Great time to be buying into ASX stocks, if you're confident in em'. I've just picked up a few more small caps and added to current holdings. SGH and CTD are my top picks for the year!!
Printable View
Great time to be buying into ASX stocks, if you're confident in em'. I've just picked up a few more small caps and added to current holdings. SGH and CTD are my top picks for the year!!
I'm happy to wait for parity, pretty sure it'll come...Oil and many of Australia's commodities are in the toilet with no meaningful signs of an early recovery.
Oil and gas combined make up half the GDP of Aus as Iron Ore does (11% vs 22%) So not negligible, but also not that big.
http://en.m.wikipedia.org/wiki/Econo...rt_Treemap.png
Today we see the first meaningful sign of a divergence in the trend for the main commodities of the respective economies and look at the early jump in the cross rate to 95.95 cents at 8.00 a.m. this morning, up a full cent in one day !! Dairy starting to recover and oil, LNG and the vast majority of other Australian commodities still headed down at pace. Parity is looking increasingly likely IMHO.
I added some charts to BFG referred site Treemap..
You see from the map as BFG observed the big 3 coal iron oil make up half of the Aussis exports...
Currency usually correlates with the terms of trade...so it comes as no surprise that the Aussi $$ is continuing to weaken.
You notice that Aussi exports enjoyed that 2007/2008 bubble....and the 2011 rebound..
As with all bubbles they don't last ..so one makes Hay while the sunshines...Did Australia Inc may Hay??? With hindsight, and with recent poor economical performance it seems the answer is, "no they didn't".
Bubbles are rare events....nice memories but investors must assume that these events are not normal...so one should assume an immediate return to that 2007situation is unlikely....
Iron doesn't seem to be that low chartwise..It could be still be a little higher than its "normal" (long term median)...so one could argue it may not be undervalued ..hence the wish to return to much higher values may be difficult to achieve in the near future.
Gold ditto
Coal bubble was tremendous and the bubble after shock was just as volatile...Again (similar to Iron) looking at the price history on the charts one could argue that the current prices could around its normal (natural) levels or slightly lower.
Oil looks lower than "normal"
So.... if these commodity prices are back near their "normal" levels...One has to ask the question "What on earth (pun:p) has happened to the Structural System of the Australian Economy during these last 20 years?"
And... the future?....Aussi may need another bubble to perform..Reliance on "bubble hope" not a good way for an economy to function...structural reforms needed?
http://i458.photobucket.com/albums/q...ap06012015.png
Very good points there Hoop, cheers
Well they won't be exporting Holden's or Ford's come 2017 so that's another blow to the Aussie economy and a blow to motoring enthusiasts who like cheap high performance rear wheel drive cars.
0.9641 currently, parity awaits!
There's so many different ways to creatively measure cost its highly debateable. You think the parent companies of Ford and Holden wanted to show a profit in Australia and pay Australian tax ? Come on... lets not be naïve about multinationals ability to manipulate profits through transfer pricing methodologies. Leaving that debate to one side, one thing for absolute sure is there will be tens of thousands of employees no longer employed by Ford, Holden or the myriad of associated component manufacturers, and all those people won't be spending their respectable sized wages at the local restaurants, bars, clubs e.t.c. so add up the multiplier effect as its affects hundreds of other small business's and retailers already impacted by the serious cutback's in the mining industry and its easy to see why the fundamentals for the Australian economy aren't looking good. What's their forecast deficit again ? $50 Billion ?
If you read the figures published when the closures were announced, it would have been cheaper to shut up shop 5 years ago and for the govt. to give every employee a million dollars. Transfer pricing or not - they wouldn't shut up shop if there was a choice, but even with subsidies etc. it just doesn't stack. Australian labour rates are simply too high. Labour rates have also killed off the bulk of car production in Germany.
Perhaps some anticipation of interest rates being kept on hold into 2016 due to NZ deflationary pressures might make the $ bob about below 1 for the time being.
Could even be that LVR by itself alone may be enough control for the RBNZ for some time to come.
http://www.scoop.co.nz/stories/BU150...g-bnz-says.htm