattering of red around 2008 and 2009, indicating just how severe the Global Financial Crisis was on broader economic conditions.

Some have recovered from that period of turbulence while others are still grappling with the fallout, even close to a decade after it hit.


QUOTE
Bloxham says that if GDP were measures on a per capita basis — the output of each citizen on average — Australia would have fallen into a technical recession during the GFC.

“If recessions were defined on the basis of per capita GDP, rather than overall GDP growth, Australia would not have had such a long boom,” he says.

He adds that using real GDP to garner the success of an economy is also fraught with danger, admitting that GDP is a limited measure of overall welfare of citizens.

Read more at https://www.businessinsider.com.au/recessio...ZvK69rB1Vzpk.99



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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

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mullokintyre
post Posted: Mar 14 2019, 02:02 PM
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In Reply To: nipper's post @ Mar 13 2019, 08:59 PM

QUOTE
We recently learned that Australia might be in a per-capita recession, which is why each Australian household is finding it so tough at the moment. Inflation and wages growth are making things difficult, although the total GDP of Australia is still growing.



Since when has this metric meant anything?
I did a quick google search, and apart from one mention of South Africa, could not find many references to anywhere else but OZ.
The last time OZ had a per capita recession was in 2006 in the height of a mining boom, with budget surpluses, impending tax cuts and nil debt.
Wish we could go back to those halcyon days of percapita recession.

Mick



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nipper
post Posted: Mar 13 2019, 08:59 PM
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QUOTE
We recently learned that Australia might be in a per-capita recession, which is why each Australian household is finding it so tough at the moment. Inflation and wages growth are making things difficult, although the total GDP of Australia is still growing.

According to the Australian Bureau of Statistics (ABS), household lending dropped by 2.4% in January 2019.

Credit growth is a key statistic that drives the economy, led by Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).

Every dollar that is spent in the economy usually goes round and round to other businesses and individuals. A fall in lending potentially signals a fall in spending and economic activity, which could mean a drop in GDP.

Nick Scali Limited (ASX: NCK), JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) are just some of the consumer-facing ASX businesses to report that their stores are showing a slowdown of same store sales.

Of course, a single month of declines of household lending doesn’t necessarily mean anything. February could show growth.

Lending to businesses jumped 10.8%, which is a good sign that the major banks of relaxed their rules a little bit. The ANZ CEO in-particular said that his bank had perhaps been a bit too stringent.....
.. resources uplift? infrastructure spending? Interest rate drops?
.. WHAT WILL SAVE US?
(Apart from nebulous ambiguous waffle)



--------------------
"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

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mullokintyre
post Posted: Mar 8 2019, 05:51 PM
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QUOTE
China's export effort appears to have finally cracked under sustained pressure from US tariffs and a slowdown in global trade
QUOTE


Key points:

China's trade surplus with the US halved as tougher tariffs took their toll
Weak imports point to a domestic economy cooling rapidly
China's appetite for iron ore hit a 10 month low
Exports in US dollar terms fell 20.7 per cent in February, far worse than a 5 per cent drop the market had forecast.

Imports fell by 5.2 per cent, which was also far weaker than expected.

The collapse in both domestic and external demand is bad news for Australian exporters relying on China, and the region, as their most lucrative source of income.

China's overall trade surplus for the month came to $US4.1 billion — wafer thin by its usual standards, and far narrower than the almost $US30 billion forecast.

The impact of US tariffs can be seen in the politically sensitive reading of the bilateral trade balance.

China's surplus with the US almost halved from $US27.3 billion in January to $US14.7 billion last month.

It is a sudden turnaround given data released by US customs earlier this week reported the deficit with China blew out by 19 per cent in December.

Overall, the US recorded a $US621 billion trade gap with China in 2018 — the largest since 2008.



Now thats interesting!
Mick



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