Black Monday

[skid]

Yes, some oil companies will fail. That is the fundamental basis of capitalism - the best performers survive, the worst performers don't

Zero interest rates can't work in isolation. The banks must lend the money to productive enterprises, trade practices (esp subsidies/tariffs) must be reformed, and labour laws freed up.

The US and NZ are good examples of what is possible with low interest rates if the other elements are supportive - heck NZ's still has very high interest rates by world standards, and look how well we are doing with diversification and new industries flourishing to take advantage of new opportunities. Yes the US does currently have the "speed wobbles" but seems to be heading in the right general direction

The EU nations (by and large) are good examples of the ineffectiveness of low interest rates if the other elements aren't supportive. Banks aren't keen to lend, labour unions aren't keen to allow greater flexibility in employment, employers aren't keen to take on more workers due to inflexible labour laws, governments aren't keen to forgo their import tariffs, and EU producers aren't keen to surrender subsidies. This breeds inefficiencies which are now entrenched in many EU countries

Economic effects of low oil price and zero interest rates are simply not comparable with regards to raising growth

I would put my money into heathcare, retirement and tourism sectors. The boomers are now retiring, generally have sound financial backing and will be strong supporters of all 3, with tourism getting a boost from working age people as well

But yes, there could be some pain to come. I'm not saying there won't be. What I am saying is that there will be a huge boost to world growth as a result of low oil price, and the benefit will out-weigh the detriment

I dont think you will get that HUGE growth if a large bank gets into trouble or oil dependent countries go bankrupt--Oil,prices need to be reasonable ,but not EXTREMELY cheap--Extremes are not good---If things level out and everyone is on solid ground -then benefits will come IMO

Baby boomers have also created an extreme in demographics--will they completely over run the health system with heart disease and diabetes? (what percentage are happy cashed up healthy folk and what percentage are the result of overuse of processed food and just getting by) probably varies according to country.---Will the young working force be able to (or willing)to carry the load?

The USA certainly needs to do something about their high dollar--(its hurting them) --China has already fired the first shot (currency devaluation) -will the US respond ?

I remember from my days of economy 101--they show you a chart that all makes perfect sense,except for that small word ..variables.
We have gotten so far from the basics of economy 101--With this era of economic policies,we are well and truly in the land of variables.

[Hoop]

In theory you are correct, however places like Japan is proving otherwise. There is also a psychology around confidence and that is impacting the consumer. retirees have the biggest collected wealth in the demograph, but they can't get any interest and that is creating a hoarding cash mentality to a degree..................
The modern economy spins money around very quickly....Deflationary environment creates negative interest rates which creates hording of money...The Reserve (Central) Banks can regulate banks to stop hoarding but it's damn hard to regulate people to stop hoarding e,g stuffing money in their mattresses....Also deflation and hoarding slows consumer spending..

Have you noticed a media push lately...there's a kite flying articles about the Governments push towards a cashless society and surprise surprise an article about $NZ100 and the Americans $US500 notes should cease to be printed..They blame the crims ...really!!!!.... more likely to stop Grandma and Grandpop pulling their investments and burying them in the back garden...

Kite flying articles like these suggest "The powers of B" think deflation is on it's way

[blackcap]

Have you noticed a media push lately...there's a kite flying articles about the Governments push towards a cashless society and surprise surprise an article about $NZ100 and the Americans $US500 notes should cease to be printed..They blame the crims ...really!!!!.... more likely to stop Grandma and Grandpop pulling their investments and burying them in the back garden...


I did notice that article the other day and thought it was weird. Never heard of it before and with inflation etc the last 30 years a $100 bill is sort of what a $20 bill was 30 years ago, so to me the article seemed really weird. Thanks for pointing out what you did... makes a lot of sense.
As an aside, I happen to use the $100 bill quite often so I am probably adding to the perceived problem :)

[xafalcon]

Japan does not have a free labour market. Many people still have a "job for life". Japanese honour will maintain much of that for years to come. Japan also has some of the highest agricultural tariffs in the world and corresponding production subsidies. Japan is a better model for what may happen to the EU if they do not reform.......

Immigration is a positive to NZ growth, but growth is not limited to consumer items and housing that are primarily associated with immigration. Tourism is the major contributor IMO, along with beef, lamb (fading atm), wool, kiwifruit, foreign student education (which is also a significant portion of immigration figures), services in general, honey, catch-up residential building (has an immigration component, but still not keeping up with backlog/demand), commercial construction, roading projects, Christchurch rebuild

Ask yourself how many of the above will do better with a lower oil price. (I say most of them).

I see NZ as doing exceptionally well, despite the headwind of depressed dairy (formally our #1 export) and a significantly higher cost of borrowing than most of the developed world

[skid]

The modern economy spins money around very quickly....Deflationary environment creates negative interest rates which creates hording of money...The Reserve (Central) Banks can regulate banks to stop hoarding but it's damn hard to regulate people to stop hoarding e,g stuffing money in their mattresses....Also deflation and hoarding slows consumer spending..

Have you noticed a media push lately...there's a kite flying articles about the Governments push towards a cashless society and surprise surprise an article about $NZ100 and the Americans $US500 notes should cease to be printed..They blame the crims ...really!!!!.... more likely to stop Grandma and Grandpop pulling their investments and burying them in the back garden...

Kite flying articles like these suggest "The powers of B" think deflation is on it's way

Which begs the question ...Just how big can your mattress get before people get suspicious:D

[skid]

on a more serious note ..this is where the economy and state control overlap.

[Raz]

The modern economy spins money around very quickly....Deflationary environment creates negative interest rates which creates hording of money...The Reserve (Central) Banks can regulate banks to stop hoarding but it's damn hard to regulate people to stop hoarding e,g stuffing money in their mattresses....Also deflation and hoarding slows consumer spending..

Have you noticed a media push lately...there's a kite flying articles about the Governments push towards a cashless society and surprise surprise an article about $NZ100 and the Americans $US500 notes should cease to be printed..They blame the crims ...really!!!!.... more likely to stop Grandma and Grandpop pulling their investments and burying them in the back garden...

Kite flying articles like these suggest "The powers of B" think deflation is on it's way

It started with B Hickey then a couple of bankers, seen about four articles in NSM now on it....

[Bjauck]

Which begs the question ...Just how big can your mattress get before people get suspicious:D Average boomers may have wealth in real estate but they have little in financial wealth assets. Lots of reasons for that including the tax system and NZ financial investment markets historical crises. As interest rates fall further will they decide to put even more in real estate as opposed to the mattress or fixed interest?

When it comes time to downsize or move into a retirement village, will land supply issues be finally sorted and the migration exodus to Australia resumed? That housing wealth may have shrunk when it comes to liquidate the mansion on the currently expensive plot of land.

[tomblu]

There is likely to be pain before the wide spread benefits you are suggesting xafalcon.
If oil stays at these sort of levels or lower then SOME of the oil industry will fail, after all that's what the Saudis want.
Some countries could 'fail' as well and the exposure to banks and the wider economy shouldn't be underestimated.
We have zero interest rates which should also put more money in people's pockets yet world growth in most Western economies is sputtering.
We now have low oil which will add to that.
The problem is we have had asset bubbles in equities, bonds & property & cash is returning zero.
So where do you put your money?

Short term I am putting my money into gold stocks - while there is fear and uncertainty gold is up. However if this turns into a depression (as in 1820, 1840, 1880, 1930) and not just a recession then gold will go south ie gold is a good store of value in inflationary times however the opposite is true with deflation

Long term $US - The only "safe haven" left

[skid]

Short term I am putting my money into gold stocks - while there is fear and uncertainty gold is up. However if this turns into a depression (as in 1820, 1840, 1880, 1930) and not just a recession then gold will go south ie gold is a good store of value in inflationary times however the opposite is true with deflation

Long term $US - The only "safe haven" left

Everything will go south in a depression except currency,your right,but US$ is not always a safe haven if the good folks who are looking after it for you get into trouble(like in the depression)...gets back to the mattress again--the criminals made out like kings in the depression (Joe Kennedy) the big boys keep their cash safe.....but what about haveing to keep it in currency ..say $20 notes..then you do need real estate ..like a house to keep it all in.

Meanwhile theres talk of an ''earnings recession'' in US (very disappointing earnings this time around))http://www.marketwatch.com/story/rising-risk-of-earnings-recession-as-expectations-slide-2016-02-25?mod=MW_story_latest_news

Still markets are up ..riding on oil....just another commodity,right?

PS interesting how when a commodity gets to this extreme level 38c up,on a barrel of oil =1.19%
Good lesson on the increased value of money when things deflate)

[bull....]

mentioned yesterday bullish action has followed thru today, up against resistance now 1945 - 50 need to break it heaps of stops above will push higher 75 if successful

[xafalcon]

PS interesting how when a commodity gets to this extreme level 38c up,on a barrel of oil =1.19%
Good lesson on the increased value of money when things deflate)

Almost "penny stock" level now, so should bring some good opportunities to make or loose money quickly. Especially when the price swings US$2-3 in a trading session, that's 6-9%

[BlackCross]

Oil below $35.00 and US fracking becomes unprofitable which suits the Saudis. However the Saudis need oil at, or above, $30.00 in order to keep buying/paying for weapons etc. Apparently, according to a quote in the FT, they are manipulating the market to remain within those two levels.

[bull....]

mentioned yesterday bullish action has followed thru today, up against resistance now 1945 - 50 need to break it heaps of stops above will push higher 75 if successful


got close overnight futures 68

[bull....]

looks like the weekly trading range held

anyway check out the cds of aussie banks wow

http://www.bloomberg.com/news/articles/2016-02-26/property-bubble-bets-help-spur-surge-in-aussie-bank-bond-risk

[trader_jackson]

http://www.independent.co.uk/news/business/comment/hamish-mcrae/five-signs-that-the-world-economy-is-not-doomed-yet-a6900471.html

Interesting read!

[Valuegrowth]

http://www.independent.co.uk/news/business/comment/hamish-mcrae/five-signs-that-the-world-economy-is-not-doomed-yet-a6900471.html

Interesting read!

Global Consumers have more money in their pockets thanks to falling commodity prices. Therefore,they have spending power and they are supporting consumer oriented companies buying their products. Fortunately, we are not going to see era of oil trading over $100 in the near future. Global central banks will take more aggressive action on monetary easing.

Therefore,we cannot expect collapse of global economies or stocks markets at this juncture. Property markets have peaked globally. Commodities are less appealing. Only place to park money is Stocks. 2016/17 is going to be another year of opportunity for intelligent investors.

[Daytr]

Really!? "the only place to park money is stocks". When there is fear, stocks aren't the place to be, not in size anyway.
At some point it will be a good time to buy stocks, but there is a bit to unfold yet imo.
Wait for the capitulation, then buy.
Anyone get any takes from the G20?

[Jinx]

Some very interesting food for thought.
http://www.sharetrader.co.nz/showthread.php?10525-Thoughts&p=609653#post609653

[bull....]

march 10 could be a big deal

http://money.cnn.com/2016/02/29/investing/europe-economy-deflation-stimulus/index.html

[BlackCross]

The very well connected Lord Rothschild Chairman of RIT Capital.Annual Report...1/3/16... 'There’s an old saying that in difficult times the return ofcapital takes precedence over the return on capital...'

In my half-yearly statement I sounded a note of caution,ending up by writing that “the climate is one where thewind may well not be behind us”; indeed we becameincreasingly concerned about global equity marketsduring the last quarter of 2015, reducing our exposure toequities as the economic outlook darkened and manycompanies reported disappointing earnings. Meanwhilecentral banks’ policy makers became more pessimistic intheir economic forecasts for, despite unprecedentedmonetary stimulus, growth remained anaemic. Notsurprisingly, market conditions have deteriorated further.So much so that the wind is certainly not behind us;indeed we may well be in the eye of a storm.The litany of problems which confronts investors isdaunting: the QE tap is in the course of being turned offand in any event its impact in stimulating asset prices iscoming to an end. There’s the slowing down to anunknown extent in China. The situation in the Middle Eastis likely to be unresolvable at least for some time ahead.Progress of the US and European economies isdisappointing. The Greek situation remains fraught withthe country now having to cope with the challenge ofunprecedented immigration. Over the last few years wehave witnessed an explosion in debt, much of itrepayable in revalued dollars by emerging marketcountries at the time of a collapse in commodity prices.Countries like Brazil, Russia, Nigeria, Ukraine andKazakhstan are, as a result, deeply troubled. In the UK wehave an unsettled political situation as we attempt to dealwith the possibility of Brexit in the coming months. Therisks that confront investors are clearly considerable at atime when stock market valuations remain relatively high......

Plenty more here http://www.ritcap.com/media/annual-report-2015.pdf

[bull....]

the rally continues, did ya know the s%P still appears to be in its long term bull on a weekly after a fake break?

[workingdad]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11598474

latest data on US manufacturing, construction spending and car sales all up

[trader_jackson]

yes it is good to see markets beginning to wake up to the underlying fundamentals, which are still generally positive, as mentioned several times

[skid]

yes it is good to see markets beginning to wake up to the underlying fundamentals, which are still generally positive, as mentioned several times

you keep saying that TJ but its just plain wrong--construction has gone up the last few months ,but to 49.5 (anything under 50 is still contracting)
Earnings in the US are looking sick--to the point that they are saying that stocks are still overvalued because even with the drop in the stock market ,the reduced earning mean that the eps is still less than before.If shares are earning less for you --they are to expensive.

Its all about oil--not fundamentals like earnings---Now that may come right ,who knows--but to be waiving a banner saying the US is in great shape is very misleading--You cant ''wish'' the US economy into good shape.

sooner or later the influence of oil will cease to be the front runner and more basic problems will have to be addressed--why do you think they (Fed)are afraid to raise interest rates?

This doesnt mean the stock market wont go up--but all is not well when you scratch beneath the surface

China did well yesterday --but if they get more of those 5-6% drops they will do something about it,and if it involves currency it will not be pretty.

[xafalcon]

Its all about oil--not fundamentals like earnings.

I think it's wider than oil

IMO it's all about competing theories about potential future influences and the effect these may have on the markets.

Whichever theory gets the most air-time gains traction, until it is disproven or the next theory comes along that appears to make more sense

The media is happy to jump on the band waggon and quote these theories to the masses as if they were fact

Joe public often believes what is written, and so it is perpetuated

Oil is just the current (but waning) theory, US interest rate rises will oscillate up and down the list in coincidence with FED decision dates, Greece is sure to come back out of the closet in a period of quiet, Brexit seems to be a trendy new entrant, the EU migrant "crisis" must be in the mix, China GDP growth decline can always be relied upon to bring fear into the market, Russian economic trouble could be a nice pick-me-up for the western world, Iranian economic expansion post sanctions doesn't fit with doom & gloom (except increased oil production) so may not get much air-time, deflation seems to have gone quiet recently, as has Japan's 3 arrows, post-GFC economic modelling theory inaccuracy has been a solid performer in the past and I'm sure is due for a come-back .........

But I agree that fundamentals appear to have little relevance ATM

[percy]

Meantime in NZ my holdings are going gangbusters.
EBO,CVT are running strongly this week..
All shares I hold had great results and are increasing their dividends.
Low interest rates are pushing my high yield NZ stocks to new highs.

[xafalcon]

Meantime in NZ my holdings are going gangbusters.
EBO,CVT are running strongly this week..
All shares I hold had great results and are increasing their dividends.
Low interest rates are pushing my high yield NZ stocks to new highs.

Shhhh. Don't say that. You are bursting the bubble of the doom & gloom merchants.....

Repeat after me - the world is doomed, economic meltdown is about to commence, sell all investments (remember this is about capital preservation, not capital growth), fill the mattress with gold and cash because everything else will be worthless, for the good of the entire world the oil producers should be paid much more for their natural extract, China will drag the world into economic depression.......

PS. My NZ equities are also doing well, with SKL the notable exception

[winner69]

yes it is good to see markets beginning to wake up to the underlying fundamentals, which are still generally positive, as mentioned several times

S&P earnings lowest since 2010 and Q116 nt lookingsitive
http://www.zerohedge.com/news/2016-02-27/mind-non-gaap-over-20-sp-500s-value-accounting-gimmicks

[skid]

Shhhh. Don't say that. You are bursting the bubble of the doom & gloom merchants.....

Repeat after me - the world is doomed, economic meltdown is about to commence, sell all investments (remember this is about capital preservation, not capital growth), fill the mattress with gold and cash because everything else will be worthless, for the good of the entire world the oil producers should be paid much more for their natural extract, China will drag the world into economic depression.......

PS. My NZ equities are also doing well, with SKL the notable exception

No one is telling you guys to go and sell all your NZX holdings --just watch out for extremes--you have done a good job of sarcastically describing one extreme-now maybe its time to look at the other ''rose tinted glasses opposite extreme and maybe find some middle ground.

If your trying to figure out the USA and world economy --go ahead..throw the theories out and look at the facts--you can start with the earnings reports---Have you noticed that alot of the fundamentals of the US economy are not looking good --but rise and drop of oil is what is calling the shots on the stock market--

the NZX is performing better than alot of world economies and some shares are performing better than the NZX top 50----Thats a good reason to let your profits run,but a lousy guide to judging the state of the world economy IMO

[xafalcon]

No one is telling you guys to go and sell all your NZX holdings --just watch out for extremes--you have done a good job of sarcastically describing one extreme-now maybe its time to look at the other ''rose tinted glasses opposite extreme and maybe find some middle ground.

If your trying to figure out the USA and world economy --go ahead..throw the theories out and look at the facts--you can start with the earnings reports---Have you noticed that alot of the fundamentals of the US economy are not looking good --but rise and drop of oil is what is calling the shots on the stock market--

the NZX is performing better than alot of world economies and some shares are performing better than the NZX top 50----Thats a good reason to let your profits run,but a lousy guide to judging the state of the world economy IMO

I'm taking the piss with my last post mate.

I already said I agree that fundamentals appear to have little relevance ATM.

But i don't subscribe to oil being the sole driver.

Like I said on the previous page, I think it's much wider than oil and based on whichever theory is making the biggest "noise" at the time. I listed a few of them that have at various times been assigned as "causing and/or contributing" to market volatility.

Take Greece. their situation is worse now with thousands of refugees, but I can't remember any recent comment on this causing the current market jitters. Last year Greece was going to exit the EU, which was then potentially going to fall apart

How about Japan. 3 arrows seems to have failed to stoke demand so they are also worse now with more government debt. Again, no association with current market volatility

US rate rises in 2016 aren't being associated with volatility anymore either, we had 6 months of will she - won't she jitters last year. We still don't know if she will raise rates next month or not, but this is apparently no longer the driver of market volatility

China's recent data releases have been as "poor" as previous releases, but again the association with calamitous market falls worldwide are no longer being drawn

Russia's deteriorating economic troubles (rampant inflation) isn't the cause either

Oil is just the latest association that "professionals" are drawing when they try and explain what is causing the volatility - it seems to align, sort of. And a feedback loop is created as other people listen to the latest theories as being solid fact, and then react to them

Kind of like looking at the death rate of doctors. Finding the data shows that all doctors die. Then saying "being a doctor is the cause of death". Sounds fine until you sense-check and realise the hypothesis is flawed

Why is oil suddenly the cause of market volatility? Cheap oil has always been a precursor to rapid world growth. I don't think it will be any different this time around. Oil is used everywhere, everywhere. If most things become cheaper to make because the raw material(s) and/or transport costs are lower, prices don't need to rise, may even fall, and more units will sell = growth almost everywhere. I definitely spend less at the pump, so I can use that "not spent" money elsewhere in a discretionary way. A sale for another company that wouldn't have happened if I spent the money at the pump. That's my sense-check

I believe the market is volatile because we are in a world where "professionals" economic models don't work properly, so uncertainty of outcome rises, leading to some occasional unexpected outcomes = volatility

But I definitely don't underestimate the danger of volatility. My portfolio is skewed towards companies with tangible hard assets, captive markets, well capitalised, solid earnings, long tenure, with good dividend yield in case the SP does temporarily dive in sympathy with offshore market gyrations

[Daytr]

Xafalcon, I think you underestimate the impact of a very low oil price will have in the short to medium term. The market is right to be wary with a trillion dollars worth of debt directly related to the sector and then there are all the ancillary service providers and entire towns and countries that are relying on a higher price. Ultra low interest rates hasn't worked in regards much higher growth, so I suspect low oil won't have the effect people are hoping for either for the same reason. Structurally the global economy is in big trouble and the fact that CBs won't allow failure, the bad is just kicked down the road.

[xafalcon]

Low oil prices are completely different to low interest rates. Low interest rates only have a significant effect on those with debt exposure. Low oil prices directly effect most of the world's population. The current price of crude oil isn't very low. It is around the average level that existed before OPEC manipulated the market by constraining supply

Why isn't the same fuss being made over iron ore prices? Same situation applies as with oil

How about coal? Dairy? Aluminium? Copper? Natural gas? Grains? Oilseeds? etc

Most likely because the oil lobby has a huge war chest to support their spin

[skid]

I agree with your basic point about the different theories and ''flavor of the month''scenarios--But Like Datr,I think you underestimate oil.
i think you are confusing cheap oil,with EXTREMELY cheap oil. Extremes cause problems.
Oil is SO different than other commodities. It is an absolute necessity. It was the underlying reason for the invasion of Iraq,with all its repercussions,including ISIS. the most horrendous atrocities can happen in countries and no one will take notice unless Oil is involved.
It is what brought Russia to its knees(long before this price crash) You cannot underestimate its power. BUT we are so used to seeing one extreme (high oil price) that many could be excused for not realizing the opposite extreme.
In an interdependent world it is not good for countries to go bankrupt--It upsets the balance(not to mention all the physical suffering)
Your ''war chest'' example just proves that point.
Meanwhile, to oversimplify,whats the point of having cheap oil to produce products that no one will buy?

but getting back to your 'theories'' its certainly true that the market looks for things to center on--it also disregards things as well(like debt) so yes ,its a crazy world economically--to prove the point Moodies downgraded China yesterday and in spite of that their market surged--go figure.

Heres something to ponder,which probably has the potential for more far reaching affects than most everything discussed

http://www.marketwatch.com/story/what-donald-trumps-presidency-will-mean-for-financial-markets-2016-03-02----This theory is starting to get disturbingly closer ---It is hard to separate the ''talk'' from actions but if this madman stays true to form,we could be in for a rocky ride indeed (trade wars anyone?)

[xafalcon]

We'll have to disagree on whether the current oil price is neutral, cheap, or extremely cheap

But I will definitely be "all-out" by mid year because I share your thoughts of the effect a Clinton v Trump presidential election will have on equity markets.

I firmly believe Trump is unelectable due to his abrasive style progressively alienating large chunks of the voting populace. But my beliefs won't make any difference to the fear that would grip world markets if/when an opinion poll suggested Trump had a sniff at a win in November

IMO this is reason enough to put the case for pre-emptive euthanasia up for discussion at the UN security council (with America's veto suspended in the interests of a fair outcome). After all, America legitimised it when they assassinated Bin Laden

[Lewylewylewy]

I would happily watch all my shares tumble 20% due to Trump being elected president of America, just to watch the ensuing hilarity of him being in charge of a country. America has had idiots in charge before, but none so bold and assertive.

[trader_jackson]

NZX 50 currently less than 5 points off its all time high... things are very bad in the world indeed ;)

[skid]

We'll have to disagree on whether the current oil price is neutral, cheap, or extremely cheap

But I will definitely be "all-out" by mid year because I share your thoughts of the effect a Clinton v Trump presidential election will have on equity markets.

I firmly believe Trump is unelectable due to his abrasive style progressively alienating large chunks of the voting populace. But my beliefs won't make any difference to the fear that would grip world markets if/when an opinion poll suggested Trump had a sniff at a win in November

IMO this is reason enough to put the case for pre-emptive euthanasia up for discussion at the UN security council (with America's veto suspended in the interests of a fair outcome). After all, America legitimised it when they assassinated Bin Laden

i think that we could reasonably assume that oil is extremely cheap if everyone who is producing it is losing money ---Yep the Trump phenomena is very scary--It is an indication that America has gotten to a point that a large(mostly uneducated and emotionally motivated)segment of the countries population are so frustrated with the American way of life,that they are willing to try anything ,no matter how ludicrous. It would most likely be the prerequisite to disaster,both economically and politically(unless of course he does an about face--(when the real heavy's have a word with him) I believe he knows it hasnt a hope in hell of working--but its an opportunity to make untold fortunes at any ones expense--I believe his campaign was for that purpose(publicity)and he never thought I would get this far.--thats my hope--If not ,there will be hell to pay and everyone will be affected--you too Lewi---Trade wars ..real wars..etc. etc.
this is a man who at least says--If you want something ..take it(which they have been doing covertly on a smaller scale)but this would be big time.

I mean...Can you imagine actually doing the things he has said??!!

[winner69]

NZX 50 currently less than 5 points off its all time high... things are very bad in the world indeed ;)

Going great guns

And the NZ50C index up 3% over the last year ...that's good as well

[trader_jackson]

Going great guns

And the NZ50C index up 3% over the last year ...that's good as well

There we go ladies and gentleman, a new record high (and this is before most stocks go ex-dividend in the recent reporting period!) :t_up:

[trader_jackson]

Latest Equity Strategy report from Forsyth Barr headline reads (for NZ):
Reporting Season: Best Since 2012

I don't need to say to much more... (also heard the Aussie economy grew at 3% or something? "I thought they could only do resources...?") Clearly this oil (and well all commodities in general) slump is not having that much of an impact, despite oil prices (which have now stabilized and even showing signs of a small rebound) being relatively low, and unlike housing, 50% of bank loans are not to oil companies (I think Aussie bank exposure is around 3-4% vs mortages at 51%... In my view, it is pretty far fetched to think low oil prices are going to have a similar effect as a crash in the housing market...)

[xafalcon]

i think that we could reasonably assume that oil is extremely cheap if everyone who is producing it is losing money

The most recent cost of crude oil production I could quickly find. Half way down the page, titled "Crude Oil’s Total Cost of Production Impacts Major Oil Producers"
Kuwait under US$9/bbl, Saudi under US$10/bblMany players are still making good money on oil at today's prices, and 12 nations production cost is under US$30/bbl

Clearly not "everyone" is loosing money at current prices, some are still doing quite well (eg 7 countries below US$20.50/bbl are still pocketing at least 50% profit, Kuwait gets a massive 250% profit)

You may have to copy and paste the link into your browser.

http://marketrealist.com/2016/01/opecs-crude-oil-production-impacted-global-crude-oil-market/

[Daytr]

No but many of the ones with depth are losing money. Countries like Saudi and Venezuela need oil receipts to fund their government budgets. We could see some countries default due to the current price of oil.

[trader_jackson]

No but many of the ones with depth are losing money. Countries like Saudi and Venezuela need oil receipts to fund their government budgets. We could see some countries default due to the current price of oil.

If oil went to $20 and stayed there for 5 years or more, then we could possibly see Saudi and several other previously wealth countries (solely due to oil ie not US, China or Eurozone - the countries that have most of the worlds GDP) could default

This is making the extreme assumption that oil does stay very low, that they do absolutely nothing to raise taxes (or even put taxes on incomes) and that they don't cut spending, which many of these Arab countries (previously filling that gap with oil revenue) could easily do (as I believe some are tax free right now and it could be argued are spending to much unnecessarily), not to mention asset sales etc

[JBmurc]

No but many of the ones with depth are losing money. Countries like Saudi and Venezuela need oil receipts to fund their government budgets. We could see some countries default due to the current price of oil.

yes and to balance these budgets they need much higher Oil prices ..$100+ in many cases

[Daytr]

I wasn't referring to Saudi as a default case. Venezuela, Nigeria, Russia are all possible. Others like Saudi, Norway will be bleeding their sovereign wealth funds who have been very large buyers of equities and now are being forced to liquidate holdings to return funds to governments .


If oil went to $20 and stayed there for 5 years or more, then we could possibly see Saudi and several other previously wealth countries (solely due to oil ie not US, China or Eurozone - the countries that have most of the worlds GDP) could default

This is making the extreme assumption that oil does stay very low, that they do absolutely nothing to raise taxes (or even put taxes on incomes) and that they don't cut spending, which many of these Arab countries (previously filling that gap with oil revenue) could easily do (as I believe some are tax free right now and it could be argued are spending to much unnecessarily), not to mention asset sales etc

[bull....]

17k looks nice tonight maybe?

[trader_jackson]

17k looks nice tonight maybe?

Sure does, good to see yet another increase on wall street in these last few weeks, I also saw this in the herald this morning: "Nikko Asset Management New Zealand has been taking advantage of this year's market turbulence. In a recent note to clients, head of equities Stuart Williams said the firm had reduced the amount of cash across its portfolios and one of its funds had moved from 18 per cent cash to almost fully invested through adding new stocks and increasing stakes in existing ones."

Clearly they aren't to worried about the world's supposed oil problem...

[Hoop]

Copied from the DOW thread page 60 (http://www.sharetrader.co.nz/showthread.php?6114-Dow/page60)

Post #886 31st January 2016
Hoop, where do you see next major resistance for the DOW?
Post #887 1st February 2016
Major resistance around the 17000 - 17200 zone
Daytr..I will post an update later when I get time..
cheers:)

[trader_jackson]

Yes it will be interesting to see where the Dow goes, I see the NZX 50 just smashed through the 6400 mark, this has been quite a fast rebound, faster than even optimists like myself was expecting... about 20 days ago the NZX 50 looked to be struggling to hold over 5900... now almost 8.5% gain since then which is huge by New Zealand standards... I believe the positive reporting season ("Best since 2012") and better than expected upgrades/outlook has propelled this surge

Disclosure: I'm a bit disappointed as my own portfolio in the same time period only gained 6%

[skid]

I wasn't referring to Saudi as a default case. Venezuela, Nigeria, Russia are all possible. Others like Saudi, Norway will be bleeding their sovereign wealth funds who have been very large buyers of equities and now are being forced to liquidate holdings to return funds to governments .

You have pretty much summed up my thoughts on the matter Datr.
there are countries who will be in danger of default--There are others who have enough wealth to ride it out for some time,but that does not mean they are doing ok with the current price of oil---Lets remember everyone --the question was what is ''extreamly cheap'' in terms of oil.
I believe at this price the benefits of really cheap oil are not worth the possible risk of the collateral damage caused.

We would be far better off with just moderately cheap oil ,say $50.

There is no doubt that things have settled on the markets at this stage,but I dont think to many are not expecting more volatility.
NZX is sweet -the past turmoil never quite got to the stage that it smacked us big time (but thats no reason not to keep abreast of overseas markets)---surly no one thinks we are totally insulated,but as you say ..so far ..so good

[bull....]

Yes it will be interesting to see where the Dow goes, I see the NZX 50 just smashed through the 6400 mark, this has been quite a fast rebound, faster than even optimists like myself was expecting... about 20 days ago the NZX 50 looked to be struggling to hold over 5900... now almost 8.5% gain since then which is huge by New Zealand standards... I believe the positive reporting season ("Best since 2012") and better than expected upgrades/outlook has propelled this surge

Disclosure: I'm a bit disappointed as my own portfolio in the same time period only gained 6%

yes im surprised to, reduced my exposure then, have only increased to portfolio back to 99% but no margin now so still reduced some what

[Joshuatree]

Most if not ALL!! of the sector indices on the ASX have bounced including Gold,Energy,Financials, Reits, Consumer discretionary, Mining etc. Weird or what, deadcat bounce or have we reached the bend at the end and changed trend up?. The fact that everything is upwards is a bit bizarre???

[Hoop]

Most if not ALL!! of the sector indices on the ASX have bounced including Gold,Energy,Financials, Reits, Consumer discretionary, Mining etc. Weird or what, deadcat bounce or have we reached the bend at the end and changed trend up?. The fact that everything is upwards is a bit bizarre???

Hmmm they don't call it relief rally for nothing...eh?

Unfortunately the feel good factor that come with relief rallies can be dangerous as someone who cashes up correctly identifying a cyclic reversal earlier goes all in again (mass buying) thinking that the expected bad news or uncertainty didn't eventuate ... whereas in reality it still may still be coming..A common investor behaviour in bear market cycles which causes problems even to the Fund managers (as buying now may see years go by before that investment become above zero capital gain).....

This is the reason why I keep on trying to figure out whether a specific market index is in a Bear or bull cycle...eg NZX50 Bull cycle....S&P 500 bear tide ...Shanghai...Bear cycle ...etc
Then apply the right investment strategy for that markets cyclical cycle...or just stay out totally during the bear cycle....By staying out of the market and keep cash in the bank during the bear cycle periods just about guarantees you to beat Mr Market in the long term

[xafalcon]

Lets remember everyone --the question was what is ''extreamly cheap'' in terms of oil.

"Stupidly expensive" oil price >$US75/bbl
"Expensive" oil price US$45-US$75/bbl
"Normal" oil price US$35-$45/bbl
"Cheap" oil price US$25-US$35/bbl
"Extremely cheap" oil price <US$25/bbl

Let's see where the market settles

[skid]

http://www.economist.com/news/leaders/21688854-low-energy-prices-ought-be-shot-arm-economy-think-again-whos-afraid-cheap

[Joshuatree]

Most if not ALL!! of the sector indices on the ASX have bounced including Gold,Energy,Financials, Reits, Consumer discretionary, Mining etc. Weird or what, deadcat bounce or have we reached the bend at the end and changed trend up?. The fact that everything is upwards is a bit bizarre???

Surely this is unprecedented, everything rallying together. "This correlation between gold( officially in a bull mkt 21% up off its USD lows) and equity mkts (ALL SECTORS); both rising . We are in very uncharted waters" BOOM Or BUST coming up in your rear view mirror faaassssttt. Feels like a BUST to me. Unless its just the Trump effect re the gold bull.:eek2:

[kura]

Everything in my Portfolio ( NZX & ASX ) is green ( In profit )
Can't remember this ever happening before.
So deceided to start selling down today & take profits.
Happy to sit on sideline for a while.

[Bobdn]

Things definitely are weird - right now I'm watching BHP Billiton plc climb by near 6% over the last 30 minutes (I have BHP on the AX). I should be in bed but I'm fixated by it. It's approaching a 20% increase over the last five days. A few weeks ago I had my head in my hands. This evening, actually 1am this morning, i feel much better.

[trader_jackson]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11600214

Brian talking about the good results season...

Disclosure: No need for me to sell (although things have been pretty good lately, I plan to hold almost all of my stocks for a long period of time)

[skid]

Things definitely are weird - right now I'm watching BHP Billiton plc climb by near 6% over the last 30 minutes (I have BHP on the AX). I should be in bed but I'm fixated by it. It's approaching a 20% increase over the last five days. A few weeks ago I had my head in my hands. This evening, actually 1am this morning, i feel much better.

Probably helped along by oil breaking the $35 psychological barrier--now your biggest decision is whether to hope for more profits or exit with your hide still intact.

[Daytr]

That's in historic terms and the problem with history is that its out of date very quickly.
The average cost of production is around $45/bbl.
10M bpd of production is above $75. You cannot lose that sort of production unless its replaced by cheaper production which is possible, but not easy.
So half of global production is not profitable below $45 and that's not accounting for a profit.
So the poo needs to be quite a bit higher than that.
A normal oil price therefore is around $75-85/bbl.



"Stupidly expensive" oil price >$US75/bbl
"Expensive" oil price US$45-US$75/bbl
"Normal" oil price US$35-$45/bbl
"Cheap" oil price US$25-US$35/bbl
"Extremely cheap" oil price <US$25/bbl

Let's see where the market settles

[skid]

"Stupidly expensive" oil price >$US75/bbl
"Expensive" oil price US$45-US$75/bbl
"Normal" oil price US$35-$45/bbl
"Cheap" oil price US$25-US$35/bbl
"Extremely cheap" oil price <US$25/bbl

Let's see where the market settles

Look at this 5 yr chart---feel free to reevaluate your figures

http://www.infomine.com/investment/metal-prices/crude-oil/5-year/

[xafalcon]

Look at this 5 yr chart---feel free to reevaluate your figures

http://www.infomine.com/investment/metal-prices/crude-oil/5-year/

Ha ha ha. What relevance does that chart have to determining "extremely cheap"? Answer = none. So I assume you are taking the piss

PS. I did revise my figures before I posted them, I moved them upwards. I originally had "normal" pegged at US$35/bbl (no range)

[xafalcon]

That's in historic terms and the problem with history is that its out of date very quickly.
The average cost of production is around $45/bbl.
10M bpd of production is above $75. You cannot lose that sort of production unless its replaced by cheaper production which is possible, but not easy.
So half of global production is not profitable below $45 and that's not accounting for a profit.
So the poo needs to be quite a bit higher than that.
A normal oil price therefore is around $75-85/bbl.

The average cost of production is around $45/bbl = Rubbish

10M bpd of production is above $75 = please substantiate

So half of global production is not profitable below $45 = rubbish.

I posted production costs a couple of pages back from January 2016. Only Brazil & UK were above US$45/bbl, but not by much

http://marketrealist.com/2016/01/crude-oils-total-cost-production-impacts-major-oil-producers/

A "Normal" price is arrived at when supply isn't artificially constrained, as it has been for the past 20 years. That is how I determined my baseline for "normal" price, than adjusted it upwards

Before you say things like "So half of global production is not profitable below xxx" ask the question - would half the world's oil producers continue pumping oil when they are loosing more money with every barrel they extract? The answer must be "No". Some hypothetical numbers

Cost for country X to produce = US$50/bbl
Revenue from sale = US$33/bbl
Volume = 1M bbl/day
Period = 1 month (30 days)
Loss = US$510M

Cost for country X to produce = US$50/bbl
Revenue from sale = US$33/bbl
Volume = 0
Period = 1 month (30 days)
Loss = US$0

Country X is better off by not extracting and selling oil, so why would they - out of the goodness of their hearts? because they are stupid and can't do the maths? Or is it because their cost of production is lower than you think and they are in fact still making money?

Shale production costs are apparently falling quickly as the fracturing technique is improved

The ONLY rational reasons for continuing to extract oil when cost of extraction is above sale price that I can imagine are

- the oil is a by-product, the well is primarily a source of gas (like in NZ)

- the oil is being stored in anticipation of a future price rise, and not being sold (would need some very big tanks and a big stack of money to fund this.....)

- the well shutdown process is long and is currently underway

[Andrew]

I wondered how low can it go, and wondered how much longer they can keep pumping at a loss, and I wondered who is making a loss. These questions will never be answered, because it is such a secret. The spot price of oil, is a lot different to what they are selling it for. Most of the oil producing countries are selling to either middlemen, end users etc, who have hedged the price some time ago. When the spot price reached its high no doubt they were selling it cheaper than that and entered into future contracts for supply at a lesser price that the spot price at the time and more than the spot price now. Genesis in their final results have said they were getting (off the top of my head) around $58 per barrel in the last period. Anyway it was a lot higher that the spot price at the moment. I believe some of the purchasers of oil who hedged their price are now trying to either store it or offload it at a loss, just to keep their cash flows up (desperation) before they go completely bust. I don't know what the lag time would be but we must come to a point where the spot price dissects the hedged price. I would suggest that while the spot price is just over $30 per barrel, even an astute purchaser would be buying above that so that if the price goes high and they were a spot market purchaser they may be without supply. I again believe Gull buys a lot on the spot market. I think if I was someone like Gull, I would try and buy some on the spot market, and hedge some at a higher price, just in case the price starts to skyrocket quickly, and then you are priced out of the market altogether. Any end user would be a bit foolish to ruin their continued source of supply for too many short term gains.

I believe there are a lot of investment syndicates out there who buy oil, just to sell at a higher price, they must be crying at the moment.

If the major oil producing companies were selling at less than it cost them to extract, I am sure they would stop production, once the variable costs were not being recovered, they may continue to pump at a loss, just to pay the fixed costs which would continue anyway. What those costs were for each producer is just about any bodies guess as I am sure, their fixed and variable costs will be kept under lock and key. Any way that's my impression and I am no expert. But what comes down will go up, and no doubt what goes up too far will come down somewhat.

[Baa_Baa]

This might interest the oil debaters http://knoema.com/otsvwed/north-american-oil-and-gas-bankruptcies?utm_source=knoema&utm_medium=browser&utm_keyword=vizoftheday

[James108]

Country X is better off by not extracting and selling oil, so why would they - out of the goodness of their hearts? because they are stupid and can't do the maths? Or is it because their cost of production is lower than you think and they are in fact still making money?


Probably because the marginal cost of producing a barrel is significantly less than the cost including CAPEX.

[trader_jackson]

I remember my Grandad telling me stories of how oil was quite literally dirt cheap...
http://inflationdata.com/Inflation/images/charts/Oil/Inflation_Adj_Oil_Prices_Chart_small.jpg

When it gets under $20, then maybe all producers will begin to "feel the heat", and even then, it would just be a bigger "global tax cut" :t_up:

[Lewylewylewy]

Andrew, bloody good point about the hedging. The price per barrel will be market rate, the big buyers will be on higher fixed rates. The fixed rates will be hedged at higher rates as the oil companies will be in a better position to predict future prices than the customers as they control the supply.

Given this, how low any given oil company will let the market price will go down will be dependant on the length of time left in their average hedge price.

Who knows how low the price can go before it starts to effect profit. One things for sure, as soon as it starts hitting them, they'll want to show an upward price tend so they can lock in higher hedge prices before letting it drop any further if that's what they want to do...

[skid]

The average cost of production is around $45/bbl = Rubbish

10M bpd of production is above $75 = please substantiate

So half of global production is not profitable below $45 = rubbish.

I posted production costs a couple of pages back from January 2016. Only Brazil & UK were above US$45/bbl, but not by much

http://marketrealist.com/2016/01/crude-oils-total-cost-production-impacts-major-oil-producers/

A "Normal" price is arrived at when supply isn't artificially constrained, as it has been for the past 20 years. That is how I determined my baseline for "normal" price, than adjusted it upwards

Before you say things like "So half of global production is not profitable below xxx" ask the question - would half the world's oil producers continue pumping oil when they are loosing more money with every barrel they extract? The answer must be "No". Some hypothetical numbers

Cost for country X to produce = US$50/bbl
Revenue from sale = US$33/bbl
Volume = 1M bbl/day
Period = 1 month (30 days)
Loss = US$510M

Cost for country X to produce = US$50/bbl
Revenue from sale = US$33/bbl
Volume = 0
Period = 1 month (30 days)
Loss = US$0

Country X is better off by not extracting and selling oil, so why would they - out of the goodness of their hearts? because they are stupid and can't do the maths? Or is it because their cost of production is lower than you think and they are in fact still making money?

Shale production costs are apparently falling quickly as the fracturing technique is improved

The ONLY rational reasons for continuing to extract oil when cost of extraction is above sale price that I can imagine are

- the oil is a by-product, the well is primarily a source of gas (like in NZ)

- the oil is being stored in anticipation of a future price rise, and not being sold (would need some very big tanks and a big stack of money to fund this.....)

- the well shutdown process is long and is currently underway

Your logic is flawed about continuing to sell oil when you are not making a profit--That may be because you (and I ) are from countries that are blessed with never knowing real hardship like many developing countries.
a little money is better than no money when you are up against it.

[Baa_Baa]

This might interest the oil debaters http://knoema.com/otsvwed/north-american-oil-and-gas-bankruptcies?utm_source=knoema&utm_medium=browser&utm_keyword=vizoftheday

Did anyone speculating on the whys and wherefores read this? Start here and then do some research on who the creditors are that stand to lose everything. It might also help those struggling with this to consider that the oil companies are not the market.

North American Oil and Gas Bankruptcies

"With the slump in crude oil and natural gas prices dozens of North American oil and gas companies have commenced Chapter 11 bankruptcy" ... "The total amount of aggregate debt involved in filed cases reached $17.2 billion for E&P and $5.3 billion for oilfield services companies." ... etc.

7924

etc.

[Lewylewylewy]

Personally, I give 2016/17 a 50-50 chance for the world economy to enter deeper, more prolific turmoil. That's my way of saying that I don't really know, but believe that something significant could happen.

I do not believe that any of it will be caused by, or a symptom of oil prices dropping. Rather it will be general poor performance of the economy (of one or more countries) or some political/religious event, if anything.

My current strategy is (once I get my THL dividends) to go 50% cash, ready to jump in if there are any panic sales.

[Joshuatree]

Moving this here a w69 planted it in with the row of corn..

https://www.janus.com/bill-gross-investment-outlook (https://www.janus.com/bill-gross-investment-outlook)

[skid]

Moving this here a w69 planted it in with the row of corn..

https://www.janus.com/bill-gross-investment-outlook (https://www.janus.com/bill-gross-investment-outlook)

Sobering reading--Everything deflating in value except cash which is then discontinued or penalized by negative interest rates

To the non believers I would say--Go ahead and discount oil and its repercussions--bank failures-and celebrate the NZX's performance-----but have a back up plan

[Jinx]

US finished the week last week on a solid high, ASX performing well today yet NZX is down?
Anything to do with Sales being doing 0.5% (55M) for December 15 qtr
http://www.stats.govt.nz/browse_for_stats/industry_sectors/wholesale_trade/WholesaleTradeSurvey_HOTPDec15qtr/Commentary.aspx

Or just a bad day for NZX?

[BlackPeter]

US finished the week last week on a solid high, ASX performing well today yet NZX is down?
Anything to do with Sales being doing 0.5% (55M) for December 15 qtr
http://www.stats.govt.nz/browse_for_stats/industry_sectors/wholesale_trade/WholesaleTradeSurvey_HOTPDec15qtr/Commentary.aspx

Or just a bad day for NZX?

Bad day? My portfolio (80% NZX ...) looks better than it ever did this year ... tendency upwards. If you call this a bad day - could we have more of them, please ...;).

If you look at the biggest losers and gainers - most of the big losers are "penny stocks" (SEA, BLT, MAD ... and even they didn't lose much and have been compensated by PPL (LOL) on the winner's side. Other gainers: GTK and ZEL went up and are good companies and some investment trusts gained (following the outside world).

As well - don't forget, that the NZX missed out on the big dips the US markets as well as ASX had earlier this year - i.e. less to catch up.

Life is good ...

[Jinx]

As well - don't forget, that the NZX missed out on the big dips the US markets as well as ASX had earlier this year - i.e. less to catch up.

Life is good ...

Fair call. Agree that everything's looking great compared to the start of the year, just expected an overly positive market based on Oil, NZ$ and all other markets up on their last day of trade.

[skid]

so we appear to have a bit of a dichotomy going on here...Oil has climbed (got to $40)before dropping back but the earnings still suck.(in US)

Nevertheless you could watch the markets rise and fall with the price of oil---for now,''just another commodity'' it aint

Having said that ,it looks like the markets may end in the red (only just with the Dow) so either the earnings are moving to the fore in the fight between oil and earnings. (if oil was down it would have been ugly IMO)

[bull....]

oil rally didn't translate into big stock rally? dislocating maybe

[JBmurc]

US finished the week last week on a solid high, ASX performing well today yet NZX is down?
Anything to do with Sales being doing 0.5% (55M) for December 15 qtr
http://www.stats.govt.nz/browse_for_stats/industry_sectors/wholesale_trade/WholesaleTradeSurvey_HOTPDec15qtr/Commentary.aspx

Or just a bad day for NZX?

Just go and view the two comps NZX ASX ....been great over last couple years to be invested in NZX but this year looks like the ASX is going make many investors much more

[skid]

At the moment they are looking better(making up for the previous losses--just like the US markets---but the big question is can they continue--seems like there are still lots of dangers unless natural resources turn.
There seems potential for gold to improve as I think alot of the masses are beginning to think that the basic fundamentals are not solid enough for equities to go full steam which could benefit Gold.

[Beagle]

At the moment they are looking better(making up for the previous losses--just like the US markets---but the big question is can they continue--seems like there are still lots of dangers unless natural resources turn.
There seems potential for gold to improve as I think alot of the masses are beginning to think that the basic fundamentals are not solid enough for equities to go full steam which could benefit Gold.

Lot of chatter about gold and silver at yesterday's Auckland ST meeting.

[skid]

oil rally didn't translate into big stock rally? dislocating maybe

That crossed my mind as well..but Im not sure it would be the case if oil fell again--Seems like whatever happens these days ,the market is struggling for the result.

One thing I have noticed is that if it was a sporting event and you left the stadium early,you could end up with the opposite result --Alot happens towards the end.

The fact that so many have used almost all the tools in their arsenal (negative interest rates etc) weighs on peoples minds IMO

[JBmurc]

Lot of chatter about gold and silver at yesterday's Auckland ST meeting.

So talk round OGC pretty much it on the NZX or Bullion .... what was the concession (Bullish or Bear)??

When you think about the movement of many muti billion dollar+ ASX resource stocks across the board been nothing less than spectacular since the start of the year less than 70 days ago

the likes of FMG up over 100% NCM 40%+ OSH-WPL up 20% BHP-20%

haven't had a NZX share for over a decade now ....can't see that changing now it looks like the market might be heading back into hibernation (has had a great run ,,and will always be a far superior yield market)

[arc]

China is not happy.

http://in.reuters.com/article/us-china-economy-trade-idINKCN0WA09C

[Joshuatree]

Thanks Arc. I have a sinking feeling that this great bounce has been a dead cat one followed by the ambulance driving off the cliff ;but I'm no global expert and i know it.

[skid]

Thanks Arc. I have a sinking feeling that this great bounce has been a dead cat one followed by the ambulance driving off the cliff ;but I'm no global expert and i know it.

None of us are JT--we just have to do our best to figure out which of those who claim they are ,make the most sense

[Raz]

None of us are JT--we just have to do our best to figure out which of those who claim they are ,make the most sense

Those that may well me be... an't going to be talking in public, I can assure you of that.

[moka]

http://www.zerohedge.com/news/2016-03-07/whole-rally-just-one-big-trap
Is This Whole Rally Just One Big TRAP?
Submitted by Phoenix Capital Research (http://www.zerohedge.com/users/phoenix-capital-research) on 03/07/2016 10:01 -0500
“I don’t trust this rally.
Few analysts realize that the sharpest, most aggressive rallies occur during bear markets. The reason for this is that during bear markets, investors tend to go short (borrow shares to bet on a collapse).
So when the market rallies even a little bit, it often will go absolutely vertical as these individuals panic and cover their shorts (which increases the buying).

Consider the Tech Bubble. When it burst, we had THREE monster rallies of 17%, 33% and 16% in just SIX months time!
Anyone who bought into these moves for the long-term ended up get crushed as the market soon rolled over and worked its way down. The below chart gives some perspective on just how much further stocks would fall relative to these traps.”

[BlackPeter]

http://www.zerohedge.com/news/2016-03-07/whole-rally-just-one-big-trap
Is This Whole Rally Just One Big TRAP?
Submitted by Phoenix Capital Research (http://www.zerohedge.com/users/phoenix-capital-research) on 03/07/2016 10:01 -0500
“I don’t trust this rally.
Few analysts realize that the sharpest, most aggressive rallies occur during bear markets. The reason for this is that during bear markets, investors tend to go short (borrow shares to bet on a collapse).
So when the market rallies even a little bit, it often will go absolutely vertical as these individuals panic and cover their shorts (which increases the buying).

Consider the Tech Bubble. When it burst, we had THREE monster rallies of 17%, 33% and 16% in just SIX months time!
Anyone who bought into these moves for the long-term ended up get crushed as the market soon rolled over and worked its way down. The below chart gives some perspective on just how much further stocks would fall relative to these traps.”

Not sure whether it is helpful, but they say as well that "bull markets climb a wall of worry ...", so - maybe the recent dip was just a huge bear trap?

One thing I do know is that none of the past big stock market events has been predicted by expert consensus. Neither am I aware of any expert who got it repeatedly and reliably "right". You could even argue that if there would be anything exceptional in the stock market which could be reliably predicted per definition will not happen, because everybody would be prepared for it ...

Sure - there are always hundreds of different expert opinions around. Some of them even might be from real experts. In hindsight some of them might prove correct. If you remove the time factor, than nearly all of them will prove correct over time (like "the next big crash will come"). The problem is just - there is no way in predicting, when ...

Be careful, sensible, diversify, buy shares of companies producing something useful and making money by doing so who have a reasonable P/E and be prepared for periods with (at least nominal) capital loss. And yes ... don't worry too much - neither you nor I will be able to predict when the next crash comes anyway.

[xafalcon]

oil rally didn't translate into big stock rally? dislocating maybe

Or it could be that the suggested correlation with oil prices was merely a transient aberration in the minds of "experts" who are struggling to predict/explain the post-GFC market movements.

I wonder if the "expert market predictors" will soon join the "expert currency movement predictors". Just accepting that correlation models based on pre-GFC cause/effect no longer work particularly well, and change their commentary to a significantly higher level to avoid unnecessary egg-on-face and the related market volatility

If one group of "experts" has successfully accepted reality and made the change, maybe other "expert groups" can too. Although I'm sure it has a much stronger effect on bonuses of equity "experts", so it may take a while yet

[skid]

well,you could always invest in suffering
http://www.marketwatch.com/story/theres-only-one-sure-bet-this-election-season-2016-03-08?mod=MW_story_latest_news

shows what kind of a Global world we live in ..

Expert opinions..
True ..no one can predict all the time ..but there are many sign posts along the way,that in hindsight investors just cant believe they missed when it hits the fan(or maybe it wont hit the fan-death of a thousand cuts)

''It wont happen overnight..but it will happen''-----Debt---it is everywhere you look---We seem to be on a road traveling farther and farther away from the basics of the economy---We are on the -''I like this cushy life--Ill pay you back Tuesday''road.

Meanwhile..What is value? Value is a state of mind....there is no such thing as ''real value''

[JBmurc]

- Price is what you pay ....Value is want you get....

...we could also say what price we pay for DEBT will affect the Value of many major purchases

Here is NZ we look to be heading towards a very nasty situation ..Property market leveraged to the hilt along with prices way passed stupid levels
biggest export hitting the wall ...looking even worse now with Dairy $3.90 payout ....

So this means many a Farmer and property Investor need higher prices to pay the low interest rates and to keep afloat ....but for how much longer>>

Fonterra has confirmed about 3600 to 4000 businesses that provide services to Fonterra are having to wait up to three months to be paid...
http://www.stuff.co.nz/business/farming/agribusiness/77646215/fonterra-cuts-payout-to-farmers

[BlackPeter]

...

Are biggest export hitting the wall ...

Is it? Rumours are that tourism, wool, red meat, pip fruit, wine and fish do quite well.

Sure - dairy (as commodity) does have its problems, though specialist producers don't do too bad either - but is this really a reason to assume the world will stop spinning and NZ will drop into the sea?

[JBmurc]

I agree the world will keep spinning and NZ will not fall into the sea...and I never said it would !!! but even small corrections can be painful ask the farmer that just ticked up another 100-200k in debt to just keep afloat and looking at doing the same next year ... or the property owners having less than $100 left over at the end of the week after costs on their million+ dollar property along with living costs

I live in NZ biggest tourism hot spot ....and many Businesses here can't get staff or even keep the staff they have as accommodation is very hard to get for under $250 per room so paying the min wage along with higher costs etc just doesn't cut it ...

On the farming show I listen to now and again the ASB Banker they had on reported they wouldn't be supporting farmers(with more debt) for much longer .. 12months MAX and that was when payouts were $4+

Also I work in the fishing industry and some sectors are having the worse season on record ...here's hoping the next will be better

You can believe in rumors if you like ....

[xafalcon]

Tourism has past dairy as NZ's largest export earner.

Since then tourism has posted 10% plus yoy growth.

Property prices are only stupid to some people, to others they are attractive. Depends on your perspective. Generally whenever demand exceeds supply, the price will increase. This is what has been happening, not enough houses were built since the GFC. Supply unlikely to catch up with demand, so don't expect any significant price reversal

Hard to comment definitively on leverage, but banks are more likely since the GFC to decline a mortgage if repayment is shaky. So I would assume this means leverage has decreased. Plus there are now minimum equity requirements, again reducing potential leverage

[bull....]

tourism is cyclical due to world confidence if world turns down how good will tourism in nz be then, also nz is flavour of the month at the moment.

downturn in tourism + dairy down turn would make nz very vunerable indeed not to say the over inflated ridiculous multiples of ones wages people pay for Auckland house prices

[JBmurc]

Ok so tourism is our number one earner(thanks to the collapse of the dairy sector our farmers focused on in the last decade)

....Right so what other country has tourism as their #1 earning should we aspire too ?? Fiji , costa rica , Greece ??

[BlackPeter]

Ok so tourism is our number one earner(thanks to the collapse of the dairy sector our farmers focused on in the last decade)

....Right so what other country has tourism as their #1 earning should we aspire too ?? Fiji , costa rica , Greece ??

You are correct .... NZ does not fare well (if we measure the income and economical activity) when compared with first world countries. I think it was Bolger who said once "to a degree we stand both in the first as well as in the third world"?

However - making money with producing commodities is not more advanced than making money with tourism - i.e. I don't understand your point. We just replaced one not so sophisticated activity with another one ...

[xafalcon]

tourism is cyclical due to world confidence if world turns down how good will tourism in nz be then, also nz is flavour of the month at the moment.

downturn in tourism + dairy down turn would make nz very vunerable indeed not to say the over inflated ridiculous multiples of ones wages people pay for Auckland house prices

The stats don't show tourism being a cyclical "world confidence" industry. The 2nd graph on pg 9 doesn't show a downturn with the GFC as you would expect if this were the case. And growth over the past 3 years has been consistent and strong. The lower airfares resulting from reduced fuel costs should accelerate tourism growth further, and increase tourists discretionary spending money as well. NZ is a "bucket list" country, and now also a safe destination with a western culture & language. It's just a shame we drive on the wrong side of the road

http://www.stats.govt.nz/~/media/Statistics/Browse%20for%20stats/InternationalVisitorArrivalsToNewZealand/January%202016/IVA%20January%202016.pdf

The situation you should also be considering is strong growth in tourism + recovery in dairy prices would make NZ a super-rockstar economy. The reality is that dairy will recover. I've been in the industry for 26 years. It is cyclical due to the long lead-in period (long reaction time to increased demand/higher prices) as milking cow herd growth takes 3 seasons from mating to first milking, and a huge growth rate is not achievable due to a variety of reasons (50% of offspring don't produce milk, a proportion of herd replacements are needed to keep production constant etc)

The "ridiculous multiples" are heavily tempered with lower interest rates. 8 years ago interest rates were north of 10%, today they are half that (or less). If income has remained flat over the same period (which it has not), house values can roughly double since then and remain as affordable/unaffordable as they were then. Add in salary growth and the equation improves further

But the key Auckland housing point is that nobody is forced to buy a house there. It is a completely voluntary decision.

[bull....]

strong tourism , strong housing the only thing keeping nz afloat , down turn in the world economy which is forecast and declining credit growth worldwide will impact tourism eventually lower prices will probably extend the cycle and a rise in interest rates which looks unlikely at present but if it happens will kill housing and bankrupt so many. banks look like the worst investment around in any environment.

[xafalcon]

Ok so tourism is our number one earner(thanks to the collapse of the dairy sector our farmers focused on in the last decade)

....Right so what other country has tourism as their #1 earning should we aspire too ?? Fiji , costa rica , Greece ??

I see you are located in Queenstown. Nice place. But all it would be if not for tourism is an isolated petrol and/or lunch stop on the way to the other coast (not intended to rubbish Q'town, but to illustrate the benefit tourism brings)

You have completely underestimated the benefit of tourism as a major earner for any country. It is one of the most non-destructive sources of income imaginable. I count NZ as being extremely lucky to have this wonderful asset that can be used to create so much wealth and employment without producing effluent, or requiring hazardous ingredients, or expensive manufacturing infrastructure, or unsightly strip mines etc that almost any other source of income requires. I would suggest that the NZ tourism industry is something that many other countries would be extremely envious of. Annual overseas visitor numbers now exceed 75% of our countries population

As an unquantified bonus, foreign tourists come to NZ, pay 15% GST on everything they pay for, lowering the tax burden on NZ residents and businesses. I would be interested if anyone has a figure for this as I've never come across anything in my travels

[skid]

Tourism is indeed a valuable source of income--no one is saying to ditch tourism--but to discount the fact that a global downturn would not affect tourism in one of the most isolated countries ,may well be a mistake--Its a leisure activity--It could certainly taper off if people are scared about their assets.
Its the same with housing,even in Auckland and Queenstown. There can still be a downturn in housing prices with a housing shortage if they become unaffordable from to many jobs lost--doesnt mean plenty would'nt LIKE to live there...they just wouldnt be able to.(then factor in banks getting spooked)

My biggest assets are residential rental accommodation in Auckland so I hope Im wrong,but I do believe that the whole framework that we operate in can change(with a downturn or crash)--..right now a person with a mansion in Auckland or Queenstown has a valuable asset --but it has no value to you if you dont have a chance in Hell of ever owning it--If it gets to the point that almost everyone doesnt have a chance in heck of ever owning that mansion--it will surely decrease in value to meet the market(shortage or no shortage) There will be just alot more crowded garages etc.

[JBmurc]

I see you are located in Queenstown. Nice place. But all it would be if not for tourism is an isolated petrol and/or lunch stop on the way to the other coast (not intended to rubbish Q'town, but to illustrate the benefit tourism brings)

Personal I'd love it if it wasn't a International Tourist mecca ....but just a domestic holiday stop with 10 Restaurants rather than the 200+ we have ..or two basic ski fields with hundreds of skiers rather than thousands ..or road with a few cars etc and not full of campers and suicide drivers .....

Still another 6wks and I won't be here In Qtn anymore

Don't get me wrong having international guests spending money here is great ....just not an industry I'd be keen to work in with the panthanic low wages >>

[skid]

I see you are located in Queenstown. Nice place. But all it would be if not for tourism is an isolated petrol and/or lunch stop on the way to the other coast (not intended to rubbish Q'town, but to illustrate the benefit tourism brings)

Personal I'd love it if it wasn't a International Tourist mecca ....but just a domestic holiday stop with 10 Restaurants rather than the 200+ we have ..or two basic ski fields with hundreds of skiers rather than thousands ..or road with a few cars etc and not full of campers and suicide drivers .....

Still another 6wks and I won't be here In Qtn anymore

Don't get me wrong having international guests spending money here is great ....just not an industry I'd be keen to work in with the panthanic low wages >>

My sentiments exactly---In my travels ,I have seen to many places get the life sucked out of them ,for the almighty dollar,which incidentally,in many cases ,just causes unhappiness for the majority of those who live there.

[skid]

http://www.marketwatch.com/story/happy-birthday-bull-market-now-write-your-will-2016-03-09

[trader_jackson]

Did anyone else see a cut to 2.25 coming this morning? I wasn't expecting it this soon in the year...

Stocks with good dividends should react positively (in my view)

[sb9]

Did anyone else see a cut to 2.25 coming this morning? I wasn't expecting it this soon in the year...

Stocks with good dividends should react positively (in my view)

I wasn't expecting a cut until Monday, but after Fonterra cut their pay out on Tuesday, thought there is very good chance to cut the rate and Mr Wheeler obliged!!!

Great not only for high yield stocks and also for mortgage holders, lower for longer!!!

[bull....]

good news they cut if they didn't the dollar would be 70c now instead of 66c ( I was short nz dollar into announcement )

all eyes on the ECB tonight

[Peitro]

Which stocks will be significantly influenced by this?
NZD - FPH NZR
High div yield stocks - MEL CEN GNE
Tourism - SKC THL

Who else should I be watching today?

[bull....]

Which stocks will be significantly influenced by this?
NZD - FPH NZR
High div yield stocks - MEL CEN GNE
Tourism - SKC THL

Who else should I be watching today?

im in mel and spk stable businesses for the foreseeable future and great yields esp if deposit rates fall at banks

[winner69]

I wasn't expecting a cut until Monday, but after Fonterra cut their pay out on Tuesday, thought there is very good chance to cut the rate and Mr Wheeler obliged!!!

Great not only for high yield stocks and also for mortgage holders, lower for longer!!!

But pain down the track

But if we live for today who worries about next year anyway

[Bobdn]

NZ $ sinking. Just one more reason not to have all eggs in the NZX.

[sb9]

NZX tops 6500 briefly before easing back....who would've thought this would happen!!! This even after some big name stocks have gone ex-div...

[trader_jackson]

NZX tops 6500 briefly before easing back....who would've thought this would happen!!! This even after some big name stocks have gone ex-div...

Capital index well above 3200, will it get to a record 3300? Who knows... so far this "dead cat bounce" has continued for almost 2 weeks... I know for me, my share portfolio, heavily skewed to the nzx, has gone up every single trading day since February 29 :t_up:

[xafalcon]

NZX tops 6500 briefly before easing back....who would've thought this would happen!!! This even after some big name stocks have gone ex-div...

NZX 50 is a gross index. Ex-dividend make no difference because dividends are included in the NZX 50 index calculation

[skid]

NZ $ sinking. Just one more reason not to have all eggs in the NZX.

Golds doing well atm (in $NZ)

[Lewylewylewy]

Which stocks will be significantly influenced by this?
NZD - FPH NZR
High div yield stocks - MEL CEN GNE
Tourism - SKC THL

Who else should I be watching today?

Add SCL to your list there, and any other NZ based exporter

[bull....]

nz rates down , euro rates down big - us rates up? say what!

[bull....]

dragi should have cancelled speech lol

[skid]

sometimes you just gotta laugh...Marketwatch headline...Warning,low gas prices could cause cancer

[JBmurc]

nz rates down , euro rates down big - us rates up? say what!

yeah doesn't make sense in Global inter-connected banking world ...if they do the USD will surge and markets will be hit hard one would think>>

[pak]

Found this an interesting read so thought I'd share it.

http://investmentwatchblog.com/they-spent-it-all-on-hookers-blow-and-fancy-toys-hedge-fund-manager-predicts-lower-oil-for-longer-quantitative-easing-for-the-people-and-a-gold-bull-market/

[drcjp]

Found this an interesting read so thought I'd share it.

http://investmentwatchblog.com/they-spent-it-all-on-hookers-blow-and-fancy-toys-hedge-fund-manager-predicts-lower-oil-for-longer-quantitative-easing-for-the-people-and-a-gold-bull-market/

interesting read pak. A few reports like this coming out and I always get suspicious: is it a real trend or one smoothly coerced by writers. Hard to know but the herd mentality is real. Gold certainly has improved recently though.

[bull....]

crazy 2 nights on the markets! time for bed looks like the bulls took charge market remains on track possibly test the highs again of the channel 2100, 17800-18000 depends on the fed I guess

[Hoop]

Special Alert to all Sharetrader Members

Sorry to inform you that for safety reasons the next week's Black Monday has been cancelled, as the bulls have been accidentally let loose within the area.

Sorry for the inconvenience.
We are in the process of tracking down the idiot that left the gate open..

Yours sincerely
Mr Edward Bear

[skid]

Thanks for the warning Hoop

Mr Ido Bearall

[skid]

and me as well

Mrs. Betty Dont

[skid]

Lets hope this doesnt get out of hand

Mr Seymore Butts

[Snow Leopard]

...next week's Black Monday has been cancelled...

Anyone up for a round of golf then?

[trader_jackson]

Yes it would be terrible if the world starting feeling good about themselves again! Bring back the Bears!

Although earnings were better than expected in US*, Australia, and little old New Zealand, we must continue the doom and gloom motto that too cheap oil (of which banks have less than 5% exposure to) will cause the world to collapse.

*things were expected to be pretty bad, instead they were just 'not that good' (on the whole)

Disclosure: my portfolio has had its best 2 weeks ever, increasing 10%

[percy]

NZ Reserve Bank governor Wheeler, thank you,the world has responded.!

[Baa_Baa]

Yes it would be terrible if the world starting feeling good about themselves again! Bring back the Bears!

Although earnings were better than expected in US*, Australia, and little old New Zealand, we must continue the doom and gloom motto that too cheap oil (of which banks have less than 5% exposure to) will cause the world to collapse.

*things were expected to be pretty bad, instead they were just 'not that good' (on the whole)

Disclosure: my portfolio has had its best 2 weeks ever, increasing 10%

It won't be oil that causes a collapse in world markets, though it may contribute as will many other factors, by far the largest being debt, or more precisely the slowing capital creation, velocity of money and inability to refinance burgeoning public, business and sovereign debt.

You're penchant for accusing all and sundry as doom and gloom, who choose to monitor global economic health and it's correlations to assets and investing in NZ, is trite and superficial. A brief period of outperformance in your personal portfolio clearly is clearly a joyous event, though will you be so emboldened when the opposite happens, or worse, perhaps much much worse?

As a matter of interest, have you personally been invested and experienced any of the previous severe equity markets declines. If so what did you do?

[trader_jackson]

It won't be oil that causes a collapse in world markets, though it may contribute as will many other factors, by far the largest being debt, or more precisely the slowing capital creation, velocity of money and inability to refinance burgeoning public, business and sovereign debt.

You're penchant for accusing all and sundry as doom and gloom, who choose to monitor global economic health and it's correlations to assets and investing in NZ, is trite and superficial. A brief period of outperformance in your personal portfolio clearly is clearly a joyous event, though will you be so emboldened when the opposite happens, or worse, perhaps much much worse?

As a matter of interest, have you personally been invested and experienced any of the previous severe equity markets declines. If so what did you do?

Being relatively young, I have not personally experienced any of the previous severe equity market declines, nor do I know everything there is to know, I am also not aware of any that was caused because of cheap oil, I would be interested to know what your view is on the "many other factors" as important headline numbers like job creation, factory output, housing and building numbers, and retail sales seem to be doing ok and in some cases beating expectations, both here, the US and Australia (although I realize there are other countries, and am probably missing alot).

My families lifestyle, including mine, changed dramatically after 2008 so in some way I do have a very sober experience of what a decline in financial markets can do.

[winner69]

John Cochrane, the Grumpy Economist says we can fix the world economic and financial problems with a bit of getting back to basics and doing a bit of hard yakker

Nice piece of writing anyway

Our economy is like a garden, but the garden is choked with weeds. Rather than look for some great new fertilizer to throw on it, why don’t we get down on our knees and pull up the weeds? At least we know weeding works! For another metaphor, our economy has become like a hoarder’s house. For a while he could get through the passages and keep life going, but now the junk is closing in. Well, rather than read the architectural magazines about just what the perfect house will look like, let’s get to work cleaning up the mess.

[skid]

Being relatively young, I have not personally experienced any of the previous severe equity market declines, nor do I know everything there is to know, I am also not aware of any that was caused because of cheap oil, I would be interested to know what your view is on the "many other factors" as important headline numbers like job creation, factory output, housing and building numbers, and retail sales seem to be doing ok and in some cases beating expectations, both here, the US and Australia (although I realize there are other countries, and am probably missing alot).

My families lifestyle, including mine, changed dramatically after 2008 so in some way I do have a very sober experience of what a decline in financial markets can do.

It has been stated more than once on this thread (and if you do your research ) that manufacturing output for the USA has increased a bit so that it didnt drop as much as the 2 quarters before--but it still dropped. American households are earning about the same as the early 80s(especially unskilled)---(Corporations are doing just fine) the country is going in the direction of a giant Walmart where the owners are disgustingly rich ,while the working man suffers.
The mechanics of this ''tampered with'' economy we live in is not an easy thing to get ones head around at times and outcomes are uncertain(and potentially disastrous)
Perhaps you should practice the art of being cautious and happy at the same time--how hard is it to have a back up plan?(other than trying to convince posters in a tiny country that all is well,and there is no need for one)

This thread is not about predicting Doom and Gloom and scoreing points if it happens--It is about putting our heads together with the intention of being best prepared to survive as best we can if things do get ugly(like they have before)

[skid]

John Cochrane, the Grumpy Economist says we can fix the world economic and financial problems with a bit of getting back to basics and doing a bit of hard yakker

Nice piece of writing anyway

Our economy is like a garden, but the garden is choked with weeds. Rather than look for some great new fertilizer to throw on it, why don’t we get down on our knees and pull up the weeds? At least we know weeding works! For another metaphor, our economy has become like a hoarder’s house. For a while he could get through the passages and keep life going, but now the junk is closing in. Well, rather than read the architectural magazines about just what the perfect house will look like, let’s get to work cleaning up the mess.

Dont forget the part where some others are sitting in a barren piece of land where even weeds will not grow and in some bizarre way ,giving them a helping hand could actually help us, further down the road.(instead of some fat world bank character coming in and buying their soul)

[trader_jackson]

It has been stated more than once on this thread (and if you do your research ) that manufacturing output for the USA has increased a bit so that it didnt drop as much as the 2 quarters before--but it still dropped. American households are earning about the same as the early 80s(especially unskilled)---(Corporations are doing just fine) the country is going in the direction of a giant Walmart where the owners are disgustingly rich ,while the working man suffers.
The mechanics of this ''tampered with'' economy we live in is not an easy thing to get ones head around at times and outcomes are uncertain(and potentially disastrous)
Perhaps you should practice the art of being cautious and happy at the same time--how hard is it to have a back up plan?(other than trying to convince posters in a tiny country that all is well,and there is no need for one)

This thread is not about predicting Doom and Gloom and scoreing points if it happens--It is about putting our heads together with the intention of being best prepared to survive as best we can if things do get ugly(like they have before)

I completely agree with you, I am probably a bit to positive, and I agree this thread is designed to share views etc and prepare/adjust accordingly... my only 'thought' is that I do get the feel sometimes when things aren't to bad, us Kiwi's are very good at talking ourselves into an unreasonably deep hole when there probably isn't one (or at least not as deep)

[skid]

I completely agree with you, I am probably a bit to positive, and I agree this thread is designed to share views etc and prepare/adjust accordingly... my only 'thought' is that I do get the feel sometimes when things aren't to bad, us Kiwi's are very good at talking ourselves into an unreasonably deep hole when there probably isn't one (or at least not as deep)

I think most of the talk is about other parts of the world at this stage,but with globalization we all need to keep in touch--otherwise,just looking at the NZX its certainly not so bad.--There were some articles in the papers regarding the shock interest rate cut,that certainly did raise some concerns though---they mentioned the main concern is other countries slipping into a spiral of deflation,similar to japan,for the last decade.

[sb9]

Another record day for NZX, up to 6570 now...

[Lewylewylewy]

I wonder what would happen to share prices if we started to see deflation. I imagine people would want to hold cash, for obvious reasons. But how would deflation effect the actual value of companies and their ability to earn and pay dividends. I suppose it would reduce the value of them as deflation suggests that the price of their goods are going down, therefore profits decrease? Do any companies increase in value during deflationary behaviour? Perhaps companies holding lots of cash or ones whose suppliers are competing heavily causing costs to drop more than the price of the company's goods / services? Maybe monopolistic companies would flourish as the value of cash increases, but their prices don't go down as they're a monopoly?

[sb9]

http://www.interest.co.nz/news/80572/banks-including-anz-bnz-kiwibank-tsb-westpac-cutting-savings-rates-some-now-low-075

Could explain to some extent why NZ Stocks are performing so strongly....

[JBmurc]

Who watched the BIG Short .....worldwide Property Bubble ready to pop once again

https://www.youtube.com/watch?v=3hG4X5iTK8M

[stoploss]

Who watched the BIG Short .....worldwide Property Bubble ready to pop once again

https://www.youtube.com/watch?v=3hG4X5iTK8M

Yes , I actually liked the book better. .... but one day all the money printing , low rates , will come and haunt us all.

[Xerof]

Hope none of you are holders of Bespoke Tranche Opportunities:eek2::eek2:

[bull....]

the bears must have gone into hibernation on this thread or left the house 300 pts dow or 2% away from last high not much room left for the bears to say its still a down trend

[trader_jackson]

Very quiet indeed...

With "solid" data out of the states overnight/this morning, combines with the Dow turning positive for the year, I think we could see the NZX 50 close over 6600 today

[winner69]

Very quiet indeed...

With "solid" data out of the states overnight/this morning, combines with the Dow turning positive for the year, I think we could see the NZX 50 close over 6600 today

Yield curve in US has steepened (sharply) in US since Janet said a few things yesterday

[skid]

Very quiet indeed...

With "solid" data out of the states overnight/this morning, combines with the Dow turning positive for the year, I think we could see the NZX 50 close over 6600 today

and all because of that ''black gold--Texas Tea''...that ''just another commodity'' ..Fed Ex and Boeing ,helped along with cheap oil,and the market in general helped along by more expensive oil--the typical dichotomy. -Janet has helped keep the $US from going up with no change in interest rates.(no one in their right mind would have done that)--To be able to raise interest rates gradually like they had hoped would mean that the experiment might be working and they can get back to normalcy --no chance at this stage.(the high dollar killed that)
But it looks like the bullet has been dodged for now--Yes Bull ,the bears are getting sleepy.....party on people! (until the next rate increase and higher dollar and etc etc.)

[Hoop]

Yield curve in US has steepened (sharply) in US since Janet said a few things yesterday

The yield curve is one of my "ducks"....when it inverts it can be a recession warning signal

This 21 month old article tells a bit about it...The interesting thing about the yield curve is that Janet will be watching it and making sure it's not going to invert...she fixed that yesterday..eh Winner..
Going down the regulation path is fraught with dangers so one has to be nimble and very smart...I've noticed that when the NZ swaps get close to inverting Wheeler doesn't raise the OCR...An example was this latest so-called "surprise" OCR rate drop..I was talking on Facebook to a guy 2 days before the OCR cut saying this exact reason why a drop is on the cards.. saying that if Wheeler didn't do it it would've been seen in theory as bad management as it creates an extra risk to enable the yield curve to invert.

Smoke mirrors and manipulation :)

[skid]

The yield curve is one of my "ducks"....when it inverts it can be a recession warning signal

This 21 month old article tells a bit about it...The interesting thing about the yield curve is that Janet will be watching it and making sure it's not going to invert...she fixed that yesterday..eh Winner..
Going down the regulation path is fraught with dangers so one has to be nimble and very smart...I've noticed that when the NZ swaps get close to inverting Wheeler doesn't raise the OCR...An example was this latest so-called "surprise" OCR rate drop..I was talking on Facebook to a guy 2 days before the OCR cut saying this exact reason why a drop is on the cards.. saying that if Wheeler didn't do it it would've been seen in theory as bad management as it creates an extra risk to enable the yield curve to invert.

Smoke mirrors and manipulation :)

and you know what they say about a broken mirror and 7 years bad luck

[trader_jackson]

Ladies and Gentlemen, can we finish above 6600? :ohmy:

[trader_jackson]

Yes we can! Big last minute jump pushing the index to a record 6624!... I was watching MRP at closing, huge volume was brought/sold!

*the bears remain speechless*

[winner69]

Yes we can! Big last minute jump pushing the index to a record 6624!... I was watching MRP at closing, huge volume was brought/sold!

*the bears remain speechless*

You forget t_j - Bearishness Is Strictly For Informed Optimists

Better than just being overexcited - too much sugar and colourants in the lollies I fear - cut back on them mate

[trader_jackson]

You forget t_j - Bearishness Is Strictly For Informed Optimists

Better than just being overexcited - too much sugar and colourants in the lollies I fear - cut back on them mate

I am just pulling everyone's leg...!

However, I still find it quite amazing how when things fall, no mater if it is now, a year ago, or 4 years ago (when the NZX began its 'metric' rise) everyone rushes onto the Black Monday forum wondering how low it can go, how bad it can get etc etc (we only need to look at the 40% of people who thought the index would be 5800 at December 31, which looking a little far fetched and in stark contrast to the brokers who believed a 7% or so gain was still possible... however I appreciate we still have a fair few months till Christmas)

At least this is what the mood feels like for me...

Anyway, none the less, cutting back sugar wouldn't be a bad thing ;)

[Beagle]

Going out for a good curry tonight and will ask for extra rice, trying to soak up the excess sugar. Wheeler really piled it on didn't he !!

[xafalcon]

Dec 31 is still a looooooong way in the future. I'm picking the "Trump factor" to hit equity markets from Jul-Nov, and am planning to be "all-out" before then

The sheer unpredictability of his comments, the lack of any discernible policies of any substance, his apparent lack of consistency (early Alzheimers?), the massively inflammatory nature of his ideas, and the over-riding message "let's make America great again, screw the rest of the world" will likely spook many investors

And remember I'm an optimist.......

[skid]

Dec 31 is still a looooooong way in the future. I'm picking the "Trump factor" to hit equity markets from Jul-Nov, and am planning to be "all-out" before then

The sheer unpredictability of his comments, the lack of any discernible policies of any substance, his apparent lack of consistency (early Alzheimers?), the massively inflammatory nature of his ideas, and the over-riding message "let's make America great again, screw the rest of the world" will likely spook many investors

And remember I'm an optimist.......

Its scarey alright XF,but keep in mind he is only tapping into a very real discontent(ie a real problem in American society,which has economic as well as political and social roots) His lunacy ,and popularity,just shows how strong that feeling is.
somethings going to have to give,maybe,or maybe not this time around.But it will come..things cannot go on like this,there is to much discontent (and for good reason).....but its scary alright ..this trump thing

[skid]

I am just pulling everyone's leg...!

However, I still find it quite amazing how when things fall, no mater if it is now, a year ago, or 4 years ago (when the NZX began its 'metric' rise) everyone rushes onto the Black Monday forum wondering how low it can go, how bad it can get etc etc (we only need to look at the 40% of people who thought the index would be 5800 at December 31, which looking a little far fetched and in stark contrast to the brokers who believed a 7% or so gain was still possible... however I appreciate we still have a fair few months till Christmas)

At least this is what the mood feels like for me...

Anyway, none the less, cutting back sugar wouldn't be a bad thing ;)

Some times it takes a long time to create such a perfect horrible situation...meddle here...meddle there..until at some point no matter how much you meddle ,it just falls apart.....so enjoy it while you can

[Bobdn]

Yes we can! Big last minute jump pushing the index to a record 6624!... I was watching MRP at closing, huge volume was brought/sold!

*the bears remain speechless*

It has certainly been an amazing couple of weeks but not that many weeks ago I was down a good 50k to 60k over an eleven day period (thanks BHP and ANZ). Oh it's all fine now, sure, but anyone who went through 1987 knows how dark it can get in a blink of an eye.

I type this in a park, quietly eating fish and chips, drinking pepsi max, trying not to provoke karma.

[fungus pudding]

It has certainly been an amazing couple of weeks but not that many weeks ago I was down a good 50k to 60k over an eleven day period (thanks BHP and ANZ). Oh it's all fine now, sure, but anyone who went through 1987 knows how dark it can get in a blink of an eye.


Except in 1987 to drop 50 to 60k might have meant you started with 51 or 61k.

[Bobdn]

So true Fungas!

[sb9]

Anyone notice big volumes in MEL (35ml), SKT (29ml), SPK (15ml) and SKC (9ml). What's interesting is most of big numbers gone thro' after market close.

Just normal?

[sb9]

Just checked on NZX website total turnover for the day $530 ml and volume 145 ml shares, must one of the biggest days if not the biggest!!!

[trader_jackson]

http://www.scoop.co.nz/stories/BU1603/S00653/market-close-half-billion-dollar-day-for-nzx.htm

Wow!

"It looks like someone was doing a portfolio buy!"

Probably what pushed up the index from just over 6600 to 6624.

[Baa_Baa]

Perhaps with the DOW etc approaching stern resistance and NZX being one of the very few markets apparently immune from international gyrations, the biggest money decides it will sell to take profits .. to the big money locally. We easily forget as retail investors that the biggest money owns our market and it isn't local money. Follow it, the money that is.

[Xerof]

Anyone notice big volumes in MEL (35ml), SKT (29ml), SPK (15ml) and SKC (9ml). What's interesting is most of big numbers gone thro' after market close.

Just normal?

This comes up every quarter, quarter after quarter, year after year. Yes, normal, as its Index portfolio adjustments going through

[Beagle]

http://www.scoop.co.nz/stories/BU1603/S00653/market-close-half-billion-dollar-day-for-nzx.htm

Wow!

"It looks like someone was doing a portfolio buy!"

Probably what pushed up the index from just over 6600 to 6624.

I know A2 milk was included for the first time in the ASX300 index yesterday so I'd imagine a number of other companies had inclusions in that or the ASX200 index.

This stood out from the article you kindly provided a link for, (bet you everyone thinks I'm going to reference the bit about AIR N.Z. being cheap.. but sorry to disappoint)


"The market's at an all-time high but interest rates are at an all-time low. We're starting to see investors rolling off term deposits. A portion of that's going to go into the equity market. Listed property vehicles and some of our key infrastructure stocks on the market are prime targets for investors because of their consistent cashflows."

People are looking at circa 3% before tax on term deposits, (that's circa 2% after tax for those on a 33% tax rate) when they roll over for the next term. On the other hand Listed Property Trust's with reliable and growing PIE, full tax paid distributions are still yielding over 5%, examples include ARG and GMT. 5.1% fully taxed doesn't sound flash but for a 33% tax rate investor that's 7.6% gross and they're not subject to the open bank resolution if the custard ever hits the fan properly.

As the year unfolds and interest rates track even lower still I expect term deposit rates to go under 3% and the fairly safe listed property trusts to continue to perform well. Boring but pretty safe and increasingly attractive to retired folks seeking yield. Disc - Recently added more GMT and ARG. Good to have some boring stocks to mix with the higher octane more volatile ones :)

[Hoop]

What drives the market?,,,,,,,,available money!!!...and we saw a lot of that yesterday..eh?

Money!!!!!!

The NZ$ is a big global currency, 10th largest in the world...Over 2 years ago Brian Gaynor wrote this article (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11176031)...The reason why I have dredged up his article is that the Triennial Central Bank Survey is due to be published again in April 2016 ..Brian Gaynor's article referred to the The triennial Central Bank Survey April 2013 survey (http://www.bis.org/publ/rpfx13.htm) The survey has a wealth of information data containing not only currency exchange and Bank data but also..for example, the Property Market with comparisons in Nominal values from other countries in quarterly series going back to 1970..Some survey results are in spreadsheet form which is continuously updated e,g the property market is updated every quarter up to the latest 31/12/2015 (http://www.bis.org/statistics/pp_long.htm?m=6|288|595)..This data comparison is interesting as it shows NZ's property market is well overvalued and how much when compared to other Countries around the World.

Also of interest are the Countries whose property markets were affected by the 2008 GFC but the lag effect saw these markets tumble later, during 2009 - 2011 period, well after the 2008 GFC.

The Survey website is a great data source for reference and research...When reading an article one can refer back to the 2013 survey to check if the media is telling porkies or not...remember some of the 2013 survey spreadsheets are continuously updating.


(http://www.bis.org/publ/rpfx13.htm)

[skid]

This comes up every quarter, quarter after quarter, year after year. Yes, normal, as its Index portfolio adjustments going through

agree...when apparent mysteries like this occur,its hard to look past the end of the tax year.--Its easy to miss things like these adjustments when we are caught up in our particular share ''bubble''---Its like being in a little micro community surrounded by like minded people--but if we get in our hot air balloon and go up,things can look quite different.

[skid]

What drives the market?,,,,,,,,available money!!!...and we saw a lot of that yesterday..eh?

Money!!!!!!

The NZ$ is a big global currency, 10th largest in the world...Over 2 years ago Brian Gaynor wrote this article (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11176031)...The reason why I have dredged up his article is that the Triennial Central Bank Survey is due to be published again in April 2016 ..Brian Gaynor's article referred to the The triennial Central Bank Survey April 2013 survey (http://www.bis.org/publ/rpfx13.htm) The survey has a wealth of information data containing not only currency exchange and Bank data but also..for example, the Property Market with comparisons in Nominal values from other countries in quarterly series going back to 1970..Some survey results are in spreadsheet form which is continuously updated e,g the property market is updated every quarter up to the latest 31/12/2015 (http://www.bis.org/statistics/pp_long.htm?m=6|288|595)..This data comparison is interesting as it shows NZ's property market is well overvalued and how much when compared to other Countries around the World.

Also of interest are the Countries whose property markets were affected by the 2008 GFC but the lag effect saw these markets tumble later, during 2009 - 2011 period, well after the 2008 GFC.

The Survey website is a great data source for reference and research...When reading an article one can refer back to the 2013 survey to check if the media is telling porkies or not...remember some of the 2013 survey spreadsheets are continuously updating.


(http://www.bis.org/publ/rpfx13.htm)

Property is obviously a bit more illiquid than other things like shares but having that lag would certainly come in handy for selling up.

ATM having rentals is certainly providing a better return on the investment (at my stage) than cashing up and putting the dosh in the bank.

Bit of work though,but keeps me a bit more active in retirement.

[NZSilver]

I think markets will have a freak out in the near term and there will be some excellent buying opportunities on the NZX - so many solid dividend paying companies the eps growth! - its pretty amazing to have 15- 25%+ capital return + 5-9% div yields. Dow back on the move, but it is only a matter of time before there is "worry" over china's growth, or "negative statistics" regarding Americas economic recovery. Bear or Bull who knows.. But looks more Bull at the moment. Low interest rates driving market sentiment (property and shares) - where else do you put money? - except for a little bit in the bank for opportunities.

[Hoop]

Property is obviously a bit more illiquid than other things like shares but having that lag would certainly come in handy for selling up.

ATM having rentals is certainly providing a better return on the investment (at my stage) than cashing up and putting the dosh in the bank.

Bit of work though,but keeps me a bit more active in retirement.
Sure...Probably using the property market as an example may not have been the best option to get my meaning across in the last post ...I wasn't intentionally inferring that the property market is going to bust at some stage (it may or it may not..it may simply absorb by just not increase much more for long period of time)...My meaning in the post was, that looking at all data you get a sense of how and why the markets work the way it does...you also get a feeling of the networking of markets and the players in action at the moment...If other people want more than your intangible feeling then you are able to back it up with concrete proof by crunching the numbers from the spreadsheets..

[xafalcon]

This data comparison is interesting as it shows NZ's property market is well overvalued and how much when compared to other Countries around the World.

But the NZ property market isn't over-valued.

While prices continue to rise, it must still be undervalued - nobody pays more for a house (or anything else) than they have to, and they can always say "no thanks, your price is too high". The fact that house prices in general are still rising shows that the buyers believe the current prices still represent acceptable value for money

Only when prices actually start falling are houses over-priced

I do not see prices significantly falling for a number of years, if ever. NZ's housing shortage is still getting worse. Auckland's housing market will get it's second wind in the next month or so

[skid]

Sure...Probably using the property market as an example may not have been the best option to get my meaning across in the last post ...I wasn't intentionally inferring that the property market is going to bust at some stage (it may or it may not..it may simply absorb by just not increase much more for long period of time)...My meaning in the post was, that looking at all data you get a sense of how and why the markets work the way it does...you also get a feeling of the networking of markets and the players in action at the moment...If other people want more than your intangible feeling then you are able to back it up with concrete proof by crunching the numbers from the spreadsheets..

I believe that was a fair comment and certainly would not rule out a fall in the housing market--simply commenting on the lag,which if it plays out that way(if it happens) would be a financially lifesaving situation.

i look at the housing market a bit like i look at the economy--I just dont see it continuing on this path indefinitely. Something has to give.
it could be a dive in the economy--It could be something that eliminates overseas buyers from the market(change in Chinas policies?)
The only way i can see it carrying on is for NZ to become a ''servant to overseas ownership'' economy.
Property owners would prosper,but most would ''work'' for foreign owned entities. (Ive seen it in a number of places) Hawaii is a great example.

XF--People are still buying at this stage,but does that mean that houses are not overvalued? I suppose it depends on the scenario--right now the King has clothes,but in todays world he could be buck naked in no time.(If Hoops theory rings true,maybe you could get out while he was still in his boxers):)

My comments were just alluding to the fact that I have always depended on capital gain on my places(lucky to buy in the early days in Auckland) ,but in most cases if I had sold up,I would have made a better cash flow in a term dep.---The pendulum seems to have swung now and i am getting the same or better return on rents than the same house value in the bank.(or at least alot closer)

Is Auckland really such an important city (in world terms) that an absolute rotting dump is worth 2 mill(Grey Lynn) just to be close to it?

The numbers must be getting big enough $$$ that some bright spark who could figure out a way to transport people easily would be on to a billion dollar idea (at the expense of Auckland housing $$$)

[xafalcon]

XF--People are still buying at this stage,but does that mean that houses are not overvalued? I suppose it depends on the scenario--right now the King has clothes,but in todays world he could be buck naked in no time.(If Hoops theory rings true,maybe you could get out while he was still in his boxers)

Buyers are still driving up house prices, so they must see value there. If buyers didn't see value at the price currently being offering, they would be offering less. Hence I do not see houses being over-valued today.

As economic circumstances change, the value price point will change. At present NZ has a booming economy with a great lifestyle and lots of people want to come here to live. Hence I think the current price trend will continue for a while (I've no idea how long)

Eventually, NZ will see XS people moving to greener pastures across the ditch and further afield. Then the housing supply:demand balance will likely change and offering prices may flatten or fall (I have no idea when)

I assess true value as the amount a willing buyer is prepared to pay a willing seller, and trend across many sales. REINZ data is a good source. The trend in house value still seems to be rising

Value is clearly different to affordability, investment return, risk etc and everybody has a different value-factor for certain housing attributes. ie. value is in the eye of the beholder. I would assess each of the above differently to my value definition

[skid]

Our booming economy looks good when we look at the NZX,but no quite as good when we look at our biggest export and the fact we need most out our money from overseas (banks,lending etc)---Wheeler must have been concerned when he made the shock interest rate drop.

Right now housing value is what people are prepared to pay(I wonder how many are Chinese wanting to get their money out of China--How do they see value?)..but lets face it ,almost all of our discussions have to do with ''what will happen in the future''...How ''now'' affects the future ..maybe near future.

no one is going to give you $3 for AIR shares today..but next week ..who knows?

This is one of those hazy discussions where if you are right ,it will be good for me and if Im right ..it wont--crazy world eh?

One things for sure (at least now) houses are for real(and the dirt they are on) especially if you own them outright,so thats a comfort to know if your getting on. (even if they become worth a bit less)

[dobby41]

Buyers are still driving up house prices, so they must see value there. If buyers didn't see value at the price currently being offering, they would be offering less. Hence I do not see houses being over-valued today.

As economic circumstances change, the value price point will change. At present NZ has a booming economy with a great lifestyle and lots of people want to come here to live. Hence I think the current price trend will continue for a while (I've no idea how long)

Eventually, NZ will see XS people moving to greener pastures across the ditch and further afield. Then the housing supply:demand balance will likely change and offering prices may flatten or fall (I have no idea when)

I think you are assuming some rationality here.
Often the housing market isn't entirely rational - there is FOMO and the hype from the media.

As for booming economy - the GDP grows at little more than the population rise - doesn't sound 'booming' to me.

When (if) people do decide to move on Ak property prices will dive fast.

[xafalcon]

I think you are assuming some rationality here.
Often the housing market isn't entirely rational - there is FOMO and the hype from the media.

As for booming economy - the GDP grows at little more than the population rise - doesn't sound 'booming' to me.

When (if) people do decide to move on Ak property prices will dive fast.

I'm simply reading the data. Buyers are valuing houses at current prices with continuing upwards momentum. I don't know how long it will last before flattening off. But I don't see any significant probability of a meaningful drop in Auckland housing values since the housing shortage in Auckland is acute, barring a catastrophic event hitting NZ economy

Check your math. When I do the calc's I see population growth as being one of several contributors to growth. 65K/4.5M = 1.4%. Growth is over double that, with our previously top export earner presently "on the ropes". So I see scope for increased growth as dairy prices move closer to historical averages and tourism continues to expand

Remember it's important to check whatever you read/hear in the NZ media. They were happily parroting the "GDP growth is only due to population increase" for the last 10 days. But doing some simple maths shows they didn't sense-check the underlying figures. Maybe they don't know how to? But in NZ doom & gloom stories sell better than real investigative journalism, so we end up with rubbish statements like the above being taken as fact

[Hoop]

Overall NZ economic growth GDP looks OK at the moment..the last 2 quarters at 0.9% each is very good (above historic average) for NZ..a hellva lot better than most Countries around the World atm..
Notice from the Chart when NZ was labelled a rock star economy nothing much has changed since...therefore NZ must still be a rock star.....eh


The next chart is measured in US$http://cdn.tradingeconomics.com/charts/new-zealand-gdp-growth.png?s=nzntgdpc&v=201603201708n&d1=19160101&d2=20161231
http://cdn.tradingeconomics.com/charts/new-zealand-gdp.png?s=wgdpnewz&v=201603101226n&d1=19160101&d2=20161231

[Hoop]

And here is the GNP chart...Note: measured in NZ$

http://cdn.tradingeconomics.com/charts/new-zealand-gross-national-product.png?s=newzealangronatpro&v=201603201510n&d1=19160101&d2=20161231

[winner69]

And here is the GNP chart...Note: measured in NZ$

http://cdn.tradingeconomics.com/charts/new-zealand-gross-national-product.png?s=newzealangronatpro&v=201603201510n&d1=19160101&d2=20161231

Good one Hoop

NZ economy 'not doing that well' story is just acbank economists beat up to sway Wheeler into OCR cuts for their own selfish greedy reasons, like margins. And the media fall for it and the public lap it up.

Those economists find something bad in every release these days. They don't admit that construction, tourism, services and even manufacturing are doing OK, if not booming.

They concentrate on dairying. The who agriculture, forestry and fishing industry sector makes up 9% of GDP so dairy has to be much less than 8% of GDP

[xafalcon]

And here is the GNP chart...Note: measured in NZ$

http://cdn.tradingeconomics.com/charts/new-zealand-gross-national-product.png?s=newzealangronatpro&v=201603201510n&d1=19160101&d2=20161231

This is a telling chart. Very solid and consistent growth over a period of world turmoil. 25% over 6 years, or 3.8% yoy compounding

Well done NZ I say

[winner69]

Migration had an impact overvthe last few years - today's newvsays net migration surged past 67,000

On a per capita basis still OK

But whose complaining -its all economic activity eh

[dobby41]

Check your math. When I do the calc's I see population growth as being one of several contributors to growth. 65K/4.5M = 1.4%. Growth is over double that, with our previously top export earner presently "on the ropes".

I don't have the figures.
Westpac, in their weekly report today

It is important to note that population growth, driven by
strong net immigration, has played an increasing role
in New Zealand’s economic growth over the last few
years. Over 2015, GDP rose by 2.5%, while the population
increased by 1.9%. The net result was per capita growth of
just 0.6%, which is well off the pace seen in previous years.
Don't know where Dominick got his figures from but they differ from yours.

Of course it could be from Stats NZ

During the June 2015 year:
New Zealand's population grew by 86,900 (1.9 percent).
Natural increase was 28,700 and net migration gain was 58,300.


Maybe they are wrong also?

[winner69]

Record net migration has help the economy grow, and the way Dominick and others talk that's a negative

So what

Do shareholders complain if a company's share price goes up because it got heaps of new customers?

Growth is growth

[Hoop]

It is important to note that population growth, driven by
strong net immigration, has played an increasing role
in New Zealand’s economic growth over the last few
years. Over 2015, GDP rose by 2.5%, while the population
increased by 1.9%. The net result was per capita growth of
just 0.6%, which is well off the pace seen in previous years.

This is the wrong way to analyse data


Migration had an impact overvthe last few years - today's newvsays net migration surged past 67,000

On a per capita basis still OK

But whose complaining -its all economic activity eh

GDP/capita (PPP) measured in USD

the chart only goes to 2013
so add 2014...35,305 M (actual) 2015.....35966M (Est) 2016....36979M (Est)..IMF figures

Migration?... no dilution factor seen here..If one marks in the 2014 actual and forward est 2015 2016 there's an accelerated uptrend in progress... No evidence with this measure of the NZ economy that the increased amount of migration negatively effects the economy? if anything one could say it is having a positive effect ...eh Winner

http://cdn.tradingeconomics.com/charts/new-zealand-gdp-per-capita-ppp.png?s=nzlnygdppcapppcd&v=201601121613n&d1=19160101&d2=20161231

[skid]

in terms of housing..

Keep in mind it would be very easy for one element of that ''population growth'' to quickly taper off....overseas buyers----that seems to have a biginfluence on house prices at auctions.

China is big on shifting to a domestic economy--all it would take is a few new rules over there.

The other danger is the flow on effect of a housing crash in other places..again China and closer to home OZ---America didnt seem to affect us to much ,but china and OZ could be a different story.

In terms of now..prices are falling a bit-----the other option is prices stay the same over time until the market catches up(providing we still have inflation)

We really have to be in the ''prediction'' game though dont we? Its whats coming up in the future thats the big question.. When we talk about now.what we are really saying is ''this is whats happening now so I think because of this,I think this is what will happen in the future.---Mind you, with housing stats,even now is sometimes hard to decipher--depends on whose doing the calculations.

This was in reply to an earlier post--but subsequent posts do seem to support the NZ economy (I do get nervous when I hear ''rock star''economy though-----makes me remember Ireland)

[arc]

I was talking with someone last week and they mentioned the negative interest rate scenario. I am having a hard time following the concept. Can someone here describe why the current negative interest rate slide might tip the world economy into global depression?

http://www.businessinsider.com/interest-rates-dangerously-negative-2016-3

[BlackPeter]

I was talking with someone last week and they mentioned the negative interest rate scenario. I am having a hard time following the concept. Can someone here describe why the current negative interest rate slide might tip the world economy into global depression?

http://www.businessinsider.com/interest-rates-dangerously-negative-2016-3

Negative interest rates are not really the cause of the problem ... they are just a symptom of deflation (or the risk of it). Deflation is bad because it makes consumers stop buying things ... actually - just look at the share market - as long as prices go up, everybody is happy and keeps pushing prices ... it makes sense to buy now, if you know that whatever you want to buy will be more expensive next week / month / year.

However - in a deflation (basically a bear market for consumer goods) everybody delays buying as long as any possible ... since whatever they might want will be cheaper next week /month / year. Negative interest rates are sort of trying to fix that ... while whatever you want to buy in a deflation might be cheaper next year, you will have as well less money to buy it (because you "received" negative interest).

Problem with the concept of negative interest rates is that it is unproven ... and people have other options than buying consumer goods to avoid the undesirable negative interest rates like e.g. buying (unproductive) property for speculative purposes, buying gold, silver, other resources, hoarding cash, ...

Its in my view the deflation and the "side effects" of negative interest which may kill the economy.

[xafalcon]

I don't have the figures.
Westpac, in their weekly report today

Don't know where Dominick got his figures from but they differ from yours.

Of course it could be from Stats NZ


Maybe they are wrong also?
Further to Hoop's comments

As an individual's contribution to GDP is not consistent from birth to death I prefer to use PLT immigration gain as a proxy for working age population growth. The working age population is the "engine room" for GDP

I think this is far more real-world than assuming a new-born has a similar effect on GDP as a working age person. Ditto a retired person (which is now the largest growing demographic of NZ citizens)

My understanding is that every child born today is roughly matched by one person retiring (the baby boomers), so NZ's natural population growth is in reality an increasing number of 65+ who have a much smaller impact on GDP than working age people

In summary, without some weighting for different age groups relative contribution to GDP, any population increase comparison is somewhat misleading when normalised against total population

[skid]

Further to Hoop's comments

As an individual's contribution to GDP is not consistent from birth to death I prefer to use PLT immigration gain as a proxy for working age population growth. The working age population is the "engine room" for GDP

I think this is far more real-world than assuming a new-born has a similar effect on GDP as a working age person. Ditto a retired person (which is now the largest growing demographic of NZ citizens)

My understanding is that every child born today is roughly matched by one person retiring (the baby boomers), so NZ's natural population growth is in reality an increasing number of 65+ who have a much smaller impact on GDP than working age people

In summary, without some weighting for different age groups relative contribution to GDP, any population increase comparison is somewhat misleading when normalised against total population

You would probably find some of Harry Dents stuff interesting--(you can Google it)

As a side bar (in terms of the housing debate -some believe its overvalued) ''Overvalued'' by definition means that people are valuing an item to high(it makes no difference that the item is being bought and sold at that value)--This will carry on until the masses realize that they have gotten the value wrong--if in fact it is overvalued.---If it is overpriced-then people will be more apt to not buy.---the point is that both buyers and sellers can be wrong about the value of any product --One of the biggest stumbling blocks that can derail whole thing, is the notion that prices will continually increase and the fact that the masses use that idea to buy what they cant afford--(which is tickety boo as long as that happens---but if that doesnt happen (due to many factors like increase in interest rates or deflation,the house of cards can fall. If they do people will quickly learn that thy're concept of value has shifted considerably)---of course this is true with any asset.(inevitably share markets become overvalued and reset them selves (correction)or if it goes for to long ..recession..but if a basic mechanism of the economy fails--then it can get ugly
For those wanting to learn more about an economy caught in a deflationary cycle,just research Japan in the last 15years---This was a slow cycle.

lets just stop and think about this for a moment--New Zealand is a very tiny economy. It still has its ups and downs and needs to be productive to be successful--Its doing relatively well at the moment.
But the fact that we are so tiny makes us far more susceptible to outside forces(globalization)
We will eventually pay dearly for other countries mistakes,especially the big ones.
It would be naive to think we are totally insulated from this. But as long as world markets are in a more or less ''holding pattern'' we can continue to ''do our thing'' and reap the rewards--We do have alot of things going for us,but if things do become unhinged in the outside economic world ,then regardless of how well we are doing ,we will pay----Its not fair ...but neither is unbridled Capitalism.
If deflation hits the world..It will pay a visit to NZ and no matter how much of a housing shortage we have,we will not spend as many of those precious dollars.
the killer is that we will most likely not be able to get our hands on the dollars we have(physically) in the bank---New laws will quickly be utilized----Even now ,go down and try to get $800,000 in cash out of the bank(even if you do have a super king size mattress,and an Armoured truck.) and lets say you do pull that off(on the quiet?)..you just get your mattress filled and DOH! $100 bills get taken out of circulation,not to mention the fact that you are looking ,and feeling like a criminal,even though the money is yours---Capitalism is not freedom,Its Darwinism

But ofcourse this is just what could happen.(and deviating from the status Quo just makes many want to open up their box of labels,and maybe throw in some adjectives as well..) Have a nice day folks...yes,its still very doable!

[xafalcon]

Thanks, I will google Harry Dent over the w/e

Housing value includes tangible aspects (price, size, amenities, location) and intangible aspects (location, colour, character, design, feel). It is not a typo having location being both tangible and intangible

So value is very much in the eye of the individual purchaser. It is not possible to "value" a house mechanistically (term borrowed from G Wheeler, but I think it fits perfectly) to determine if it is under or over valued by the market. That assessment of value depends entirely (and only) on the ultimate purchasers particular circumstances, and only the purchaser can attach a dollar amount to the value they perceive a house possesses

In housing value (or price), the sellers perspective is completely irrelevant. The value or price is entirely determined on the demand side. eg. A seller can "value" their property at $500k, but if the highest bid/offer is $400k, then that is the current value for the circumstances prevailing at the time

Deflation is unlikely to take hold. Far too much focus on headline inflation. Try looking at underlying inflation instead. Japan is a notable exception, but they need to address their whole economic management to start solving deflation.

[skid]

you are talking about houses (within the market) I am taliking about (potentially) the market itself...(the framework in which value decisions made.)

Harry Dent is big on Demographics and is (has) been making some pretty dire predictions.

He has an interesting theory but I think he is neglecting the fact that these are timelines that can take ages.
(be prepared for catastrophic doom predictions)

[Hoop]

"...Deflation is unlikely to take hold..." Economist types on ST may disagree but I personally see Inflation / Deflation as the economic equivalents of yin and yang...Just because we have had 80 years of inflation doesn't mean deflation won't happen ever again..The scary thing about this very long inflationary period, is the fact that looking back on the 1000yr chart (England) this period of inflation could be considered abnormally long..Usually when an event is unusually long the participants start believing that this time it is different...

An interesting thing about deflation (apart from depressions) it naturally occurs during Industrial Revolution periods. History tells us there has been 2 previous IRs and the world is in the process of the 3rd IR so therefore using this historic correlation, the assumption would be if there is a time in the future that developed nation economies would have a period of deflation now would be ideal for a period of deflation to start....This young 3rd IR is still mostly technically based but is expected to expand (disrupt) into other sectors ..atm we have already seen the evidence of deflationary behaviour from those earlier technical sectors being disrupted such as electronics, communications etc..

Property and demographics..The property market is at risk from demographic change...
Large (3&4 brm) up market housing is the vogue atm with the baby boomers but the two next generations (X and Y) property behaviour profiles are different...also the generation replenishing population numbers are lower than the exiting baby boomer generation (either dying or scaling down to retirement apartments)..migration figures need to fill the gap...

Our very own ST member Halebop is very knowledgeable in this area....maybe if we ask nicely ....:)

[xafalcon]

I'll put my statistics hat on for this one.......

A sample set of 2 isn't anywhere near large enough to make any valid inferences from - A completely random pair of variables would be expected to show complete correlation 25% of the time, simply as a matter of chance.

Previous IR's have not occurred in a globalised world, so circumstances are quite different.

The combination of these two makes any inference no better than pulling an answer out of a hat

[winner69]

Maybe relevant but a good tweet anyway

@jessefelder: Central bankers behaving like lab rats frantically pressing a bar in hope more food pellets will come out. They ain’t comin’. -@hussmanjp

[see weed]

So much for black Monday. I have about $12k in divs coming my way in next 2 weeks from BRM,MLN,GNE,PGW,HBY,IFT,TTk. Do you think we should start up a green Friday thread?:t_up:.

[Hoop]

I'll put my statistics hat on for this one.......

A sample set of 2 isn't anywhere near large enough to make any valid inferences from - A completely random pair of variables would be expected to show complete correlation 25% of the time, simply as a matter of chance.

Previous IR's have not occurred in a globalised world, so circumstances are quite different.

The combination of these two makes any inference no better than pulling an answer out of a hat

The chart below shows events which probably won't occur nowadays...also the global players have increased since 1209

The volatility of Inflation/deflation during 1250 and 1350 was due to the Black Death Plague and the drop in Agriculture output due to both lack of labour (died of the plague) or plant/animal diseases (scab) and famine (Climate, war etc)..
Note the end of those volatile fluctuations around 1700 onward... this was caused by the change of the British economy from an agricultural based to that of industry based economy,,,the start of the industrial revolution...Since 1700 if you want to break this down then deflation when not caused by disease or recession occurred when a giant industrial transformation such as the steam engine creating low cost mass production materials was introduced etcetc...often though there was complex relationships when a huge advancement disrupted the economy (increased unemployment) resulting in a recession and deflation..and the resulting benefits after that with the corresponding inflation..

Note the lack of deflation for the last 80 years

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/08-2/Inflation%20DB%202.jpg

[xafalcon]

Question for those fairly recently saying that the huge fall in oil prices will bring about significant falls in world share prices, and that half of the world’s oil production costs more than US$45-$50/bbl to extract.

This is not a beat-up, I am interested in how your information sources are rationalising the current situation with regards to equities v’s oil prices (or vice versa). And also current oil pricing with regards to extraction cost. Worldwide, not just NZ

I personally have not heard a peep on this front for over a week now

Oil prices are US$41/bbl on my ANZ Securities page

[malus]

Some light Easter reading re the global financial market we all play in! (Hope this link works - via John Mauldin)

Danielle DiMartino Booth: Self FOOL-filling Prophesies


Danielle DiMartino Booth is a longtime friend who was Richard Fisher's analyst and sometimes his speechwriter when he was president of the Dallas Fed. She has now gone out on her own and is writing some very thoughtful commentary. I thought I would pass this one along to provoke some thought.
http://www.mauldineconomics.com/overmyshoulder/pdf/danielle-dimartino-booth-self-fool-filling-prophesies

[malus]

Whoops, to access the link you will need to sign up for John Mauldin's communications... which you may or may not want too. Sorry about that... could copy the article and post, but would probably breach copyright! :(

[Tomtom]

Linky to above article via Nasdaq public site. (http://www.nasdaq.com/article/self-foolfilling-prophecies-investors-are-their-own-worst-enemy-cm596809)

[malus]

Great...thks Tomtom

[freddagg]

So much for black Monday. I have about $12k in divs coming my way in next 2 weeks from BRM,MLN,GNE,PGW,HBY,IFT,TTk. Do you think we should start up a green Friday thread?:t_up:.

IFT, are you sure ?

[skid]

Question for those fairly recently saying that the huge fall in oil prices will bring about significant falls in world share prices, and that half of the world’s oil production costs more than US$45-$50/bbl to extract.

This is not a beat-up, I am interested in how your information sources are rationalising the current situation with regards to equities v’s oil prices (or vice versa). And also current oil pricing with regards to extraction cost. Worldwide, not just NZ

I personally have not heard a peep on this front for over a week now

Oil prices are US$41/bbl on my ANZ Securities page

Im not sure of the minute details of extraction costs ...but surely you have seen the result (share markets)of this latest round of oil price increases--the markets have been having a party(despite disappointing earnings)

[Beagle]

So much for black Monday. I have about $12k in divs coming my way in next 2 weeks from BRM,MLN,GNE,PGW,HBY,IFT,TTk. Do you think we should start up a green Friday thread?:t_up:.

Yeap the naysayers have got it all wrong and the NZX is hitting new highs. The poll I ran in early Feb showed most thought the NZX50 which includes all dividends for the full year would be under 5800 on 31 December 2016 and yet we're over 6,600 already with lots of dividends to come. Big shift in sentiment in the last 6 weeks.

[see weed]

IFT, are you sure ?
Sorry about that, IFT have not announced a div yet, but still getting 12k from the others. Bought 22,000 IFT at average $2.99, in last 6 months from Oct last year, then they gave $977 div in Dec. Sold half on 31/12/15 for $3.275c and made $2475 profit, then bought them back again on 23/2/16 for $3.03c, but am reluctant to sell before next div. I think the sp might increase a bit more before then:).

[Lewylewylewy]

I own some IFT, but I don't know why the SP has been increasing other than bad bits of business being Killed off

[kiora]

I own some IFT, but I don't know why the SP has been increasing other than bad bits of business being Killed off

Most likely it will be held down by Duncan Saville's Utilico sell down now 20,000,000 shares to go,3.52% yet plus HRL Morrison & Co’s Lib Petagna has continued to sell down his stake in Infratil as he scales back his role with the investment bank.567,653,145 shares on issue.
Disclosure Utilico 20-1-14
(a) total number held in class: 66,419,275 ordinary shares
(b) total in class: 561,434,511 ordinary shares (excluding treasury
stock)
(c) total percentage held in class: 11.83%.
I can't remember what Utilico had initially
Looks to me that someone accumulating during sell down with SP creeping up already ?

[workingdad]

Interesting read about Swift drilling company in the USA and about the oil and gas industry in general with defaulting loans and the debt.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11612767

[bull....]

us markets consolidating, waiting for break direction unsure at this stage

[xafalcon]

Over the past 2 weeks I have reduced my equity holdings by 60% as key SP levels were met. I am doing this in anticipation of the "Donald Trump" effect I believe will hit equities in July if he is confirmed as the GOP candidate for president. My target is to be "all out" by June at the latest

[couta1]

Over the past 2 weeks I have reduced my equity holdings by 60% as key SP levels were met. I am doing this in anticipation of the "Donald Trump" effect I believe will hit equities in July if he is confirmed as the GOP candidate for president. My target is to be "all out" by June at the latest Yep he's already promised to trample hedge fund managers so things could get real ugly for equities alright, unless there are signs before that he's going to get kicked into touch. If he gets in he has to be seen to give Wall St a good thrashing to make the man on the street feel good.

[skid]

Yeap the naysayers have got it all wrong and the NZX is hitting new highs. The poll I ran in early Feb showed most thought the NZX50 which includes all dividends for the full year would be under 5800 on 31 December 2016 and yet we're over 6,600 already with lots of dividends to come. Big shift in sentiment in the last 6 weeks.

Its a bit early to say anyone has got it wrong or right there Roger--Its been a volatile ''game of two halves''for the years first 3 months--who knows where it will settle in 8 long months.

[Jinx]

Over the past 2 weeks I have reduced my equity holdings by 60% as key SP levels were met. I am doing this in anticipation of the "Donald Trump" effect I believe will hit equities in July if he is confirmed as the GOP candidate for president. My target is to be "all out" by June at the latest

If you think Donald Trump will get anywhere past the candidate I challenge you to a bet, Trump wont win.

If not then why even be worried, there will be very limited Donald Trump effect if he doesn't get into office

[blackcap]

Over the past 2 weeks I have reduced my equity holdings by 60% as key SP levels were met. I am doing this in anticipation of the "Donald Trump" effect I believe will hit equities in July if he is confirmed as the GOP candidate for president. My target is to be "all out" by June at the latest

THere is about a 1 in 5.5 chance of Donald becoming POTUS, or about a 82% chance that he will not become POTUS according to recent odds. So you are basing your decision on something that has a slender chance of happening?
Surely there is a flip side to the positive for equity markets if he does not become the nominee and eventual POTUS?
I am not too sure how bad Trump will be for Wall St anyway, I think he will find like Obama that being president is nice and dandy but there really is not that much you can do without Congress.

[BlackPeter]

Over the past 2 weeks I have reduced my equity holdings by 60% as key SP levels were met. I am doing this in anticipation of the "Donald Trump" effect I believe will hit equities in July if he is confirmed as the GOP candidate for president. My target is to be "all out" by June at the latest

Yep - Donald Trump might be worse to the US (and world-) equity markets than over here the threat of the NZ Green / Left winning the NZ elections last time around. Remember the havoc they played with the share price of the Gentailers? On the other hand - it was good business to bet against the Lefties in NZ, and it might be good business now to bet against a Trump victory.

Getting out is obviously a strategy as well, but difficult to live off the market if you are on the sidelines ...

Personally would I think that it is quite likely that none of the Republican candidates makes it over the 50% hurdle ... and I suppose this means that some "white knight" might appear to take the Republican candidacy ... bye bye Mr. Trump.

If Trump however really makes it to the Republican candidacy, than I think this is a big shot in Hillary's arm. Anybody who is not totally stupid would vote for her - and hey, while the US voted (at least the second time around) for George W Bush, maybe some of them did learn?: bye bye Trump.

And hey - if he really would make it (and the American people are really as stupid as some think they are), than what would happen? Here is an interesting article: http://www.thestreet.com/story/13335121/1/if-donald-trump-was-president-here-s-what-would-happen-to-the-u-s-economy.html

Did you realise that the stomping out of illegal immigration in the US would significantly increase food prices around the globe? Hey, I could think about a number of agricultural shares to buy as hedge against Trump ...

Defence industry around the globe might move into a bull market ... no NZ share springs to mind, but there are a number internationally to invest in.

Resources might recover ... (you need resources to build and fuel all these new ships, trucks, planes and the Mexican wall)

Unemployment in the countries of the major players likely to drop - every hand needed to build infrastructure to defend the motherland ... and I think after a short time Trump will need to break his election promise of reducing taxes ...

Potentially more stringent controls over the money markets ... which may or may not be a good thing.

Actually - I am not even sure, whether a Trump victory (if it ever gets that far) would spook the stock markets. Americans would only elect him if they think he is good for the economy, which would keep stock prices at least for the initial phase up (remember - its all psychology). I think I would be more worried about the world economy come the second round of Trumps reign (if he makes it to the first), but plenty of time to prepare for that.

No need in my view to go cash at this stage, but maybe I buy some more PGW ;)

As usual - DYOR ...

[Jinx]

My thoughts as a political science student studying the international economy and US politics, Clinton will win and it'll be good for wall Street.
Trump will not win. The Republicans will do a kamikaze style move and remove any chance of him being able to run / win or he'll be their candidate and all the voters who usually wouldn't care would come out of the wood work and vote for Clinton

[xafalcon]

I do not believe Donald Trump will win the presidential election. But I think it is quite likely he will gain the GOP presidential candidacy - as I said in my post on the "predictions for 2016" thread several months ago

If there is even a slight sniff of DT becoming president at any time during his campaign, I believe this would be bad for equities in USA and the effect will ripple around the worlds markets. Markets have been quick to over-react to any perceived "bad news" over the past 18 months as perception builds that the bull run can't continue much longer. Oil prices most recently, China growth before that, EU structural and economic problems, Crimea invasion, Greece debt default, the list goes on

IMO the first nexus will be June-July with Brexit vote and GOP presidential candidacy are confirmed. After the two most recent sharemarket dips that were both based on shoddy superficial economic analysis, I don't want to be part of the next one. If I miss an opportunity, so be it. I have had a good return on equity investment over the past 2 years that I'm happy to cash up

Remember it is not the facts of the situation that really matter. It is how these facts are "analysed" by various economic commentators, and how their message is interpreted by the majority.

[winner69]

My thoughts as a political science student studying the international economy and US politics, Clinton will win and it'll be good for wall Street.
Trump will not win. The Republicans will do a kamikaze style move and remove any chance of him being able to run / win or he'll be their candidate and all the voters who usually wouldn't care would come out of the wood work and vote for Clinton

Good for Wall Street ......short term yes .......but medium term a disaster?

They are ensuring Janet keeps the money go round going until the next election.

Just think about the next quarter eh

[workingdad]

I do not believe Donald Trump will win the presidential election. But I think it is quite likely he will gain the GOP presidential candidacy - as I said in my post on the "predictions for 2016" thread several months ago

If there is even a slight sniff of DT becoming president at any time during his campaign, I believe this would be bad for equities in USA and the effect will ripple around the worlds markets. Markets have been quick to over-react to any perceived "bad news" over the past 18 months as perception builds that the bull run can't continue much longer. Oil prices most recently, China growth before that, EU structural and economic problems, Crimea invasion, Greece debt default, the list goes on

IMO the first nexus will be June-July with Brexit vote and GOP presidential candidacy are confirmed. After the two most recent sharemarket dips that were both based on shoddy superficial economic analysis, I don't want to be part of the next one. If I miss an opportunity, so be it. I have had a good return on equity investment over the past 2 years that I'm happy to cash up

Remember it is not the facts of the situation that really matter. It is how these facts are "analysed" by various economic commentators, and how their message is interpreted by the majority.

I agree and have been in the process of cashing up as well, after the bewildering start to the year I decided the fickle nature and over-reaction to anything perceived as bad was enough for me to look for an exit strategy and sit back and wait. I am sticking to that and if I miss out on an opportunity or two so be it but I may be creating a better one as well. Only time will tell but I know there are a few of us thinking along similar lines....

[Nasi Goreng]

Well look at this thread since it started and you will see a lot of emotion and fear calls. What a roller coaster.

The thing is, US market is in the same place as it was when the thread started and NZX is hitting new highs. The market is very good at doing the opposite of what you think will happen. It is quite possible a DT bid could send USD lower and stocks go off to the races.

[skid]

I agree and have been in the process of cashing up as well, after the bewildering start to the year I decided the fickle nature and over-reaction to anything perceived as bad was enough for me to look for an exit strategy and sit back and wait. I am sticking to that and if I miss out on an opportunity or two so be it but I may be creating a better one as well. Only time will tell but I know there are a few of us thinking along similar lines....

In many ways the market is starting to build up a resistance to bad news,taking things that would have influenced in the past,in its stride now--but is that a solution? Time will tell...but your right ..there are many who are not trusting the market these days

[skid]

Well look at this thread since it started and you will see a lot of emotion and fear calls. What a roller coaster.

The thing is, US market is in the same place as it was when the thread started and NZX is hitting new highs. The market is very good at doing the opposite of what you think will happen. It is quite possible a DT bid could send USD lower and stocks go off to the races.

Yep--there hasnt been a Black Monday for a while now---There is always the possibility that they can continue to manipulate or ''adjust'' for a long while yet.--I dont however think that anyone would think there are not some inherent problems out there--In many ways we are in new territory,so who knows.

[Hoop]

Well look at this thread since it started and you will see a lot of emotion and fear calls. What a roller coaster.

The thing is, US market is in the same place as it was when the thread started and NZX is hitting new highs. The market is very good at doing the opposite of what you think will happen. It is quite possible a DT bid could send USD lower and stocks go off to the races.


Yep--there hasnt been a Black Monday for a while now---There is always the possibility that they can continue to manipulate or ''adjust'' for a long while yet.--I dont however think that anyone would think there are not some inherent problems out there--In many ways we are in new territory,so who knows.


The chart below shows the market is not in the same place when this thread started ..the rounded top pattern is now at an accelerated down (danger) phase....For the bull to survive this very gentle (so far) rounded top pattern it has to break quickly before this theoretical accelerated downward rounded momentum steepens resulting in this possible stage 1 (small mild downward waves with large rallies) Bear turning to a very real Stage 2 Bear (capitulation waves with small relief rallies).....

If S&P500 "officially" becomes a bear (-20+%..< 1700), will the bear pressure be too much for the NZX bull???

The market is not in new territory..it has been reacting to a low inflationary environment for sometime now...Annualised PE ratios (primary driver) can be sustained at very high levels when inflation is in its sweet spot at ~1% ...............Inflation above/below this 1% level and the high PE Ratio becomes unsustainable...Yellen announcement with a holding scenario is to not "rock the boat"...not altering what affects the primary driver that drives the sharemarket is a theoretical positive for the market...The latest earnings down turn is the real worry factor to the primary driver...Mr Market is assuming this fall in earnings is a blip and a rise in the normalised PE Ratio is accepted for now.....We will wait and see on that one

In the meantime the chart shows Wall St is slowly turning over into a bear tide....The very gentle rounding over is becoming unusually long ..maybe the effects of FED regulating (manipulating) the markets together with very low inflation

DISC: My personal opinion has not changed..I declared last August that Wall St (DOW, S&P500, etc) are reacting as if they were in stage 1 of a new cyclical bear market cycle and the bull had died...nothing since then has Wall St done to change my view in this except a further 11 bear market confirmations (see chart)

http://i458.photobucket.com/albums/qq306/Hoop_1/SampP500%2029032016.png (http://s458.photobucket.com/user/Hoop_1/media/SampP500%2029032016.png.html)

[Jinx]

I have no where near the expertise or time to make an analysis like Hoop has above. I have enjoyed the past month or so as much as anyone else but this is completely unsustainable, the NZ50 has gained more since 12-02-16 then ever seen before. A 13% increase in 48 days is unheard of. Although I'm happy to hold though whatever is coming at us later this year, if April provides positive results I'd be willing to eat my hat.

[workingdad]

The chart below shows the market is not in the same place when this thread started ..the rounded top pattern is now at an accelerated down (danger) phase....For the bull to survive this very gentle (so far) rounded top pattern it has to break quickly before this theoretical accelerated downward rounded momentum steepens resulting in this possible stage 1 (small mild downward waves with large rallies) Bear turning to a very real Stage 2 Bear (capitulation waves with small relief rallies).....

If S&P500 "officially" becomes a bear (-20+%..< 1700), will the bear pressure be too much for the NZX bull???

The market is not in new territory..it has been reacting to a low inflationary environment for sometime now...Annualised PE ratios (primary driver) can be sustained at very high levels when inflation is in its sweet spot at ~1% ...............Inflation above/below this 1% level and the high PE Ratio becomes unsustainable...Yellen announcement with a holding scenario is to not "rock the boat"...not altering what affects the primary driver that drives the sharemarket is a theoretical positive for the market...The latest earnings down turn is the real worry factor to the primary driver...Mr Market is assuming this fall in earnings is a blip and a rise in the normalised PE Ratio is accepted for now.....We will wait and see on that one

In the meantime the chart shows Wall St is slowly turning over into a bear tide....The very gentle rounding over is becoming unusually long ..maybe the effects of FED regulating (manipulating) the markets together with very low inflation

DISC: My personal opinion has not changed..I declared last August that Wall St (DOW, S&P500, etc) are reacting as if they were in stage 1 of a new cyclical bear market cycle and the bull had died...nothing since then has Wall St done to change my view in this except a further 11 bear market confirmations (see chart)

http://i458.photobucket.com/albums/qq306/Hoop_1/SampP500%2029032016.png (http://s458.photobucket.com/user/Hoop_1/media/SampP500%2029032016.png.html)

It will be interesting to see if the 2nd wave 50day MA can break through the 200day MA and hold above the rounded top trend pattern.

Great chart thank you and it really highlights the transition towards bear market.

[kiora]

From Colin Twiggs
North America

Corporate buybacks are likely to dry up during April earnings season, leaving expected outflows from managed funds to exert downward pressure on stock prices.
A pennant consolidation below 2050 suggests continuation of the rally to test 2100. But 13-week Twiggs Momentum below zero warns of a primary down-trend. I remain wary of this rally. Reversal below 2000 would warn of another test of primary support at 1820 to 1870.m Colin Twiggs

Ooch,who's going to buy ?
"

[Baa_Baa]

From Colin Twiggs
North America

Corporate buybacks are likely to dry up during April earnings season, leaving expected outflows from managed funds to exert downward pressure on stock prices.
A pennant consolidation below 2050 suggests continuation of the rally to test 2100. But 13-week Twiggs Momentum below zero warns of a primary down-trend. I remain wary of this rally. Reversal below 2000 would warn of another test of primary support at 1820 to 1870.m Colin Twiggs

Ooch,who's going to buy ?
"

Perhaps not just 'likely' but 'actually happening' http://www.zerohedge.com/news/2016-03-19/buyback-blackout-period-starts-monday-institutions-selling-stocks-7-straight-weeks-w refer the buyback blackout period and effects on stocks.

[BlackPeter]

Perhaps not just 'likely' but 'actually happening' http://www.zerohedge.com/news/2016-03-19/buyback-blackout-period-starts-monday-institutions-selling-stocks-7-straight-weeks-w refer the buyback blackout period and effects on stocks.

Well, if we look at the S&P 500 over the last 5 years, than the April's look to me quite "business as usual". I assume this "blackout period for buy backs is an annual event - isn't it? What happened to "sell it in May" (another unsubstantiated saying) anyway, if the April takes already all the gains ;)?

What I do see is in some years (e.g. 2011 and 2013) a dip starting in the second half of May (presumably as result of an unsatisfactory earning season) and yes, in 2012 the S&P 500 started to dip around late April. Nothing exciting (in April / May) to report for 2014 and 2015 - and yes, even in the "bad" years was it just a statistical ripple. Have a look for yourself (and just adjust the time scale to your needs - I used 5 years):

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=s%26p%20500%20index

However - if we all want this time to be different and if we all sell our shares, than without doubt it will turn into a beautiful bear market (or correction or whatever) - and than it just depends on who blinks first and buys all these beautifully cheap shares ...

What do you think - do we want to create the bear? As most other things in life - if enough people believe in it, it turns into a self-full-filling prophecy.

[Lewylewylewy]

There was an experiment with students. They had a room full of computers running a program that gives them each $10 and matches them with another (unknown) person in the room. At any time, someone could press the button to take $5 of their partners money. If $5 was taken from you, you lost everything.

The moral is, that you can't ask people to do something that's good for everyone, you can only termly them to do what's good for themselves.

As a side note, interestingly, if they were told who their partner was, they were less likely to steal.

[frostyboy]

Some denial and fear posts on this thread have given me some good lols.

If you straight line the S&P500 peaks instead of using a curve the resistance is around 2090

[Snow Leopard]

Purrsonally I do not own any financial instruments dependent upon the S&P500.

I will deal with
whatever happens,
when it happens,
on an individual basis,
with each and every,
share that I own,
as I think is best,
for me.

:)

Best Wishes
Paper Tiger

PS: This may count as some form of poetry.

[Hoop]

Some denial and fear posts on this thread have given me some good lols.

If you straight line the S&P500 peaks instead of using a curve the resistance is around 2090

The idea of trendlines is to sell when a rising market ends and to buy when a falling market ends..Drawing lines from peak to peak in a rising market will not give you that important sell/buy signal (breaking the trend), therefore that line is not called a trend line as such...Drawing peak to peak in a rising market gives a boundary limit in patterns..So yes, drawing a connecting line will show (possible) theoretical future resistance areas.....The problem using any straight line whether it is from peak to peak or from gap to gap or from trough to trough is that you need at least 3 touches to confirm that it is a valid line ...We have not been able to draw a valid adjusted primary or secondary trend line on a daily chart since the end February 2015..there are a couple of tertiary trend lines (shorter term) that could be drawn...but the two touches extended to 2090 as Frostyboy mentioned is not valid...

A rounding top pattern exists because of a lack of a primary trend line.

[percy]

Purrsonally I do not own any financial instruments dependent upon the S&P500.

I will deal with
whatever happens,
when it happens,
on an individual basis,
with each and every,
share that I own,
as I think is best,
for me.

:)

Best Wishes
Paper Tiger

PS: This may count as some form of poetry.

Sage advice or great poetry in motion?
Either one,I too buy shares in a company.The company sector,financials,and management, will govern how well or poorly the company will do.
This will then influence any chart.
I follow ex poster's Steve Fleming advice."share prices follow earnings,buy earnings per share growth.
It really works.!!! lol.

[skid]

Sage advice or great poetry in motion?
Either one,I too buy shares in a company.The company sector,financials,and management, will govern how well or poorly the company will do.
This will then influence any chart.
I follow ex poster's Steve Fleming advice."share prices follow earnings,buy earnings per share growth.
It really works.!!! lol.

Let me take that one step further--earnings are the main worry in the US market--and eventually that market affects our market.
Steves advice works well within our market,but if you factor in outside forces,it gets more difficult.
The disappointing earnings has not caused to much havoc in the US atm (investors seem more interested in Janet) but if it does then there will be a flow on affect,which may not only affect share prices here,but even earnings.
Ride the bull while you can,but I do not think we are in a good ''buy and hold'' environment.

[bull....]

broke out consolidation, targets remain

[Baa_Baa]

Well, if we look at the S&P 500 over the last 5 years, than the April's look to me quite "business as usual". I assume this "blackout period for buy backs is an annual event - isn't it? What happened to "sell it in May" (another unsubstantiated saying) anyway, if the April takes already all the gains ;)?

What I do see is in some years (e.g. 2011 and 2013) a dip starting in the second half of May (presumably as result of an unsatisfactory earning season) and yes, in 2012 the S&P 500 started to dip around late April. Nothing exciting (in April / May) to report for 2014 and 2015 - and yes, even in the "bad" years was it just a statistical ripple. Have a look for yourself (and just adjust the time scale to your needs - I used 5 years):

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=s%26p%20500%20index

However - if we all want this time to be different and if we all sell our shares, than without doubt it will turn into a beautiful bear market (or correction or whatever) - and than it just depends on who blinks first and buys all these beautifully cheap shares ...

What do you think - do we want to create the bear? As most other things in life - if enough people believe in it, it turns into a self-full-filling prophecy.

Did you read the article? If you had you wouldn't have gone past the assumption in your first paragraph.

[BlackPeter]

Did you read the article? If you had you wouldn't have gone past the assumption in your first paragraph.

I did ... and despite a second read am I still not sure, why you think that anything in the article would invalidate the assumption I made in my first paragraph:


I assume this "blackout period for buy backs is an annual event - isn't it?

Sure - zerohedge lists (as they usual do) lots of negative observations. Some of the statements are clear exaggerations and many are assumptions based on some analysts implying what their clients might be thinking.

Sure - the sky might fall in on Monday (or any other day) ... and at some stage it will (though according to Steven Hawking we might have another handful of billion years or so left), but if history is any guidance: zerohedge always points out risks. Some of them are real, and a small number of those might be even likely to happen.

However - I have seen nothing which turns this particular risk into a certainty. Did you?

[BlackPeter]

Oh dear - best March since 2009:

http://www.usatoday.com/story/money/markets/2016/03/31/stocks-best-march-since-2009/82458868/

How could this happen despite all the doomsday articles?

But no worries, the higher it goes, the deeper it can fall ... and at some stage it certainly will :scared:.

Be careful out there and don't trust the prophets, no matter what they predict!

[fungus pudding]

Oh dear - best March since 2009:

http://www.usatoday.com/story/money/markets/2016/03/31/stocks-best-march-since-2009/82458868/

How could this happen despite all the doomsday articles?

But no worries, the higher it goes, the deeper it can fall ... and at some stage it certainly will :scared:.

Be careful out there and don't trust the prophets, no matter what they predict!

It's easy really - just a matter of determining which is the greater risk - not buying or not selling. :D

[skid]

It's easy really - just a matter of determining which is the greater risk - not buying or not selling. :D
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[fungus pudding]

..for only $19.95 you can have this new product ..Tired of all those dreary doubts--well give yourself a high five with this evolutionary product--this product will not last long ..so act now!!

For 19.95 I'd expect it to last at least 6 months!

[skid]

For 19.95 I'd expect it to last at least 6 months!

sorry ,forgot to mention they are chocolate coins covered with gold foil....gotta keep those costs down!

[skid]

sorry ,forgot to mention they are chocolate coins covered with gold foil....gotta keep those costs down!

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[fungus pudding]

sorry ,forgot to mention they are chocolate coins covered with gold foil....gotta keep those costs down!

Couldn't get six months out of them.

[skid]

Couldn't get six months out of them.

Maybe if your very gentile when flipping--but I ate the chocolate which makes the left over gold foil really hard to flip :)

[fungus pudding]

--but I ate the chocolate .....


Ah - hah! So I was right.