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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
plastic
post Posted: May 7 2021, 09:37 AM
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As we head into uncertainty and danger what we need is a high growth company coming to market with risk being underwritten by a partnership with government and a well known corporation for distribution of product.

In a perfect storm of economic turmoil by covid it would go mental.

Sometimes these things happen before earnings are announced. Sometimes after. Earnings season is underway now so I am picking it will be the end. Which funnily enough, and my old mate loopy will laugh himself silly at this if he can stop spewing bile everywhere, comes just in time for Fourth of July celebrations. However, my guess is early September.

It's going to be a long and tedious wait if I'm right. I'm probably wrong though because it's not like you're going to find out on a failed share chat site.



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What did Uncle Mel do to us?
 
early birds
post Posted: May 7 2021, 09:11 AM
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In Reply To: nipper's post @ May 5 2021, 08:16 AM

A rising appetite for risk across a variety of asset markets is stretching valuations and creating peril in the U.S. financial system, the Federal Reserve warned. “Vulnerabilities associated with elevated risk appetite are rising,” Fed Governor Lael Brainard, the head of the Board’s financial stability committee, said in a statement accompanying the report released Thursday. “The combination of stretched valuations with very high levels of corporate indebtedness bear watching because of the potential to amplify the effects of a re-pricing event.” —David E. Rovella

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seems Fed gonna raise rate sooner?? unsure.gif



 
nipper
post Posted: May 5 2021, 08:16 AM
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In Reply To: early birds's post @ May 5 2021, 08:09 AM

QUOTE
seems rates gonna rise sooner than people thinks!!
the $64,000 question



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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 5 2021, 08:09 AM
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The Reserve Bank will keep the key cash rate steady at 10 basis points (0.10%) but has started moving to cut the size of its support packages for lending and the economy to accommodate the strengthening conditions.

In the usual statement issued after Tuesday’s monetary policy meeting, Governor Philip Lowe also again reiterated rates are unlikely to rise before 2024.

But his post-meeting statement revealed sharp upgrades to growth and jobs forecasts for the next year or so, with inflation now seen a touch higher because of the faster pace of activity in the economy.

This faster path of growth and a healthy financial system has seen the RBA decide to end one of its key support measures for banks and other lenders – its Term Funding Facility.

It will not be extended beyond the end of the current financial year. This gives banks until the end of June to draw down on the first $100 billion. A second $100 billion is still available until the end of June this year. Loans made under the TFF end in 2024.

Dr Lowe said that the bank still intends deciding at its July meeting if it will shift its three-year yield curve target from the April 2024 bond to the November 2024 bond, and discuss whether to extend the current $100 billion bond purchasing program.

“The Board is not considering a change to the target of 10 basis points,” he made clear yesterday in yesterday’s post meeting statement.

“At the July meeting, the Board will also consider future bond purchases following the completion of the second $100 billion of purchases under the government bond purchase program in September. The Board is prepared to undertake further bond purchases to assist with progress towards the goals of full employment and inflation. The Board places a high priority on a return to full employment,” Dr Lowe said.

Governor Lowe also said inflation remains below the central bank’s targets, but employment growth has been strong. The RBA now expects to see economic growth of 4.75% in 2021 (up from 3.5%) and 3.5% in 2022 (unchanged), and an unemployment rate of 4.5% in late 2022, down from 5.5%.

As for inflation, that may peak at 3% (as he has said previously) in the current quarter then fall to 1.5% in 2021 and 2% in mid 2023 (2021’s forecast unchanged and 1.5% in the February forecasts.

Mr Lowe again said the bank would be monitoring lending standards given the recent growth in housing prices.

…………

Two top tier data sets from the Australian Bureau of Statistics reveal the continuing buoyancy of Australian economic activity as it emerges from the Covid lockdowns and restrictions.

On the one hand lending finance for housing hit new highs in March, but on the other side, the trade surplus for the month tumbled to a four-month low.

The loss of income from inbound tourism and overseas students having a small impact but the real killer has been the drop in goods exports in recent months, and especially over the past year.

That fall is despite continuing high iron ore prices, the recovery in oil and LNG prices, near record copper prices and buoyant wool meat and cereal prices (and volumes for the rural products in the wake of the ending of the drought).

After revealing a monthly merchandise trade surplus for March of more than $US8.1 billion, the Australian Bureau of Statistics yesterday revealed the full surplus for the month had tumbled to $5.57 billion.

That was more than $2 billion less than the $7.59 billion recorded in February and a massive $4 billion under the $9.5 billion in January.

That was after exports fell 2% or $681 million to $38.274m and imports rose 4% or $1.340 billion to $32.700 billion.

A year ago, at the start of the pandemic-driven slump in the economy and imports, the March trade surplus surged to more than $10.6 billion.

So the fall over the year has been almost 50%.

The culprit for the fall, according to the trade data yesterday and last week was non-monetary gold (imported to be processed and then exported), according to AMP’s chief economist, Shane Oliver.

“Exports fell 1.7%, reflecting a 25% decline in non-monetary gold exports,” Dr Oliver wrote on Tuesday.

“Excluding this exports would have risen on the back of strong exports of iron ore and non-grain exports offsetting a fall in wheat and coal exports.Imports rose 4.3% with a broad based increase.”

Dr Oliver said that Net exports are expected to detract around 1.5 percentage points from March quarter GDP growth with export volumes estimated to be down and import volumes up. Despite the month-to-month volatility, trade surpluses are expected to remain solid.”

…………

Meanwhile, ABS figures on Tuesday showed new housing loan commitments 5.5% in March 2021 (seasonally adjusted) to a new record high of $30.2 billion as more and more investors moved back into thew market.

In fact the ABS data shows that lending to investors accounted for more than half of the March rise in housing loans.

The value of new loan commitments for investor housing rose 12.7 per cent to $7.8 billion in March 2021 (seasonally adjusted), 54.3% higher than in March 2020 which is understandable given that March last year is when the recession started thanks to the pandemic-driven lockdowns and closing of the borders.

ABS head of Finance and Wealth, Katherine Keenan, said on Tuesday that: “Investor lending has seen a sustained period of growth since the 20 year low seen in May 2020.

“The rise in March is the largest recorded since July 2003 and was driven by increased loan commitments to investors for existing dwellings.”

“The value of new loan commitments for owner occupier housing rose 3.3 per cent to $22.4 billion in March 2021, 55.6 per cent higher than March 2020. This rise was driven by an 8.8 per cent rise in the value of loan commitments for existing dwellings.”

The value of owner occupier loan commitments for the construction of new dwellings fell 14.5 per cent, the first fall since the HomeBuilder grant was introduced in June 2020. The HomeBuilder grant was cut from $25k to $15k effective from 1 January 2021.

Dr Oliver says the rise in interest from investors will see further rises in house prices.

“The resurgence in investor financing and the continuing surge in owner occupiers who are trading up points to further near-term strength in home prices. It also points to a further acceleration in housing debt, a further rise in the share of interest only loans and increasing lending at high loan to valuation ratios.

“All of which is increasing pressure on the RBA and APRA to move to tighten lending standards in order to head off increasing risks of financial instability – which we expect to occur sometime in the next six months,” Dr Oliver said in a note Tuesday afternoon.

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from our own sharecafe.
seems rate gonna rise sooner than people thinks!!




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early birds
post Posted: Apr 27 2021, 09:43 AM
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ASX 200 Market Internals:
The ASX 200 fell -0.2% yesterday during a session of light trade. Although it printed a (small) bearish outside day, we remain confident that it remains in an uptrend which has been reinforced by the large bullish hammer last Wednesday. The trend remains bullish above 6900 although, if it is truly in an uptrend, should not have to retrace that far to bring into question the trends strength. Our bias remains bullish above 7,000, but the 6956 high can also be used to aid with risk management.
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not just TA, even FA looks good for asx market imho [ i'm little biased]



 
plastic
post Posted: Apr 26 2021, 12:54 PM
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NZ closed for Anzac Day today even though actual day was yesterday.

Am surprised and disappointed Australia is not the same.

Might be an opportune time to front foot those reports and the covid impact and drop a bomb.



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What did Uncle Mel do to us?
 


nipper
post Posted: Apr 25 2021, 07:49 PM
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Market could have other ideas..

With sharemarkets near records, investors are on high alert for robust earnings from some of the world’s biggest technology companies to keep the post-pandemic rally alive.

It is a big week for US earnings, with about 40 per cent of the S&P 500’s market cap to report results, and quarterly earnings from tech giants Apple, Microsoft, Alphabet, Facebook, Amazon and Tesla are due to be released.

They will be closely scrutinised after Netflix results disappointed last week. Investors were spooked when the pandemic darling added fewer than expected paid subscribers in the first quarter, and Netflix shares slumped.


There are vast numbers of growth companies trading on high earnings multiples and vulnerable to a rise in interest rates and earnings disappointments, said Garth Rossler, chief investment officer at Maple-Brown Abbott.

Growth stocks under pressure in Australia in the past week included online retailer Kogan, e-commerce player Redbubble and intelligent investigative analytics company Nuix, which all slumped after disappointing investors.


“There’s a bit of a tug of war” taking place in markets between value stocks – where earnings growth is expected to drive reasonable momentum – and the growth stocks, which could be headed for a derating, the value manager said.

All three US stockmarkets rallied strongly on Friday, with the S&P 500 trading within touching distance of a fresh high. The S&P 500 rose 1.1 per cent, the Nasdaq 100 rose 1.3 per cent and the Dow Jones Industrial Average rose 0.7 per cent.

......

Amid the optimistic market mood, ASX futures are pointing to a 0.2 per cent advance on Monday, which would take the benchmark closer to its 7162 February 2020 record closing high. The S&P/ASX 200 Index closed at 7060.7 on Friday.

The Australian dollar rose 0.5 per cent to US77.45˘ on Friday. Iron ore with a 62 per cent ore content rose $US2.63 to $US186.25 a tonne on Friday..



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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 23 2021, 10:03 AM
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At the close last Friday, 97% of S&P 500 member companies were above their respective 200-day moving averages (the strongest market breadth since late 2009). Further supporting the medium-term outlook is the remaining wall-of-worry to be climbed. And generally, the ongoing economic expansion continues to underpin this bull market.


In the near-term, the market appears to be ahead of itself relative to its 2009 analog. And a healthy correction may be overdue. The log trend channel chart suggests the same. The current glass-half-full perspective can easily give way to a glass-half-empty perspective for any number of reasons. A scary 10% correction should not be a surprise, but of course that might only start 10% higher from here. The sooner the healthier in my view.


To take a step back and make a broader comment, Soros once wrote “Every bubble has two components: an underlying trend that prevails in reality and a misconception relating to that trend. A boom-bust process is set in motion when a trend and a misconception positively reinforce each other. The process is liable to be tested by negative feedback along the way. If the trend is strong enough to survive the test, both the trend and the misconception will be further reinforced.”


The term “bubble” has lost its meaning from overuse. The key point is that market booms are interrupted and reinforced by successful tests. One could argue that the market has successfully passed a number of tests over the past year and a half. The myth that “house prices never go down” was started or reinforced by how well the housing market fared through the dotcom bust. Some argue the noticed resiliency set the stage for the subsequent housing bubble. Now the mantra is “stocks only go up.” The speed of the market’s recovery after the Covid crash—and its continued rise through the hedge fund de-grossing in late January (the GameStop/Melvin Capital drama) and the more recent Archegos blowup (that created a $5 billion loss for Credit Suisse) likely reinforce that belief. In practice, I think the key will be monitoring the build-up in margin debt.


Many valuation measures remain elevated relative to past levels. But as I’ve said before, valuations are not a timing indicator. Historically, real world attempts to manage money based on long-term valuation measures have performed poorly—even over several market cycles. In my view, more important than valuation level is the pace of multiple expansion. To distill that idea further, one can look at market performance. Comparing the index to its 10-year moving average, the S&P 500 is not yet at performance levels consistent with 1929, 1987, 1999/2000, or 1989 Japan—but it’s getting closer. For now, comparisons to those market tops are still premature.


On a cautionary note, some medium-term anecdotal contrarian warning signs have cropped up lately. I’ve noticed that some long-time bears have switched to being bullish (with contorted rationalizations)—a contrarian warning sign. And I suspect we’ll see more bears capitulate before the top. Similarly, some long-time bulls are now talking in terms that sound a lot like “new paradigm” and “this time is different”—also a contrarian warning sign.

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bearish as it can be, but market seems has other idea currently. unsure.gif


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early birds
post Posted: Apr 23 2021, 08:44 AM
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It’s real: Higher taxes are coming

“Sources” have relayed to the media that US President Joe Biden will propose raising marginal income taxes to 39.6% from 37%. In addition, these sources also say that he will also propose nearly doubling taxes on capital gains to 39.6% for people earning more than $1 million. “Sources”….do you believe them? Stock markets do (at least today). Stocks initially sold off on the first headline that capital gains could be as high as 43.4% for the wealthy, then had a second wave of selling come in, as more headlines came across. Additionally, algos jumped on the quick move lower. The result: the S&P 500 is 50 handles off the highs.

How does the stock market work?

But how much further can indices go? Although 50 handles may sound like a lot, yesterday’s low was 4126.35 in SPX. Today's low so far is 4123.69, only taking out yesterday’s lows by a few handles. Tuesday’s low was 4118.38, and the large index couldn’t take that out today! Below Tuesday’s low, support crosses at the upward sloping trendline of an ascending wedge, near 4100. If price breaks below, there is a gap fill from April 1st at 4020.63.

Recall that for the last 13 months SPX has been trading higher off the pandemic lows at 2191.85. Since then, price is up nearly 100%. Therefore, traders should not be surprised if the market pulls back 10%, which would put the large cap index only down near 3,730. With such a quick move in just over a year, traders may even expect a correct such as this. On a weekly timeframe, this would confluence near the long-term upward sloping trendline (green) from January 2018 and the 50% retracement level from the October 2020 lows to last week’s highs!

The question is one of timing. Is a near 40% tax on capital gains enough to makes traders/investors bail on current positions? Perhaps it won’t be until the Fed indicates that they are ready to begin tapering? Maybe it will be a “crypto collapse”? “Sell in May and go away”? The catalyst for a larger pullback is unknown. One thing that seems certain right now though, is that higher taxes are ahead.

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sound another warning.................... we so many times by now, blush.gif

 
nipper
post Posted: Apr 21 2021, 07:49 AM
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Meanwhile, in the real world

QUOTE
ASX futures point to 1.2 per cent tumble


Australian shares are poised to drop at the open, amid a global retreat in equities amid concerns about renewed COVID-19 infections.

ASX futures tumbled 86 points or 1.2 per cent to 6911 near 7am AEST. The currency slid 0.4 per cent.

The yield on the US 10-year note fell 5 basis points to 1.56 per cent at 4.59pm in New York. Bitcoin was trading near $US56,675 near 7.20am AEST on bitstamp.net.

Wall Street’s main indexes fell for a second straight day as a global spike in coronavirus cases hit travel stocks and investors had second thoughts about big US banks’ apparently stellar earnings last week.

“The fundamentals are still strong for the US stocks but being in excessive overbought territory has this market ripe for a pullback now,” Oanda’s Edward Moya wrote in a note.

At the close, the Dow had shed 256 points or 0.8 per cent; the S&P 500 had slid 0.7 per cent and the Nasdaq was 0.9 per cent lower. Each benchmark slightly pared earlier losses




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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
 
 


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