Poll: Where is the OZ Economy at??

[WinstonWolfe]

Where's the economy AT?

Let's firstly consider economic activity is currently being propped up by the most radical economic stimulus Austalia has ever seen.

Building approvals and motor vehicles sales have been artificially elevated by borrowing unprecedentedly from future tax receipts and offshore bond holders. Consumer expenditure has been propped up by the RBA driving rates down to historical lows.

Any serious consideration of where the economy is at, should take on board how debt level and servicability has changed.....and that's not only for each household, but for the nation as a whole.

Anyway, let's look at a chart hey Sash.....retail jun09

food down
dept stores down
clothing down
household goods up (all those FHBs I bet)
other down
restaurants down

And consider a couple of quality surveys:

CBA ACCI Business Expectations Survey 4/8/09

The beginning of a recovery may be coming into view, but trading conditions remain challenging,
and businesses are under enormous pressure. Business believe it is premature to rule out further
interest rate cuts, particularly given the presence of continued downside risks to the economic
outlook.

The unemployment rate is still deteriorating and for the most part official forecast job losses are
still yet to come.

The Commonwealth Bank-ACCI Business Expectations Survey released today showed that while
the decline in business conditions moderated over the June quarter, activity still contracted, with
expectations also remaining negative for September.

The survey specifically indicated the future outlook for sales, profitability, employment and
investment remains negative.

ACCI remains cautious against the backdrop of a deteriorating labour market, fragile business
investment intentions and continuing difficulties in obtaining credit. These are far from the pre-
conditions necessary for a durable recovery.




The Westpac-Melbourne Institute Indexes of Economic Activity

Leading Index recovering slowly

The annualised growth rate of the Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was –3.9% in May well below its long term trend of 2.6%. The annualised growth rate of the Coincident Index was –0.1%, also below its long term trend of 3.0%.

Westpac's Chief Economist, Bill Evans, commented, "The revised data shows that the annualised growth rate in the Leading Index reached its lowpoint (–6.1%) in February and since then we have seen steady, albeit modest, improvement. The revised growth rate in April has printed at –4.1% so this May reading supports the reasonable expectation that we have passed the worst although the Index is still contracting on a six month annualised basis. The annualised growth rate has now been negative for 8 consecutive months but the lowpoint appears to have been reached after just 5 months. That compares with the last two recessions we have had in this country when the annualised growth rate remained negative for 20 months (1989/1991) and 16 months (1981/83). In those episodes it took 12 (1990/92) and 11 (1983/84) months before the growth rate reached its lowpoint..................

 

[evand]

Winston, I've told you previously. Stop shattering peoples illusions with facts.

 

[sash]

....and the number you are looking for.....seems to have stabilised...unless of course you have oyur own ecoomic think tank!....basically the below article seems to confirm that unemployment is starting to stabilise.

http://business.theage.com.au/business/unemployment-stays-at-58-20090806-eapo.html

Also, on late line yesterday the ANZ seems to have revised their figures and are now saying that unemployment will probably only have a 6 in front!

Winston.....I am no economist....but I do have an MBA (so does everyone else )...but from where I sit, theses are my observations:

1. We are at bottom in terms of the economy

2. There some excess capacity but nothing like in the 80s and 90s...so this means growth will translate into demand quickly

3. Asia in particular will drive growth....since we are tied in more to them we will benefit more than Europe and America. As America is now slowly coming to...China will also further strengthen.

So...from where i sit...now is the time to accumulate property with a 5 year horizon.

Where's the economy AT?

Let's firstly consider economic activity is currently being propped up by the most radical economic stimulus Austalia has ever seen.

Building approvals and motor vehicles sales have been artificially elevated by borrowing unprecedentedly from future tax receipts and offshore bond holders. Consumer expenditure has been propped up by the RBA driving rates down to historical lows.

Any serious consideration of where the economy is at, should take on board how debt level and servicability has changed.....and that's not only for each household, but for the nation as a whole.

Anyway, let's look at a chart hey Sash.....retail jun09

food down
dept stores down
clothing down
household goods up (all those FHBs I bet)
other down
restaurants down

And consider a couple of quality surveys:

CBA ACCI Business Expectations Survey 4/8/09

The beginning of a recovery may be coming into view, but trading conditions remain challenging,
and businesses are under enormous pressure. Business believe it is premature to rule out further
interest rate cuts, particularly given the presence of continued downside risks to the economic
outlook.

The unemployment rate is still deteriorating and for the most part official forecast job losses are
still yet to come.

 

[WinstonWolfe]

....and the number you are looking for.....seems to have stabilised...unless of course you have oyur own ecoomic think tank!....

yep, I am my own personal think tank....I read stuff and I think about it, without bias.

Yeah the unemployment '%' stabilized.......while we worked:
- 6,600,000 less seasonally adjusted hours in July cf June.
- 45,000,000 less this july cf last july.

Now think about that....

 

[boz]

....and the number you are looking for.....seems to have stabilised...unless of course you have oyur own ecoomic think tank!....basically the below article seems to confirm that unemployment is starting to stabilise.


1. We are at bottom in terms of the economy

2. There some excess capacity but nothing like in the 80s and 90s...so this means growth will translate into demand quickly

3. Asia in particular will drive growth....since we are tied in more to them we will benefit more than Europe and America. As America is now slowly coming to...China will also further strengthen.

So...from where i sit...now is the time to accumulate property with a 5 year horizon.

well, i agree things are more stable then in the last year, but that doesn't mean much for the medium/long term, just look how long it took from a stable situation in 2007 to get into a very unstable situation in 2008. if the problem was the debt bubble that fundamental hasn't change and things could turn nasty as soon as public money spent from global governments dry out.
about your 3 points:
the first about been at bottom none knows, you can never pick bottoms or tops, none can, markets and economy can be irrational for long time.
the second point I don't have data for australia, but it is not much important as a economy based on resources and commodity always find buyers at certain price for their goods in the global market. the capacity is more important in the industry and manufacturing sector, i don't think numbers in economy like japan, USA or europe are good (but i don't have a long term chart on that).
about the third point, i am not sure, not sure what will happen to globalisation and not sure investing in other country is safe. the advantage of australia is that they just sell dirt to china and if that stop someone else might step in, but for other country that set production and invest money in china (or other places) is more at risk of losing, you can see that from EU losing money invested in east europe or in usa with credit derivatives or m.b.securities. after all australia has been better off just because australians have no money (and aus banks had no money to invest overseas)

 

[kum yin lau]

Hi gentlemen with the stats - they're all very impressive & knowledgeable & clever. But I need one simple answer, do I sell or do I hold? Even the hateful QBE is coming back with a roar.

KY

 

[WinstonWolfe]

Hi gentlemen with the stats - they're all very impressive & knowledgeable & clever. But I need one simple answer, do I sell or do I hold? Even the hateful QBE is coming back with a roar.

KY

If the majority ignore the medium to long term fundamentals, then the xjo might keep following the spx for a while, though a slight pullback looks due as soon as the middle of this week, for both.

You might note the lastest leg up started July13 when US based Meredith Whitney gave a buy signal for GS, and the subsequent earnings season exceeded expectations.

I respect Whitney and she thinks GS was a "trade" opportunity, based on who will profit from the latest round of US debt issuance.

Things might proceed up until September, but watch your indicators carefully. Mine are showing things are overbought and Whitney says fundamentals are still sick.

 

[kum yin lau]

Hi Winston, thanks for the point of view.

I 'overbought' so probably makes sense to sell half.

KY

 

[boz]

If the majority ignore the medium to long term fundamentals, then the xjo might keep following the spx for a while, though a slight pullback looks due as soon as the middle of this week, for both.

You might note the lastest leg up started July13 when US based Meredith Whitney gave a buy signal for GS, and the subsequent earnings season exceeded expectations.

I respect Whitney and she thinks GS was a "trade" opportunity, based on who will profit from the latest round of US debt issuance.

Things might proceed up until September, but watch your indicators carefully. Mine are showing things are overbought and Whitney says fundamentals are still sick.

hi ww,
kind of weird that Meredith buy on GS drove the market up quite a lot that day and didn't turn down since. Still I don't believe she's got all that power and she is not and not claim to be a trader. I found very funny when she got asked what she think about the housing market she answer she is a renter, she probably just doesn't want to get involved and leave the matter to the property specialists.
At the moment I don't have position on the share market indexes, I am still medium-long term bearish and waiting to short the market once some down support is broken, I also think we might have to wait september.

 

[BV]

Hi gentlemen with the stats - they're all very impressive & knowledgeable & clever. But I need one simple answer, do I sell or do I hold? Even the hateful QBE is coming back with a roar.

KY

I'd sell the top performers

 

[eternit]

I'd sell the top performers

I wouldn't sell but I would put the stop loss at a point where you will be happy with the profits and keep moving the stop loss up as the market keeps going up....

 

[WinstonWolfe]

hi ww,
kind of weird that Meredith buy on GS drove the market up quite a lot that day and didn't turn down since. Still I don't believe she's got all that power and she is not and not claim to be a trader.

Her ability to influence the bank stocks is widely accepted.
I am not saying she is responsible for the broader market run, which was driven by profit reporting exceeding expectations and everyone wanting a bite of the tsunami of debt issuance.

If you read Whitney's statement that day, it was purely GS....she made no secret of her bearishness on the broader economy.

I found very funny when she got asked what she think about the housing market she answer she is a renter, she probably just doesn't want to get involved and leave the matter to the property specialists.

Her husband is a property specialist/multimillionaire in his own right. Who knows what entity owns the house she rents....

At the moment I don't have position on the share market indexes, I am still medium-long term bearish and waiting to short the market once some down support is broken, I also think we might have to wait september.

Same here. This global debt issuance is clouding things horribly, in Australia just as much as anywhere else. You can be sure it is diluting your dollars in the long term, and sewing seeds of more severe pain and uncertainty ahead. It may float the boat for 2 mths to 2 years, but it won't create sustainable jobs with sustainable income that fuels sustainable consumption. And the tax payer debt legacy it leaves will render Obama and Clinton's public health care plan the joke that it is.

 

[boz]

If you read Whitney's statement that day, it was purely GS....she made no secret of her bearishness on the broader economy.

Her husband is a property specialist/multimillionaire in his own right. Who knows what entity owns the house she rents....

I did read it then and I looked her up on the cnbc interview that day, was also in the main bloomberg news, can't miss the the news of the day...I think she forecast a peak of around 13% unemployment in US as well.
Thanks for the husband tip, it is good to know, probably that is why she doesn't talk much about property

 

[Aaron Sice]

I wouldn't sell but I would put the stop loss at a point where you will be happy with the profits and keep moving the stop loss up as the market keeps going up....

exactly - why cut future profits?

roll those stops up, take some profit, and keep going.

 

[orcades]

I too have been wondering what SS'ers opinions are the economy. I have sold my PPR and have the cash ready to upsize to a new one.

Sydney house prices are going crazy in the median price bracket. There's a serious undersupply of stock with 40-50 people often at open for inspections.
I've been trying to work out wether to jump in now before prices rise much more, or to sit on my money and see what happens. Perhaps prices will go down once the first home buyers grant end? If only I had a crystal ball...

All I can say is that house prices in the Northern Beaches of Sydney are much higher than they were a year ago.

 

[blaster]

I voted slow further .

I just can not see the maths for otherwise when the stimulus runs out , if it does.

Cheers

 

[Shadow]

All I can say is that house prices in the Northern Beaches of Sydney are much higher than they were a year ago.

I will second that. Northern Beaches properties are really starting to take off again, after a quiet 2008. I had two bank valuations come back this week, both up by 5% since the previous valuation (7 months ago). These are not FHB properties we're talking about, they are mid-range Northern Beaches 3-4 bedroom houses.

 

[chilliaa]

mmm just had a quick review of this topic from start to end.
Conclusion: stop making an investment decisions based on opions from Sommersofters (as well meaning as this board may be) and start thinking independently.


We are all influenced by decisions of the day. This is no disrespect against sommersoft (which to my belief operate a truely great forum), but rather to reflect upon other peoples comments but act in accordance with your own individual circumstances.

 

[JulieW]

It seems to me that every time I read about 'increased' it is tempered by someone pointing out that the increase is unsupported by the data and that sentiment is operating. Now that's something that we see at the auctions at the moment don't we?

I tend to agree with some of what the flat-earthers say, in that I believe that there has been a fundamental shift in economic circumstances in the world that we haven't quite understood yet, and there will likely be a lot more losers than winners when we actually figure it out.

I've been reading accounts of the collapse of Argentina and the relative security of Canada since I think we have a lot in common with both countries. The way the middle class was wiped out in Argentina (ie the mortaged, comfortably debted, non liquid people) is very, very scary when viewed from the Australian perspective. I dread to think what some of our underserviced, petrol bound outer suburbs will look like if any of the predicted disasters happen (financial, ecological or biological!)

So I think the only advice is the famously quoted duo of 'buy when there's blood on the streets' and don't buy when the shoeshine boy is giving stock tips. It looks to me like the propety market is running on optimism and emotion and there's not a drop of blood running anywhere, and every shoeshine boy you meet is thinking about or buying an investment property.

The much predicted 'correction' to this current stock market optimism might be the fright that makes people retreat from debt and pay a bit more attention to their own reality, rather than trying to be 'richer than eveyone else'.

So where are we at? I'm going with the thought that we've a fool's paradise in the lucky country. I'm paying down my debt and keeping my eyes on the horizon until after October. If the stock market dampens the spring real estate rush then early next year will be the time to buy. Of course I could be wrong.