Time for some insider trading [:0]
http://edition.cnn.com/2006/BUSINESS...eut/index.html
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Time for some insider trading [:0]
http://edition.cnn.com/2006/BUSINESS...eut/index.html
theres a strong argument that insider trading shouldnt be illegal. In fact insiders alter the price pattern just like any other trader thus demonstrating their views for all to see.
I thought this was an interesting analysis of Iceland with an obvious comparison to NZ
Overnight report
Man from Mars
Tim Drayson ABN AMRO
Imagine arriving from another planet equipped with a MSc in
economics. You are asked to assess the outlook for
government bonds in different countries. How would you
react when presented with the following: Over the last five
years, this country has seen its exchange rate appreciate
around 40%, yet inflation has risen above the central bank’s
target. The money supply has doubled, the equity market
has risen six fold and house prices have soared. Whole
economy debt outstanding has risen by 100% to 350% of
GDP. Finally, the current-account has gone from balance to
a deficit of 20% of GDP. Would you buy this country’s
bonds? Of course not. I should tell you this is Iceland, but
this could apply in future to other countries which are
currently using asset price inflation to fuel growth.
The OECD estimates that Iceland has a positive output gap of
around 3%. There is virtually no unemployment and wage
growth is accelerating. 2005 saw a domestic demand boom
with huge gains in household wealth leading to a surge in
consumption. Large-scale energy investments have boosted
demand further. Without the severe deterioration in net
exports, GDP (which grew by around 6% in 2005) would have
been even stronger. The 10% of GDP trade deficit is adding to
Iceland’s external debt. Not surprisingly, the income balance is
also deteriorating rapidly as interest and dividend payments on
foreign debt are increasing.
The Sedlabanki (Iceland’s central bank) raised rates from 5.3%
in early 2004 to 10.5% by the end of 2005, in an attempt to
cool the economy. But this only encouraged the carry traders
and led to a further appreciation of the exchange rate and wild
asset price inflation. But the economy is now starting to
unravel. This year the exchange rate has fallen around 15%
against the dollar. This is adding to inflationary pressures.
Inflation rose to 5.5% yoy in April from 4.5% yoy in March. 5-yr
bond yields have spiked 300bp since early March. The
Sedlabanki has hiked rates another 100bp this year and the
central bank governor said last week that rates might have to
rise to 16% to contain inflation.
Iceland seems certain to endure a period of below trend
growth. The question is whether it can avoid a full-scale
financial crisis while the imbalances unwind. The most likely
channel for a crisis is the household sector. Their debt is
almost 200% of disposable income and mortgage payments
are linked to inflation. A sharp drop in the currency could boost
inflation and cause severe debt-servicing problems. Iceland is
too small to have any direct impact on other markets, but
contagion could emerge if investors sense similar problems in
other countries with large current-account deficits. I would stay
clear of currencies and bonds in the following countries:
Australia, Hungary, New Zealand, Spain, Turkey, the UK and
the US.
Aus debt free from today................
21.04.06
Australia's Government will today eliminate its net debt, which stood at A$96 billion ($113 billion) a decade ago, says Treasurer Peter Costello.
"It is the day we pay off the mortgage," Costello said in a speech in Sydney. "From tomorrow, our Government will no longer be a net borrower. In fact, from tomorrow we will start to save."
Prime Minister John Howard's Government has used budget surpluses to eliminate its debt, which peaked at 18.5 per cent of gross domestic product under the previous Labor Government.
By comparison, net government debt in the US was 47.2 per cent of GDP and 41.1 per cent in Britain, Costello said.
The Australian Government will contribute future budget surpluses to a so-called Future Fund. It is planned the investment fund will grow to A$140 billion by 2020 to cover the Government's pension liabilities for politicians, public servants and defence workers.
The budget, which is forecast to record an A$11.5 billion surplus for the year ending June 30, will be released on May 9.
http://www.nzherald.co.nz/section/st...ectID=10378270
Thats Govt debt tho , not trade deficit right?
So how is NZ on the same measurement ?
I am of the unsure opinion that our Govt runs a surplus and is in the black as well.
Does govt debt relate to forex at all. isnt it more like internal debt so doesnt really impact the currency (except indirectly maybe thru interest rates)
I guess I'm just thinkin that its really trade balances that matter more altho we all know they are not really a useful indicator on a short or even medium term basis.
I've just bought this
http://images.amazon.com/images/P/07...CLZZZZZZZ_.jpg
And am finding the point and figure charts interesting. My software only does the 3 line break tho , which is similar enough... so am familiarizing with this type of representation. I'm thinking it gives quite clear indications tho of course lags.
Hi Peat
I think you will enjoy that book.
Now...............WHERES our pal XEROF ????
Come on back Xerof - all is forgiven. We miss you in the
Butterfly house.
arco
Arco, greetings!!! and greetings also to Peat and Slam (I was down your way for easter and the week after slam - must say Christchurch put on a fantastic spell of weather)
I am still alive and well, and apologies for having yet another false start at posting on a regular basis.
I am at the sharp end of getting my 'fund' established, and this is taking a huge amount of my time at the moment. Should be up and running within two weeks, and once I get into the drivers seat full time again....LOOK OUT:D:D
Xerof
Hi Xerof
Yes, Christchurch can turn it on at times.
Always a beer in the fridge if you are ever down this way, and a shandy for Mrs Xerof and Mrs Slam;)
Just had my second Grandson Today:D (well I didn't actually have him) So a few fantas for dinner
Cheers
Slam
yeh hopefully it will take me to 20000ftQuote:
quote:Originally posted by arco
Hi Peat
I think you will enjoy that book.
Quote:
quote:the shadows of the clouds throw doubt across the land
you cannot always see the truth from where you stand
from 20000 ft everything is clear