Black Monday

[CatO'Tonic]

Michael Pento is usually a bit of a pessimist but even so, this article has some disturbing parallels in our part of the world. It will be interesting to see the effect deflation has on the huge levels of corporate and government debt in the states.
http://www.cnbc.com/2016/01/15/a-rec...ommentary.html
I'm sitting on the sidelines, 100% cash and watching with interest. Might see some good bargains in a year or so.

[Hoop]

Michael Pento is usually a bit of a pessimist but even so, this article has some disturbing parallels in our part of the world. It will be interesting to see the effect deflation has on the huge levels of corporate and government debt in the states.
http://www.cnbc.com/2016/01/15/a-rec...ommentary.html
I'm sitting on the sidelines, 100% cash and watching with interest. Might see some good bargains in a year or so.

Hmmm..I have this feeling that video sees commentators believing that the USA economy is sound and will remain sound in 2016 and onwards....so no problems at home..I think that's insular thinking which can lead to unplanned contingency problems which looking at past history has sometimes resulted in causing severe consequences..

Has USA's top trading partners got big problems???...I think 2016 will see Canada in the news as China already is.....also Mexico could be a surprise contender (20% export is Oil) .......so Yes... Oil could be the next recessions catalyst...as many Countries have other Commodity dependence issues as well...

Canada is the world's 5th largest producer of Oil and Mexico is 9th largest...If these top USA trading partners get into the financial poop then USA has an export problem. The EU is not in the position yet to take up the export slack......yep ..a recipe for potential surplus goods, discounted prices (deflation), job losses and all other things that happen when national economies overheat and shrink to correct...

The Equity Market is an leading indicator to a financial downturn...Doesn't look that great does it in seeing Countries Equity Markets entering into a Bear market cycle in tandem.....Sort of a general global warning sounding off....eh?

[Baa_Baa]

NZX defies gravity and thumbs it's nose at international equities markets, so far anyway. Given the quantum of international money in NZ equities, it seems NZX is either a good hiding place or ripe for profit taking.
Attachment 7806
Hypothetically if the NZX has topped, it's curious that the rising support trend line, the 50% Fib retrace, and the 2007 highs all converge around 4335.

[winner69]

Baabaa - can u do that chart on nz50c (the capital index)

[Baa_Baa]

Attachment 7807

Baabaa - can u do that chart on nz50c (the capital index)

Is that a resistance test and fail?

[Baa_Baa]

Baabaa - can u do that chart on nz50c (the capital index)

Lets take a closer look.

All data, weekly chart, log scale, 39EMA weekly approximates to 200DMA
Attachment 7810

3-year, add the trusty 10/14 EMA's
Attachment 7809

1-year, breakout and two weekly closes below - fail. 10/14 EMA's tested, still a 'hold'.
Attachment 7808

[xafalcon]

Oil could be the next recessions catalyst

As oil is consumed globally, but only extracted and sold in economically significant quantities by a few lucky countries, cheap oil will always be a boost to average world growth, so long as the cost reductions are passed along to consumers.

In NZ this is not happening, but I expect the government to apply more pressure to big oil this year as we get closer to the election and more people start asking why the cost of crude oil has fallen by 75%, but pump prices are only marginally lower than when crude was $110/bbl.

[winner69]

Thanks BaaBaa

Interesting just looking at things without the impact of dividends

[Baa_Baa]

Thanks BaaBaa

Interesting just looking at things without the impact of dividends

It's like we're on another planet, not just another part of the world. Check the charts here: http://www.zerohedge.com/news/2016-01-15/black-friday

[Hoop]

As oil is consumed globally, but only extracted and sold in economically significant quantities by a few lucky countries, cheap oil will always be a boost to average world growth, so long as the cost reductions are passed along to consumers.

In NZ this is not happening, but I expect the government to apply more pressure to big oil this year as we get closer to the election and more people start asking why the cost of crude oil has fallen by 75%, but pump prices are only marginally lower than when crude was $110/bbl.

..

A consumers view on cheap oil will always be a simplistic rosy looking view..but the overall view is one of many effects (some which spiral out of control) from a disruptived energy market...You have to tackle the mind straining interactions of networks to learn about Market Physics so to be able to understand, for example, the US Oil investment being only 1% of US GDP, yet the oil declines last year dragged GDP down 0.4 percentage points...

Other simple disruptive effects are..
Cheap petrol prices act as a tax reduction..the Reserve bank or FED may not like not having no control on this easing of the money supply to the masses..It creates problems as to how to tighten the money supply during cheap oils deflationary effect on the economy.....
Currency devaluations upsets from Oil producing nations...
Supply/demand gets screwed up
etc
etc

Then there's the socio-economic effects...Countries in dire straits tend to do dumb things...People do dumb things like assume cheap oil is forever and financially over commit..

Yes there will be winners...some economists think it may benefit the EU community.

NZ cheap prices not happening....Don't expect government to apply the pressure...the government takes about $1/litre in various taxes..
see here for the cost breakdown for 91 octane (AA analysis)