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Hi Wombat, Great post. We're very much in the same page. Just...

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Windham14

284 Posts.

18/02/16

01:32

Post #: 17048345
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Originally posted by wombat53 ↑

@montauk66 - Thank You .
Montauk a great place, with lighthouse, Eatern tip of Long Island,
Bill Clinton said one true thing in his Pres. campaign of 1992, "It's the economy, stupid"! He was right, and won (only by Ross Perot drawing votes from Bush Snr....no majority).
If one studies the global economy.....on all continents....the collapse of global trade (BDI) at new historic lows daily it get boring to read about it, the US DJ Transports Index (goods not being shipped domestically by rail, road, air), the record lows in the CRB (Commodities, all of them, with one yellow exception), recent Trade Numbers, from AUS (down 30% to 1971 levels, I believe, I might be wrong there)), JPN and CHN Tread and GDP misses only this week (HUGE miss in JPN), even Indonesia, the closure of major retail stores in US, by the hundreds, the parlous status of European Banks (Deutsche, CS, others, at {far} lower stock levels than 2008), the less than successful efforts at Zero and Negative Interest Rates (ZIRP, NIRP), ditto with 3 rounds of QE (prepare for QE4), the failing Energy Sector (here too), with imminent debt default, flowing on to dependent industries, the state of Credit markets, over-valued equities propped up EXCLUSIVELY by QE and Corporate Stock buybacks to increase EPS, reduce P/E, financed by cheap money, but still debt, nonetheless, the collapse of the SHCOMP and other CHN indices (ASX too, at 04/2007 levels), successive CHN Devals, currency wars exporting deflation, it's not a pretty picture. But these are all symptoms, not the cause. The cause goes without saying. Just ask why BHP is getting trashed and you have your answer. BTW, there ain't no once in 100 years unprecedented mining infrastructure boom coming again soon...if ever (Kevin? The GFC? Any connection? The Howard surplus...any connection?).
And I haven't even mentioned geopolitics and the current mayhem with about six countries in Syria, in a very small part of Syria, most of them largely insane (aka "event risk")........I'm not a merchant of doom and gloom, I just study a lot, read history, look at the numbers, and then dig further than the "headline numbers" (most of which are fudged, anyway - hardly a secret...last US BLS NFP report (new jobs "created missed by 50K) was a huge miss vs consensus estimates, but unemployment rate fell from 5 to 4.9% despite (or maybe because) the labor force participation rate at 1977 levels...not mentioned. But avg. hourly wages ticked up. Good news! Some wage inflation at last? The Fed loves it! It's what they've been praying for, the other side of their Dual Mandate.
But why? Because of State Mandated increases in the minimum wage, effective Jan 1, 2016 (BTW, for the lowest paid workers....which is where such new jobs are "created"...hardly conducive to serious, sustained econ. growth...more baristas.). It's a joke. Ditto CHN GDP contracting fro 7% to 6.9%....you have to be kidding me. Even Yellen said last week to Congress US GDP is running 1.75%, omitting that the historic trend is 3.5%! But what's 50% between friends? Nobody seemed to notice. Last Q US GDP (annual) at 0.7%...subject to at least two (2) subsequent Revisions...since which time they've had huge misses in durable goods Orders and International Trade. I could go on, but I'm tired. Oh, and OPEC is broke, EU breaking down, and NATO in chaos, due to member Turkey invading Syria and killing US armed Kurdish "rebels".....not CIA clandestine armed, bona fide US supported. They have every right to call US in Incirlik AFB (Turkey) to bomb Turkey!!!
I've tried to draw attention to some of the main issues, the obvious ones, but I know I have skipped a lot.
Perhaps I've made my point, perhaps not, but I think much of the above is pretty obvious, at least to those who've been paying attention. Austr. is not immune...just look at the largest export industries...iron ore, coal and gas, in that order, and the players in that space, and the flow on from that collapse.
Also look at the banks here (5 of the top 10 ASX are Banks, inlcudes MQG (it did last I looked)): XJO Forum should know them off by heart...not doing well, since they're basically a proxy for (shorting) China. Looks to me that BEN (small) will be the first to go under, or bought out, looking at a Chart. Down 50% from high.
BOQ is falling off a cliff since 29 Jan (look at chart).
CBA...down 25% off the high (aka "bear"). Yes, I know there are more severe capitalization requirements by International Agreements (Basel etc...).

Any Aussie who has Super (which is most), holds all these blue chips, whether they know it or not....and I think most don't. This will generate the reverse of the "wealth effect".....(seeing savings dissipate, and greater reluctance to spend). I remember in US in 2001,2,3....people got Monthly (much better than here) Retirement Statements in the Mail...(often called 401(K) or IRA Plans, etc...so many retirement vehicles...it's a nightmare...worse than here) ....they literally didn't open them....they knew what was inside..... and didn't want to see.
Good luck to all investors.

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Hi Wombat,

Great post. We're very much in the same page.

Just one point, you mentioned in response to one of my previous posts that I had in error omitted to mention that the ''bull'' market in stocks was as a result of QE. I didn't mention this, however, only because to me it's obvious that the bull market we've seen, especially in the states was completely a function of QE.

To add to some of your points above, I was also fairly shocked when the unemployment rate in January managed to tick down to 4.9%, despite all the mass closures of retailers and energy related businesses in the states.

At this point, I literally don't believe any of the stats coming out of the states.

''Reality is that which, when you stop believing it, doesn't go away''. The world is in the process of being served a generous portion of reality, and it's not going to taste good.

Cheers
Ivan
1 Upvote

0 Great analysis

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