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Archive through July 08, 2010

Chart Forum » Hilarius' Hall Of Fame » Our Daily Bread » Archive through July 08, 2010

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jaded
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Post Number: 236
Registered: 03-2010

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Sunday, July 04, 2010 - 08:36 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



bridog-
There's a problem in measuring the performance of the XIJ [i think] in that Compushare[CPU] is 72.6% of the XIJ200 and Iress{IRE] is 12% giving these two 84% weighting so one is virtually measuring the performance of these two mostly.

Considering Compushare is a Specialist Computer Business in it's use of IT,I feel that the Index does not reflect the share price moves of the whole Industry.

Now I have very little experience in using Index Analysis to pick shares.Mainly because the Index is Blue Chip orientated but one should look/study the shares weighting in such Index so you aren't just following the progress mainly of very few shares like CPU.


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

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bridog
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Post Number: 140
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Sunday, July 04, 2010 - 11:50 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Jaded, thanks for that, I haven't yet got around to studying the make up of the indices, the only one I knew was that Telecomms was basically Telstra.

Yeah, when I now look at XIJ I see it has only 4 components . . still worth me doing some homework on.

Cheers







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bridog
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Post Number: 141
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Sunday, July 04, 2010 - 12:05 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Jaded, the following article addresses (but not answers) your very perceptive question “Wouldn’t iron ore quarterly pricing increase volatility rather than the other way around?” or words to that effect..

Article from MetalMiner
by admin on July 2, 2010
. . . Tom Albanese, CEO of Rio Tinto, one of the “Big 3” iron ore producers has stated, according to SteelOrbis, that the “Quarterly pricing system applied in the global iron ore market could be rescinded since current iron ore prices in the spot market are lower than the main iron ore miners’ contract prices for the third quarter.” Well folks are we at all surprised that the Chinese would decide to not play ball with the current schema as spot prices for iron ore decline against the quarterly contract price? Truth be told, the Chinese are not the only ones unsatisfied with the current quarterly iron ore contracts. But by wiggling out of the quarterly contracts, where does that leave the state of iron ore price negotiations?

We have long reported on the validity of certain types of contracting mechanisms, in particular, we have written about how when a company is in a long term buying agreement and prices drop, buying organizations tend to want to try and re-negotiate (we actually tried to coin a term to cover that practice – ‘weaseling’) and when prices rise, they tend to thank their lucky stars that they called the market correctly. We all know that the Chinese have a history of wiggling out of contracts that don’t work in their favor (they did that the last time iron ore spot prices plummeted during 2008). So the questions we really need to ask ourselves are as follows:

1. If the Chinese are working on a quarterly contract such that volumes are established annually and only the pricing mechanism is left to the quarterly contract AND the Chinese fail to place orders under that contract, then we can say that the Chinese have reneged on their contracts.

2. But if the quarterly contract also involves a quarterly volume commitment (in other words there are no base load volume commitments set annually) and the Chinese opt to buy on the spot market, have they broken any contract? The answer would be no.

So, which of these two scenarios actually shows the reality of the situation? Friends, if you picked Scenario 1, you would be correct. But in all fairness to the Chinese, we’d like to reiterate that the Japanese and South Koreans (though in a more delicate approach and tone) also reneged on the quarterly contracts. We have even heard from industry sources that European mills also reneged and specifically, ArcelorMittal also attempted to re-negotiate their iron ore contracts. We can’t blame them. Again, it’s natural to do what we described in the second paragraph of this post.

There is one mis-perception (that we were guilty of) that we will share with you now. First, we (MetalMiner) interpreted the move from annual iron ore contracts to quarterly contracts as instigated by the Big 3 iron ore producers to capture price rises more effectively and frequently (we assumed the producers see a long term bull market for these types of commodities). That assumption turns out to be erroneous based on our discussions with firms close to the process. The reality is that yes, the Big 3 did switch to quarterly contracts but not for greed, rather, to try and limit the amount of contract reneging by the Chinese! (So much for their efforts).

We also reached out to Tim Cummins, who runs IACCM (International Association for Contract and Commercial Management) for what recourse, if any do the miners have if indeed the buyers failed to honor their contracts, “The question is whether the ‘consideration’ that accompanies a firm commitment is sufficient to merit any sort of compensation for de-commitment. Some supply contracts handle this by allowing a certain percentage increase or decrease at specified times in the contract period.” Whether these contracts are written in this manner remains unclear.

That brings us to the last big question of the day – if the iron ore quarterly contract dies, what will take its place? Well, certainly trust no longer factors into the equation. With essentially everyone breaking contracts when things don’t go their way, maybe the industry will move toward a spot market and steel buying organizations will need to bone up on their hedging skills to take advantage of iron ore swaps contracts.

–Lisa Reisman


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jaded
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Sunday, July 04, 2010 - 01:33 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



extremely pertinent,bridog on Quarterly Iron Ore Pricing.
If anything it's in the particular contract to the individual company.
This is 'vital' information especially when dealing with companies that have a Substantial Holder who is taking the production.[Grange is an example with IFE 'trying' to organise such a Sub Holder onto it's Register.]

rederob doesn't 'like' companies who forward sell.He prefers only Spot Producers.I'm wondering if he's more concentrated in Nickel,Copper,Zinc and hasn't contemplated Iron Ore or Coal in this criteria?

Anyhow it's Sunday and I'm no expert on the spot market for Commodities so i'll leave it there.

bridog-the IC search engine can easily sort the some 130 companies listed in the IT sector on performance criteria.Do you have IC prog,bridog?The Search Engine is very simple[compared to others] but very effective in getting a list of possibilities.

happy trading


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

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bridog
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Post Number: 142
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Monday, July 05, 2010 - 07:49 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ever wondered why the price of aluminium has held up despite there being 4 millions tonnes in LME warehouses? I have, and found the following article very illuminating:

LONDON, July 1 (Reuters) - Metal consumers are once again learning the lesson that when it comes to LME stocks, what you see is not what you get.

LME aluminium stocks may still number well over four million tonnes but all that metal is owned by someone else. And most of it is owned by bankers, who have locked metal up in financing deals, effectively placing it in the deep freeze.

The effect is to starve the physical market of units, forcing up physical premiums. This has been a constant feature of the aluminium market for many months but it has also become a talking point in both the zinc and nickel markets, albeit for different reasons.

FINANCING BONANZA
The mechanics of financing stocks are fairly straightforward and the practice is as old as the hills, particularly in markets prone to oversupply such as aluminium.

By buying nearby metal and simultaneously selling forward metal, the financier can earn the contango between the two dates, minus the cost of borrowing the money and minus the cost of storage over the period.

However, to understand why so much LME-registered metal is in financing quarantine it's worth revisiting history, specifically the end of 2008 and the beginning of 2009.

Several factors combined to make this a bonanza period for metal financing.

Firstly, demand for metal collapsed as financial crisis mutated into manufacturing crisis. Secondly, the availability of credit also collapsed, meaning producers and merchants were
no longer able to finance the unsold metal. Thirdly, central banks around the world slashed
interest rates to forestall economic apocalypse.

The result of the first two was a surge in deliveries to the LME, the market of last resort, where stocks of most metals exploded and forward curves accordingly moved into full contango.

Copper, by the way, was a notable exception thanks to huge imports from China, which entered the market to capitalise on what looked like, and turned out to be, bargain-basement prices.

As a result of the third factor banks could borrow money at rates close to zero, reducing the cost of financing to just the warehouse storage fees. Indeed, in a zero interest rate environment banks had a massive incentive to look for other ways of generating returns on their money.

TO ROLL OR NOT TO ROLL
Once locked up in a financing deal the metal is quarantined until the deal expires or until market conditions change sufficiently to warrant its early unwind. Since the latter will often incur penalty fees from the warehousing company, it requires something pretty dramatic, such as a change in market structure from contango to backwardation, for the premature release of the metal.

Failing that, the question is whether at the time of expiry the forward curve will allow a simple roll-over at similarly favourable financing terms, locking the metal in for another term.

The answer for the three metals in question is different because of shifts in their respective forward curves.

The aluminium forward curve remains in full contango, not entirely surprisingly given the fact that LME stocks have fallen only marginally over the intervening year and a half.

True, the bonanza returns of late 2008 and early 2009 are no longer available, but the current cash-to-15-month spread would generate a gross return of somewhere between six and seven percent . . .

Critically, interest rates are still at or close to zero in most of the developed world, meaning the net return is still largely dependent on what sort of storage rate the financier can negotiate with the warehouse operator, an infinitely variable calculation depending on who, where and
for how long.

Hence the current consensus that most aluminium financing deals are being rolled over, which is continuing to underpin physical market premiums the world over.

Nickel presents quite a different picture. Only the front ends of the forward curve, out to around
nine months, is now in contango. The far-dated end of the curve is backwardated.

This means there is no positive rate of return on the cash-to-15-months spread and only a
sliver of one on the shorter-dated cash-to-six-months spread.
FEATURE
With little or no incentive to roll over financing deals, metal is now being released to the market to capitalise on generous physical premiums, particularly in North America, where availability has been severely crimped by the near year-long strike at Vale's Canadian operations.

THE NEXT ALUMINIUM?
Zinc is in a unique transitional phase. Like nickel, the front part of the forward curve is in contango and the far-dated part is in backwardation.

The difference lies in the fact that the contango on the front part of the curve is steadily widening again, increasing the rate of return potential.

Why is the contango widening? Because this market, like aluminium, looks very much as if it is in structural oversupply and will be for some time to come.

LME stocks have continued rising this year to the tune of 128,000 tonnes. Cancelled warrants, namely metal earmarked for physical delivery, are minimal at just 20,525 tonnes. The ratio of cancelled tonnage in the system is currently 3.3 percent, which is the lowest of any of the LME
base metals. And the summer slowdown period is now just around the corner. Surplus metal and zero interest rates make expiring finance deals easy to roll over. Indeed, there are fears among physical consumers that more metal may be locked away in the deep freezer, particularly if stocks continue to accumulate in LME warehouses at New Orleans, a well-known dead zone for unwanted zinc metal.

If current trends persist, don't be surprised if banks start looking at that ultimate "financing deal", the metalbacked exchange traded fund. After all, if it will work for aluminium, why not zinc?


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peterloh
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Monday, July 05, 2010 - 11:47 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



CEY at $6, going off cheap. They are others, a whole heap of small and medium miners too. To date many were sold at rock bottom prices because of GFC and no help from the government, resulting in many giving away 50% or more of the holdings. Our loss is somebody else gain. China stood to benefit the most with their astute buying and buying at bottom prices when times are bad and with their huge reserves accumulated during good times.I have accumulated some at low prices as an investor as I see things different than most.Traders time their trade to make short term profit. With SP below the 30 weeks average, no traders will have a bar of it. I buy certain shares knowing that the SP performance is the sign of times, not because of the company's own individual performance. The future fund go for the top 20 or 50s, so where are we from here!Today, Suragen from CSR is gone, though it looks expensive, however with sugar price 30% below the average and a glut at the moment, the timing is good for China. Our institutions are forecast of the short term too often, what else can it be? I am not complaining about China, they are smart buyers, timing their purchase well and they need the resources.Probably after selling everything away, we can then start taxing them.


-------------------------------------------------
Disclaimer: Please note that comments made in this column is mainly for the interpretation of charts in technical analysis. It is not made in my professional capacity and should not be taken as advice.In my professional capacity I am only allowed to give advice on certain managed funds authorised by my license dealer.Any share discuss is for general interest and should not be relied on to make an investment decision.It is likely that I may own the shares that we discussed as a trade or as an investment. Please consult your stock broker or financial adviser in regard to your personal situation.

The views expressed here contain information derived from public available sources that has not been independently verified.No representation or warranty is made as to the accuracy, completeness or reliability of the information.Any forward looking information in this representation has been prepared on the basis of a number of assumptions which may prove to be incorrect.It should not be relied upon as a recommendation or forecast by the writer.

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ody
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Monday, July 05, 2010 - 05:26 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



How the government and the three major miners are dudding us

Ever since the RSPT was revised, and a compromise was reached so glibly between just three mining companies and the federal government I have felt uneasy.

One problem, as I saw it ( and still do), was that just three companies decided what was going to happen while all other mining companies in Australia - and there are many, including very good ones - were excluded. It appears that, already, the government is now trying to do something about this inequitable situation; but I doubt that the matter will readily be resolved.

The other worry that I had is that, if the three companies were ready to compromise, the deal would have to be quite agreeable to them, as otherwise they would readily have rejected it. This raised a very important question: how could the companies be supposedly content, while the government would, instead of 12 billion, get 10.5 billion out of them?? If the difference was so small, then there had to be a different explanation: the government would NOT get anything like this amount of money out of them, and could not possibly, for the concessions that it made could not result in an amount so little different from the original one.

The article below, by Robert Gottliebsen, one of Australia's most searching and best informed commentators, goes some way towards explaining what the true story probably is: i.e. the the three big miners will not lose anything like 10.5 billion, and the government is keeping mum about the fact that total revenue will be much smaller.

I think that increasingly we'll find out yet more about this, and that what the electorate has been told about will very manifestly turn out to be a smoke-and-mirrors scheme.

From the beginning, those in-the-know have suspected that the naive expectations of Henry-Rudd-Swan - a triumvirate of ignorance - about the supposedly huge sum that Australia would earn within a very short time from its mineral resources was almost certainly VASTLY over-optimistic. And this is likely to be the more so as the global economy is very rapidly deteriorating, including that in China.

For your interest, here is the Gottliebsen article in full (from Business Spectator). And even this may still underrate how much less money will be involved than we are generally being told.

The amount matters greatly, in that if the government gets vastly less than supposed, it will be in very significant trouble as debt escalates. Most Australians will not realise what will happen: they will likely enough be dudded by the compromise solution. The real trouble will probably only emerge during the next term of office, and likely enough will not affect Gillard's election chances, as most will not understand what the issues actually are. The three companies have now - for reasons of their own - become complicit in the deceit to which the electorate, and taxpayers, are being subjected.
------------------------------------------------------------
Digging deeper on the MRRT

Robert Gottliebsen

Published 6:38 AM, 5 Jul 2010 Last update 10:15 AM, 5 Jul 2010

We are now only just getting to the bottom of how the miners expect to pay about two thirds less tax under the new minerals resource rent tax rules yet the Gillard government is expecting a relatively minor reduction in revenue from what was expected under the original plan.

And as we look deeper we also discover why copper, gold nickel and uranium escaped, leaving the tax confined to iron ore and coal. There’s also the miscalculation by the coal seam gas/LNG producers who opted to be treated under the petroleum resource rent tax. They should have stayed in the mining camp.

As we delve into these issues we discover a lot about the future of our country which is why today’s comment is a little longer than usual. In my view, at best, the government has only a 25 per cent chance of achieving its projected $10.5 billion in revenue from the revised mining tax in the tax’s first two years. There is an equal chance they will receive almost no revenue, with the most likely outcome that the income the first two years will fall by about two thirds from the original $12 billion to $4 billion. Importantly, for the assumptions behind the government’s $10.5 billion tax revenue forecast to prove correct the Australian All Ordinaries index will have to soar above 6,000 and the Dow index of US shares will have to rise well above 11,000.

To understand how I reached these remarkable conclusions I have to take you through four key steps in the decision-making process by relevant stakeholders following the realisation that the original tax was completely flawed.

Most of the action took place before Julia Gillard became Prime Minister, which is why she was able to act so quickly.

The first step was that the coal gas/LNG producers, led by Santos, wanted to move coal seam gas to the petroleum resource rent tax and indeed some of the Curtis Island players had come to Australia to do a deal with Kevin Rudd on the day he was deposed.

Going in with the petroleum rent tax represented a major reduction in the tax burden for the Curtis Island group and made most of the projects economic. But with a bit of patience and some risk taking, they would have achieved a far better outcome had they stayed with BHP, Rio Tinto and Xstrata.

The second step was meticulous logic of the chief executive of South African-based AngloGold Ashanti, Mark Cutifani. Cutifani spent time with Rudd, Resource Minister Martin Ferguson and anyone else who would listen, explaining that Australia’s gold and copper reserves were deep in the ground and so exploration was high risk and high cost. (Australia's own-goal, June 15.)

AngloGold has discovered a rich gold deposit, Tropicana, in a remote area off Western Australia, but under the first version on the mining tax Anglo could not go ahead with the development of the project. If the Tropicana bonanza ore body could not be justified, then there was no point in looking for copper or gold in Australia.

Cutifani’s logic could not be faulted which was supported by the pleas from South Australian Premier Mike Rann, who realised that the giant BHP Billiton Olympic Dam copper and uranium expansion would be mothballed by the tax. Accordingly the government concluded that it really only needed to concentrate on iron ore and coal – that’s where the money was.

Thirdly, there were a series of other issues like making sure expensive treatment plants, such as OneSteel’s steelworks at Whyalla, were not taxed.

Fourthly, the crazy idea of the government underwriting losses was quickly seen as an idea in the Treasury shower that should have stayed in the bathroom.

Finally, and most importantly the original estimate that the tax would accrue $12 billion in revenue over the first two years appears to have been based on commodity price estimates prepared by the Australian Bureau of Agriculture and Resource Economics (ABARE) some months ago.

Just before Rudd was sacked, the bureau lifted its forecasts showing a rise of about 35 per cent in the expected iron ore revenue and a rise in coal earnings by about 16 per cent. That sent the expected revenue from the mining tax way above the original $12 billion estimate. Combined with the withdrawal of the loss underwriting, there was now room for the new Gillard government to move.

The ABARE estimates are in line with the bullish Treasury budget forecasts which estimate global growth will rise by 4.5 per cent.

My guess is that both the ABARE and the Treasury budget forecasts have their genesis in December last year when there was a wave of optimism around the world. We then had a market correction in January 2010, but after that fall the All Ordinaries index market recovered to go past 5,000 on April 15. That’s about the time both the Treasury budget and ABARE estimates were locked in.

Since then there has been sharp falls in global stock markets and we are looking at slowdowns around the world, including in Asia. Even more importantly, copper and other metal prices have fallen sharply, including a 22 per cent decline in the spot iron ore price. According to Ivor Ries from EL & C Baillieu, writing in the Eureka Report, over the next three years around 39 global iron ore projects will create a massive 500 million tonnes of extra iron ore capacity. If that capacity comes on stream when demand is depressed there will be little mining tax revenue from iron ore because prices will slump.

None of these factors worried the government mining tax negotiators. They had their revenue figures which allowed the miners to get most of what they wanted and Julia Gillard to look brilliant.

As it is now constructed, the mining tax is very sensitive to rises and falls in revenue as a result of commodity price changes. Treasury and ABARE could still be right, but if they are right then the stock market has completely misread the play. If the estimates are wrong, then Lindsay Tanner’s replacement as Finance Minister will have to slash government expenditure at the eve of the 2013 election.

The key for miners is to lock in market values for their assets based on the latest ABARE numbers. The central person in that negotiation will be former BHP Billiton chairman Don Argus. At this point, Argus very important to both BHP and Rio Tinto. So much for Don’s retirement.


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ody
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Monday, July 05, 2010 - 11:30 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



That 10.5 billion dollars may yet trip up Gillard about her supposedly successful solution:

A few paragraphs from The Australian ...
-----------------------------------
Wayne Swan trumpeted a "$10.5 billion mining boom dividend" in his weekly economic note, but the figure has been met with scepticism.

"We raised an eyebrow at that," one mining source told The Australian. "The effective rate of the new measure is 22 per cent. If a 40 per cent tax was going to raise $12 billion, how can a 22 per cent tax raise $10.5bn?"

The Coalition yesterday repeated its demand for the government to release the modelling behind the proposal. "Until they show us the modelling, we wouldn't know who's plucking figures from where, whether the first set of figures were a smokescreen and these are the real figures or whether the first set of figures were real and these are a smokescreen," opposition resources spokesman Ian Macfarlane said.

And RMIT University economist Sinclair Davison said: "The structure of the MRRT is very different to the RSPT, yet we are invited to believe it will raise a similar amount of money. This is very hard."
--------------------------------------

It remains remarkable that so far so few people have really tackled Gillard about this incredible discrepancy between what 22% suggests the figure would be and what the government claims it will be. An unbelievable smugness seems to have hit people about this supposed solution.


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ody
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Tuesday, July 06, 2010 - 12:18 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Black Cross

By Rudi Filapek-Vandyck (FnArena)

Global economic momentum has taken a few steps back and investors have responded through fear and concerns. It will take a while yet before we will have more clarity into exactly how long this economic slowdown will last and how deep it will go.

In the meantime, equity markets have retreated by some 15% from their peaks in April. This, in response, has put severe stress on technical indicators used to gauge the underlying trend for risk assets.

The most recent ominous sign to result from weeks of dominant selling pressure on global share markets is a so-called “Black Cross” for US equities, otherwise known as a “Dark Cross”, otherwise known as “the Cross of Death”.

Even for investors not familiar with technical analysis, the name for this signal probably gives away sufficient clues as to its potential importance. This is not a positive signal, and that's putting it mildly.

Am I all of a sudden trying to convert you all to technical analysis? Not at all, but even for those investors who wish to stick to fundamental value-analysis only, it seems but wise to pay attention when technical charts start flashing red warning signals.

Let's have a brief introductory first, so we're all on equal footing. Market trendwatchers use moving averages to establish the outlook for asset prices on a short to longer term horizon. These are simple calculations that are being updated every day. One such popular measurement is the 50 day moving average (M/A) which is used to determine short term momentum. For the long term, the 200 M/A is used.

In general, if share prices are above the trendline, this is seen as a positive; below is negative.

Similarly, when the short term trendline is above the longer term trendline, this is evidence of a healthy bull market. This is why investors got all excited last year in June, because that was when the 50 M/A moved above the 200 M/A.

In techno-lingo, such an event is called a “Golden Cross”. Those investors who followed up on the last appearance of such “Golden Cross” thirteen months ago enjoyed the second leg in a strong rally from crisis-low prices.

Alas, since peaking in January, and then again in April, global equities have reversed course. This has had a significant impact on trendlines. As a result, the 50 M/A for the Dow and the S&P500 indices has now crossed the 200 M/A on its way down. This is the opposite of what happened in June 2009.

US based market trader Dennis Gartman had the following to say about it on Wednesday:

“Historically this is ominous, for when it does happen, which is rare, it signals very real changes beneath the surface of the equities’ markets that are broad, perhaps even tectonic in nature.

“We’ve already seen many of the “Dark Crosses” take place in many different individual stocks, most notably the steels and the metals, and now we are seeing it taking place in broad market indices and in numbers of countries around the world rather than merely or only in the US.

“Like outside reversals, we pay heed to “Dark Crosses,” for history has shown that those who don’t pay a price for their indecision.”

Gartman certainly is correct in that US equities are lagging in this matter because other markets, such as the Chinese equities market as well as Australian indices, have already seen the 50 M/A break below the 200 M/A.

He is also correct in that both Golden and Black crosses are rare events. The S&P/ASX200 index, for example, already saw a Black Cross in June, but prior to that, only two of each crosses appeared during the past eight years.

In each of the previous four occasions Gartman's wise words proved accurate in that investors better pay attention, and act in line with the cross on their price charts.

The past eight years show:

- a Black Cross was generated in early 2002 which then was followed by a sharp downturn
- by mid-2003 a Golden Cross appeared on ASX200 price charts which proved the starting signal of a four-year lasting bull market
- a Black Cross became fact in early 2008; what followed was a savage bear market, seldom witnessed in modern history
- but a Golden Cross again followed in June 2009 and share markets entered the next stage of their recovery rally from March-lows

In early June another Black Cross appeared for both the ASX200 and the All Ordinaries indices. This has now been followed up by similar crosses for major US equity indices.

Should investors now expect the worst?

A quick investigation of the All Ordinaries index over the past 45 years (since 1965) teaches us that Black Crosses are often a signal of mayhem coming, but not always. Sometimes the 50 M/A merely dips below the 200 M/A, but it never breaks significantly below it, setting up a share market bottom from which the next rally can take place.

It is this scenario that is at present keeping market bulls' hopes alive: that fears about a significant sell-off will prove to be without merit, and that a rally will take off instead. Maybe this is why some chartists adhere so much importance to whether the 200 M/A is still trending upwards, or not.

At this point in time, it is only the 50 M/A that is falling. The 200 M/A for Australian indices is merely tracking sideways. The same holds true for major US indices. Of course, if the tide doesn't turn and share prices fail to again move higher in a sustainable manner, the 200 M/A too will eventually turn course and start trending south.

A similar picture emerges when we look at individual companies in the Australian share market. WorleyParsons ((WOR)), for example, experienced a Black Cross in February this year and the shares have continued battling headwinds ever since, with rallies being kept in check by the 200 M/A and with the 50 M/A drifting lower and lower. From $30 prior to the cross, the shares closed below $21 on Monday.

WorleyParsons must be close to a textbook example of why a Black Cross should not be casually ignored. If it's not, then surely BHP Billiton ((BHP)) is, with the 50 M/A crossing below the 200 M/A in June and with the falling 50 M/A seemingly keeping a lid on the share price since. That other leading stock for the Australian share market, CommBank ((CBA)), has equally witnessed a Black Cross.

As a matter of fact, as of Friday 120 from Australia's top 200 individual companies have now generated a Black Cross on price charts, including the ones mentioned above, plus the likes of Telstra ((TLS), Woodside Petroleum ((WPL)), QBE Insurance ((QBE)) and Woolworths ((WOW)).

Yet, the example of CSL ((CSL)) shows a Black Cross in itself does not always signal only worst case scenarios lay ahead. CSL shares have been struggling since March 2009. In late November the 50 M/A broke below the 200 M/A but the share price did not collapse, it rose above both trendlines instead.

Admittedly, after a brief rally, the shares have continued their struggling path and the 50 M/A, which had risen back above the 200 M/A in February, has now again crossed the long-term trendline to the downside.

CSL's experience over the past nine months confirms the suggestion made by the 45 year chart for the All Ordinaries: a dip below the 200 M/A in itself is no guarantee for a sell-off, but it does show how weak overall momentum has become for equities.

Oddly enough, such point of low-confidence could also turn out to be the ideal platform to start the next rally from. Remember March 2009?

Those readers curious to see what a healthy and positive technical outlook looks like should have a look at a price chart for ResMed ((RMD)). The 50 M/A surged above the 200 M/A in November last year and after posting this “Golden Cross” the share price has appreciated from less than $5.50 to $7.34 on Monday.

Not only are both 50 M/A and 200 M/A for ResMed still trending upwards, but the first one is clearly above the second, and there's a gap between the two so wide that it will take more than just another sell-off to change the current pattern.

This story was originally written and published on Monday, 05 July, 2010.


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rdumas
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Hi Ody,

Just one minor point that should be mentioned and that is the 200 day EMA on the XJO started trending down ever so slightly in early May 2010.




It is interesting to note what happened last time this occurred back in 2007/2008.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Hi Folks,

For those wave watchers who have been following my EW count. In my market wrap on the week end I posted the following count for the XJO.




It is possible that we may have completed wave Circle a today and have started wave Circle b shown as a green dashed line on the chart above. If we haven't then we can't be far off. For that reason I bought some STW earlier today.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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Additional reasons (to Rudy's) why shares in Asia are currently up"

In Australia, the trade surplus would of course be a help, but, in truth, Asia is more widely in the green. See the following from Bloomberg. Prices had come to look low to bulls. But I doubt that we shall see anything like a consistent bounce. Still, one understands why bulls would act.
-------------------------------------------------------
Asia Stocks Rebound as Drop Attracts Investors; Treasuries Gain

By Darren Boey and Jonathan Burgos

July 6 (Bloomberg) -- Asian stocks rebounded, with the regional benchmark rising from the lowest level in almost a month, led by Australian banks and Taiwan technology companies. Treasuries gained.

The MSCI Asia Pacific Index rallied 0.8 percent to 112.77 at 2:10 p.m. in Tokyo, gaining for a second day. Standard & Poor’s 500 Index futures were little changed before market trading resumes in the U.S. following a holiday. Yields on 10- year Treasuries fell 4 basis points to 2.94 percent.

The MSCI Asia index sank 3.4 percent last week. The decline was the most since the period ended May 21 and took the average price of its companies to 13.6 times estimated profit, the lowest level since December 2008. The Shanghai Composite Index led gains in Asia, rising 1.8 percent before the pricing of Agricultural Bank of China Ltd.’s initial public offering in what may be the world’s largest IPO.

“Valuations have become attractive and bargain hunting is pushing the market higher,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which holds $90 billion. “I doubt this is durable. Until we get more clarity on whether we will get a double dip in the economy, markets are likely to remain volatile.”

About six shares rose for every two that declined in the MSCI Asia index. Commonwealth Bank of Australia, the country’s largest bank by market value, increased 2.2 percent after the nation’s central bank left its benchmark interest rate unchanged for the second straight month, as expected. Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, advanced 2.2 percent. HTC Corp., the maker of Google Inc.’s Nexus One cell phone, jumped 4.7 percent.

Share Sale

Agricultural Bank, China’s largest by number of customers, is selling as much as $20.1 billion of stock in Shanghai and Hong Kong. The share sale comes after Shanghai’s benchmark stock index reached a 15-month low yesterday and shares of Chinese companies traded in Hong Kong completed their longest losing streak since 1996.

Treasuries rose, pushing yields toward the lowest levels this year. Ten-year yields, a benchmark for mortgage rates and company borrowing costs, fell 4 basis points to 2.94 percent in Tokyo, according to data compiled by Bloomberg. The 3.5 percent security due in May 2020 rose 10/32, or $3.13 per $1,000 face amount, to 104 3/4. The yield declined to 2.8793 percent on July 1, the least since April 2009.

To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.


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market_mad
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Hey Rudy,

Great charts as always. Where would you envisage a possible termination of the current Wave B up? I wouldn't have thought it would have gone much more than 4300.

Cheers
MM


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rdumas
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Hi MM,

As the move up today was impulsive I would expect a Zigzag pattern to emerge. So the move should be short and sharp. The 50% retrace of the 21st June top would take the index to around the 4400 level however I expect that it will more than likely peak around the 4380 level as there is a reasonable degree of resistance at that level.


I would expect it will close the gap above the 4320 level because this baby doesn't like to leave unclosed gaps. It has a fetish about these things.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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cat_lady
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hi jaded

re quarterly spot prices for iron ore, came across this extract from an article at the BS which I thought you might find interesting:

QUOTE:

Spot prices for seaborne iron ore are tumbling. According to Goldman Sachs, citing resources information provider Platts, last week the spot price for fines delivered to China was $US130.50 per dry metric tonne, its lowest level for 18 weeks. In the derivatives market, third-quarter swaps are being settled at $US117 a tonne. The further out one looks in that market, the lower the forward price.

Except for the worst few months of the global financial crisis, spot prices have traded at a substantial premium to contract prices. In April that premium was just under 150 per cent. More recently, it evaporated.

As Goldman says, spot cargoes are now trading at an implied discount of nearly 20 per cent to the proposed third-quarter contract price being sought by Australian producers. It expects steel mills to vigorously resist paying a premium over spot and being disadvantaged against competitors not locked into the new quarterly pricing deals.

In fact the history which led to the breakdown of the long-standing annual benchmark pricing system says the Chinese mills will refuse to pay the premium and will be prepared to renege on their contracted volumes if they feel disadvantaged.

That’s particularly likely as Goldman also says there is no shortage of supply of seaborne iron ore, with Brazilian ore being offered via tender, spot cargoes being offered by suppliers not normally involved in the spot trade and reports that Vale has as much as 885,000 tonnes of ore floating off China’s coast.

Just as the shift to market-related pricing was inevitable as the benchmark system broke down, it would appear equally inevitable that if the market remains volatile there will be pressure to move the quarterly priced elements of the market closer to spot, making the price even more volatile.

There is a lot more supply coming into the market both from the large and small Pilbara producers and from Brazil, where Vale is pursuing a 50 per cent increase in its production. It has also starting buying and building its own ships, which will presumably shift its emphasis at the margin from price to volume.

In the long term, growth in Asian demand and particularly China’s demand might underwrite the massive increases in production volume. Rio Tinto alone is considering expanding its capacity by about a third by 2015.

In the short term, however, China’s economy is slowing as its authorities try to stamp out speculative bubbles.

END QUOTE

cheers
cat lady


Without my morning coffee I might as well be a dog

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ody
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Markets up in general

1. Kitco spot prices up.
2. Asia up, and Europe up.
3. Wall Street futures (for trading our time tonight) also up, clearly though not hugely.

The markets do not look as though they are about to rocket, but there definitely are buyers. On our market, though, volume was really very thin, which means that at this rate shares won't go up for long. Also, there were once again more lows than more highs. So, all in all, those bullish, or "bargain hunting", are to an extent active, but in a rather quiet way, and there are not that many of them.

We would need to see much bigger volumes, and fairly decisive signs of confidence, for the market to be tradeable in anything other than the very short term. And let us note that these modest purchases occurred while commodities were improving, the trade figures for Australia were positive, and there was no increase in interest rates. Such factors would, in more bullish times, be likely to impact far more positively than the low volumes suggest they did, even though the rise, today, for the bulls, was nice.


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ody
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Tuesday, July 06, 2010 - 06:48 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Some APPARENTLY safe stocks

Even though the only actual stock that I have is ETF GOLD (other listed entities are all interest rate securities), I do from time to time have a look at stocks I have on watchlists to see how they would have performed if I had kept them. (Or, indeed, how solid they might prove to be if I were to buy any stocks now.)

My latest - very recent - "survey" of this kind is based on what Stock Doctor lists by way of performance over 1 year, and shorter periods in between 1 year and 1 day. Today is not included: the calculations apply to the state of affairs as per yesterday.

Not suprisingly, shares which would at NO time have lost money for shareholders in terms of these categories (1 year, 6 months, 3 months, etc) are extremely rare, but even so there are some. These tend to be typical "quiet achievers", usually not much in the news, which just do not get sold down aggressively, and in that sense, at any rate, appear to be quite safe. I AM NOT IMPLYING THAT THEY HAVE NO BUILT-IN DANGERS, OR WILL NOT FALL AS YET. But they ARE stocks that have a very consistent record of being "in the black".

The following were in the black AT ALL TIMES listed by Stock Docctor:

ASZ (ASG Group)
CLV (Clover Company)
ETF GOLD (now by many predicted to go into decline for the time being)
SUL Super Cheap Auto

Note that, with the exception of ETF GOLD, not one of these companies gets much attention. That is, in fact, probably to their advantage. It is the stocks that have been priced up too much, at any time, which one needs to worry about if one thinks defensively - far more than those that have been able to sustain their level.

I wish to point out that I do, of course, also keep an eye on stocks which are far more "newsworthy" - not only those recommended by bigger brokers, but also by e.g. Roger Montgomery and others who work within a more "selective" format. So I am very aware of the performance of stocks like JBH, Mondadelphous, etc - good companies, but quite a bit more volatile than I like them myself, particularly in a market like this.

The following are "also rans", which ONLY ONCE flopped into the red, and did so BY LESS THAN 2%.

ANG Austin Engineering
DMP Domino's Pizza
FGL Foster's
RFG Retail Food Group

Others which got close were MTS (Metcash), which fell by 2.5% measured over 6 months, and TRS (The Reject Shop), down by 3.8% over 3 months.

Please note that some of these stocks that were in the black at the times chosen may well have been (often probably were) in the red at some other time. Nevertheless, there is a considerable likelihood that, in terms of price at least, stocks like ASG Group, Clover, and Super Cheap Auto, and to an extent also those of the "second" rank, are amongst the most resilient companies one could have held, during the last year, and possibly also will be in what are likely to be very trying periods to come.


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ody
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But how did these apparently safe stocks otherwise perform?

I shall list figures for 1 year, followed by 1 month

"All black" stocks

ASZ 139.8% and 4%
CLV 35.7% and 9.6%
ETF GOLD 22.2% and 0.6% (note this last figure ...)
SUL 50.8% and 3.7%

"Almost all black" stocks

ANG 130.2% and 9.3%
DMP 74.6% and 0.9% (note)
FGL 12.8% and -0.5% (NOTE)
RFG 63.7% and 6.5%

Based just on these performance figures, stand-outs would be ASG Group, Clover Company, and Super Cheap Auto, along with Austin Engineering, and Retail Food Group. But I shall look at them yet more closely.


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ody
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Looking at "in the black" stocks in more detail

(1) ASZ (ASG Group) is an IT company, a solutions provider, with a strong record of health and what has been a good record of earnings. Disappointingly, however, EPS growth for June of this year was thought to be down to - 5.88%. Its market performance over a few years has been less imposing than this year's "in the black" performance would lead one to expect. That, however, is probably due to people having intrinsic faith in the company, and its having a very positive forecast for 2011, at 47.50% EPS growth. This is a Stock Doctor star stock, which encourages one to have confidence in its quality. It is trading at a PE of 15.05 with a ff div. of 4.24%, and a PRG of not more than 0.62. According to SD's criteria, the stock is clearly undervalued. However, as the stock has over a few years been quite "up and down", one could not necessarily be confident that the price might not fall again.
---------------------------------------------------------
(2) CLV (Clover Company). This is a very modern, "with it" company concentrating on e.g. Omega 3. As such its "story" is good, with much promise. HOWEVER, although its financial health is strong in essence, its EPS growth was down by -25.20% for June 2009, though better things are clearly expected for the future. But I find it concerning that its EPS growth was previously much stronger, and the company looks too uncertain for me. Trades at a PE of 13.83 and a div. of 3.51ff with a PEG of 0.71. Worth watching to see how it will or will not fulfil its potential.
----------------------------------------------------------
(3) SUL. Super Cheap Auto is a strong and successful retailer, which has appealed to quite a few investors. It is a star stock with SD, and somewhat undervalued by its criteria. It has a nice history of earnings, and EPS growth for June 2010 is supposed to be 20%, with the figure for 2011 at 16.39%. Returns for shareholders have been quite satisfactory. It is at a PE of 16.53 with a 3.64 ff div. Ought to be quite a reasonable sort of a hold. Over a somewhat longer period, however, it can be quite volatile.
----------------------------------------------------------
(4) ANG. Austin Engineering is obviously a competent industrial company which tends to be overlooked, rather, in comparison with more glamorous stocks in its field. Health is "satisfactory" (not "strong"). Its EPS growth has been rather up and down: negative at -9.15% for June, it seems. But expectations for next year are very positive at 36.33%. At a PE of 14.15 and yields a 2.43 ff div.
----------------------------------------------------------
(5) DMP. Domino's Pizza is - and not surprisingly - a Stock Doctor star stock. The company has been remarkably successful in gaining market share for itself wherever it has gone, and not only with its pizzas but also other dishes. It has shown itself very capable and well-focused as a growth stock with solid income. In Dec 2009 its EPS growth was as high as 35.11%, and the company may well exceed what is predicted for it - i.e. about 16% EPS growth for this year and, likewise, the next. It is trading at a high-looking 21.12% with a ff. div of 2.57%: but with a PEG of 0.60 and a strong business plan which is being well executed its earnings may well surprise on the upside. One masterstroke is that it tends to sell its wares to unsophisticated palates - showing great cunning in winning over those clients. I would see this as, at the moment, probably one of the safer propositions to be invested in, as even in Europe people will continue to buy pizzas from a highly efficient and "cheap" producer during recessionary times. At the same time, I am not confident that the stock is not already fully priced.
-------------------------------------------------------

In the end, I am not particularly tempted to buy any of these (or other stocks, for that matter), but I think these ARE among the stocks worth watching closely, as in all cases one can understand why people should, during the last year, have found them appealing, and it is very possible that most of them will, as companies, continue to do well.

By the way, as for Foster's: when all is said and done it is pretty much a non-performer. There are better ways of finding returns at a low level - soon higher than what this company produces. It produces weak earnings, and weak results in the share market. About the only thing one can say for it is that it does not look like collapsing. Of course it does have good assets, but the yoking of beer and wine together has been a huge mistake - fortunately that is now coming to an end, but I cannot help but feel that if anything the company will continue to face problems not actually expressed in the price. I certainly wouldn't buy it. Wine, whether or not you sell a company producing it, is currently not commercially a good proposition. A wonderful product at a low price for the consumer, but a nightmare for producers.


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ody
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Europe is trading very strongly, and no doubt Wall Street will be up as well. Markets are currently showing a degree of bullishness.


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market_mad
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Hi Rudy,

I'm not convinced about this rally - the US was less than convincing last night. The Nikkei is off over 1% this morning and we are seeing some good selling pressure on our market as a result at this early stage.

US futures are off in after market (S&P off 4). I think we are heading back down to 4230-40 on the day...

Cheers
MM


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p3t3
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market_mad wrote on Wednesday, July 07, 2010 - 11:09 am:

I think we are heading back down to 4230-40 on the day...


Great call MM.

Rudy's projection extends to mid-July, so there's still time for some basing and a subsequent rally. Does your view extend that far?


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rdumas
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Hi MM,

I've been out all day and only just had the chance to look at the market just now. As I suggested in my post yesterday I believed that we had either just completed wave Circle a or weren't far off it (in other words there could be one move wave down but I don't think so).

I expected a Zigzag move up to the termination of wave Circle b and that the move would be short and fast. A retrace of the first wave up of up to a maximum of 70% is allowable for a Zigzag so we are still in the right ball park as the retrace so far has taken back around 52.3% of the first wave.

If I am correct then we should get our move up tomorrow. I had anticipated the wave Circle b to only last a few days before we head down to the bottom of the upcoming wave Circle c which I assume will terminate mid to late July.

Should we go down from here instead of up it means that I was out by a couple of waves and I would still stay in my STW trade.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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jaded
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cat_lady,thanks for that article.combined with bridog's ones it gave me more insight into the spot market.

It's always been that commodity production increases over quick time to fill Demand and prices for commodities fall to equalise Supply and Demand.
Many,especially Minor,Producers thus get caught by only being able to viably produce on High Prices and Fail when the Majors Supply to the Market by greater Capacity.

That simultaneously we have a Industrial SlowDown?
well,those articles cover how the,say,Steel Makers are not held hostage to the temporary Commodity price increase.

Companies can say they've SHIPPED X million tons this Quarter BUT have they sold it for current Spot Price?

My watchlist of Iron Orers[up'n'comers] has NOT responded significantly to the 'easing' of the resource tax.Ergo they didn't Fall since May because of this Tax but it would seem because of the uncertainty of getting this Spot Price Windfall.

So I'm going to run a check over Mining Contractors.Perhaps they are Oversold because of this New Projects happening 'Fear' from the Tax?

cat_lady,Mining Contractors usually pay top rate Dividends and/or can achieve Capital Appreciation very suitable for DIY Super Funds.The 'trick' is how Profitable their Contracts are NOT How much they're Worth.
So it's not a Big Deal them announcing a Multi Million Job.What ya have to follow is How Profitable such a Contract is?MND is a great performer to this point.

A 'dud' is like MAH.They contracted to build the NT Railway BUT they only got the Job by Buying Into the dang White Elephant thing this Railway turned out to be!!
Now if a Contractor cain't build a flaming Railway at a Profit?
Pretty Hopeless,Hey?

Anyway,that was years ago.Currently I favour SDM.

and cat lady SDM is 'annointed' by New Hope so is a Wash Soul Approved Entity [like Clover]
In these 'troubled' times,cat lady,such angles of strength and endorsement just might get us thru.

regards


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

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ody
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jaded: prices for resources stocks

Thank you for your post, jaded.

Interestingly, David Haselhurst, who specialises (very successfully) in small miners, had this to say today, in The Eureka Report, citing his figures, too:
-----------------------------------------------------
Buyers before the end of tax-loss selling on June 30 are mostly in front by week’s end and the heat out of the resources tax controversy.

With the majority of our portfolio stocks up from their weekly lows last week, three finished on weekly highs with robust gains.
-----------------------------------------------------

I would not myself want to generalise about the effect of the LIFTING of the resources tax, as distinct from its IMPOSITION. I have argued about the latter to such an extent that I am not going to do so again. With respect to the lifting, the examples that Haselhurst gives indicate that certainly a number of stocks went up from lower levels. But I think we are probably also all aware that this is not true of all resources stocks by any means. One important reason why they did NOT all go up is that several stocks (e.g. some of the big ones) had already been climbing well and truly BEFORE Gillard pounced. The rise was a clear expression of a growing belief - some time PRE Gillard - that the tax would have to be revised. The initial fall occurred when people were uncertain that such a revision would occur, but the share market (as often) then announced through taking up some miners that it felt that Rudd would not succeed in preserving the RSPT.

As for the future ... in the short term I am not in the least confident about many mining stocks, largely because we are now in the second negative phase, globally, of the GFC. Under these circumstances resources stocks generally remain under significant pressure. One would have to invest with a mixture of uncommon skill and luck, I feel, at this time, if one is to see one's mining stocks go up in value.

One of my major worries about iron and coal would be that in practice Chinese "players" will not view any agreed prices as compelling. With iron ore spot prices declining there would have to be a very good chance of the miners getting far less than e.g. Ken Henry would expect.


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bridog
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Thursday, July 08, 2010 - 01:41 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Ody,
Thanks for sharing your thoughts and research on some stocks. I bought into ASZ at $1.40 this morning after some brief research. I'm a recent bullish convert on the info tech sector, for companies who have a profitable operational business. From the days we all remember of hi-tech hopefuls with no income, info tech has now arrived big time. All business, other than maybe some sole traders, and all governnment cannot run without IT, and those businesses that can facilitate it will be in demand.

ASZ clearly is doing just that and has picked up 5 new contracts, mostly government, in the last six months. They have increased profits every year since 2004 including the GFC era, can't get much better than that. They have little or no debt, their current assets exceed their total liabilities in December balance sheet. And they have an impressive chart for the last 12 months. I get the feeling they have a long way to go over the next few years as long as they don't stuff it up.

Ody, does Stock Doctor have anything to say about APA? It is a utility company owning gas pipelines and storage facilities. It appears to be progressing satisfactorily with increasing profits and distributions, in fact the dividend yield is about 9%. APA also appears to have been totally unaffected by the GST except for the share price. Revenues and earnings consistently progressing. I bought some recently, backed up again today and am considering going in again on any weakness.

Cheers


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ody
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Thursday, July 08, 2010 - 02:37 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Bridog: ASZ - I am delighted to see you take the plunge. I am quite convinced this is among the best companies on the market right now, and I would not be particularly concerned about its being an IT company, as it is very expert. My own only hesitation is the environment that we are investing in, and the possibility that if things go belly-up in general then you might see some drop in the price. But IF THIS WAS A BULL MARKET I'd buy it without any hesitation whatever. It is just the kind of stock that I have built much of our capital on: as you have obviously concluded, I select my stocks carefully and with much screening of various sorts - this has certainly withstood almost all probing I could think of.;

I shall do some work on APA for you tomorrow - a different kettle of fish, of course. I know I have looked at it from time to time and have liked certain things about it. It it's a choice and you are not afraid of some volatility then I think that ASZ is what I'd prefer to go for. But that is not really what is in front of you: you want to know whether you should buy APA as well.

Certainly ASZ has proven very resilient, and - as you say - its future looks, on any fundamental basis, very good indeed. A well-run company, with great discipline, a good balance sheet, and able to gain business for oneself. If one ignores the hard times we are in, I'd certainly include this one among my most favoured stocks, and give it a very high rating.

Simply by way of practice: even when times are tough - perhaps the more so! - I like to test out myself by seeing which companies stand out for me, disregarding all sorts of hype about those that get a lot of publicity or are at a very high price level. I hope you will do well with the stock.


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ody
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Thursday, July 08, 2010 - 02:42 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Interesting to see a number of markets turn around quite impressively on bargain hunting. There is tension, at the moment, between bulls looking for stocks they think will be cheap, and bears who think the global news is so bad that one is better of not taking risks.


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gdd3
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Thursday, July 08, 2010 - 03:35 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi "Our Daily Breaders'"...

Just an update on a chart I posted back on May 24th, 2010 - 11:14pm on this thread which was part of a discussion(with Rudy) about time "hotspots" in the future for a possible turning point. At the time Rudy was concentrating on a near-term 'hotspot' time in the 1st week in June but I had mentioned , basis his analysis, that a 100% timing of his 186/188 cycle came later about July 10th and that I was more interested in this time frame because it had co-incided with a few of my own time cycles(90CD and 120CD)that I felt were possibly more applicable as they originated from more significant(?) swing points. Well the time is nie(between the week of 4th and 11th of July...which should have been 5th-9th...Mon-Fri....right!).

Just maybe, Tuesday's low proves to be a bit more significant and we get more than Rudy's 'a few days' rally expectation and that Tuesday's low was either the completion of the higher degree C-wave that Rudy is ultimately looking for(A-B-C down from the 5025 high) or indeed merely a 're-positioned' wave A that is currently favoured by Rudy at the May 21st low. Either scenario would mean accepting a 'stunted' c-wave(52.3%) relationship of the 15th April high to the May 21st low)????

Regardless, it looks clear? that Rudy's assessment for XJO's direction, at least for the next few day's, should be vindicated. Bragging rights after that is remains to be seen (joshin', Rudy).




Cheers
Dolphin


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eblode
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Gentlemen & Cat Lady,
Eugenio is back on deck after 2 weeks of cool weather on the Gold Coast.
My portfolio is still in tact despite two vicious drops in price by IRE and DWS. Both were Stopped out. However all was forgiven when my CEY shares went into orbit on the news of it's takeover play. Doesnt happen often but when it does it feels sooooooooo good. As I posted weeks ago the Rudd mining scheme has been disgorged by Gillard but I believe it still won't be excepted and Abbot will be the next PM. If this was an American election there is no doubt that Gillard would be out for 2 reasons. One, it is political suicide to be an Atheist and not swear on the bible in high office. Two, the very thought of a de facto relationship living in the White House is unthinkable. Americans export their sexy films and TV programs around the world but basically they are prudish to the core. I must congratulate Rudy, whom I consider the best Chartist in Oz for his dire postings. Spot on ol buddy but I believe as soon as the reporting season arrives we shall be on our way to 5000 plus as business is improving and figures in the U.S. are growing stronger every week. Auto sales are up, employment is clawing it's way back and the housing market is not getting worse. Let's go for the 5000 mark and todays jump in the DOW will certainly help. Great to be back.

Eugenio


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rdumas
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Thursday, July 08, 2010 - 07:55 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Dolphin,

Great to hear from you again after what seems like a long absence. I know that Randall (one of the Musketeers) also has a feeling that we may be up to "a longer than expected rally" as well and he is pretty good at his trade.

Unfortunately I can't see it from an EW perspective (at least my EW perspective). The XJO continues to behave as I expected and I still believe that my Minute wave Circle b (which I believed would be sharp and short) is in the process of starting its final leg of its Zigzag pattern today. If it reaches my 4380~4400 target zone today it may well complete that leg today as well.

On that basis I have put in a sell order for my STW at $41.05. In my view, the worst outcome is that I am wrong and I pocket a tidy little profit for a few days work.

As Ody said earlier in the week. This market is extremely interesting and I always look forward to the next thrilling episode.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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Thursday, July 08, 2010 - 09:30 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Thanks for that post, Rudy.

And interesting it continues to be, after Wall Street's enormous jump. Futures for Australia up by 85 points for today.

But ... I think most of these extreme days, which we get every once in a while, are somewhat of an "outburst" by bargain seekers, and don't carry any follow-through of substance with them. So, yes, in your position I too would take advantage of today's very likely strength.


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ody
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Thursday, July 08, 2010 - 10:03 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Bridog: APA

Hi again!I have just looked at this on Stock Doctor. Its health is seen as strong, and there are, in fact, no negatives listed. I can see why you'd feel attracted to what is virtually a 9% dividend. HOWEVER, the reason why I would myself not buy it - and would much prefer to see anyone in ASZ - is that earnings per share growth for APA is expected to be LESS THAN 4% for both 2010 and 2011. That is very low in general, but not least for this company, which showed a much stronger earnings path before.

Obviously earnings are always uncertain and subject to revision. But most brokers are - reluctantly - re-rating down rather than up. The spruikers are trying to talk earnings up, and, as one influential one did so for the U.S.A. last night, the people there - desperately keen to hear some good news - were partly moved by this pep talk to move in. I'd be very wary, in general. Not that I'd see this as one of the worst stocks anyone can buy.


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ody
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Thursday, July 08, 2010 - 10:07 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



(From the SMH)

Mining tax changes could cost $35b over 10 years
CLANCY YEATES
July 8, 2010

JULIA GILLARD'S move to appease mining companies by softening the government's resources tax could cost the budget $35 billion in revenue this decade, a new report says.

In defending its ''breakthrough agreement'', the government said the changes would raise only $1.5 billion less than the $12 billion the ill-fated super profits tax was budgeted to raise in its first two years.

But a report from Goldman Sachs JBWere suggests these official numbers severely underestimate the revenue forgone under the new tax arrangements negotiated with BHP Billiton, Rio Tinto and Xstrata.

It found the revised tax would raise $3.2 billion less than Kevin Rudd's ''super profits'' tax in its first two years from 2012 - more than double the government estimates. This gap between the two tax proposals is then expected to widen over the decade, as miners increase their production and profits.

By 2020, budget revenues are forecast to be $35 billion lower than they would have been under the original proposal designed by the Treasury secretary, Ken Henry.

Although the new minerals resources rent tax would still raise $20.9 billion this decade, a Goldman analyst, Hamish Tadgell, found the ''super profits'' tax would have raised more than $56 billion over the same period. Treasury has not released forecasts for the tax beyond 2013-14.

A senior government source concurred with the thesis, but said the real impact of the revenue loss could be even worse. He said the government had been banking on the tax raising almost $100 billion by 2020 but the changes agreed to with the mining industry would reduce that by more than half.

This would bring into question the government's ability to deliver on all the promises the tax was slated to fund, which included infrastructure, a 1 per cent company tax cut and superannuation top-ups.

A spokesman for the Treasurer, Wayne Swan, said the government had provided a new forward estimates figure of $10.5 billion, which was standard practice. To try to forecast beyond that was risky because it was impossible to predict variable factors such as exchange rates and commodity prices.

The long-range projection by Goldman Sachs comes after Dr Henry this week revealed the government had relied on higher commodity price assumptions when it forecast the revised mining tax would raise $1.5 billion less than its predecessor. Yesterday's report adopted conservative assumptions that commodity prices would fall well below their current near-record levels after 2014.

The softened version of the tax - which has been welcomed by the mining industry - will take a far smaller bite out of these profits because its headline rate has been slashed from 40 per cent to 22.5 per cent, once a new extraction allowance is taken into account. It kicks in once returns have exceeded about 13 per cent, compared with the previous threshold of 6 per cent.

The latest tax has received a warm reception from financial market analysts, most of whom were fierce critics of the previous plan. A Deutsche Bank resources analyst, Paul Young, said this week that the package of changes seemed like ''complete capitulation'' on behalf of the government, delivering a ''huge win'' to the mining industry.

with Phillip Coorey


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rdumas
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Thursday, July 08, 2010 - 10:46 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



G'day Eugenio,

We missed the colour of your posts (and occasional stirring) on the thread. Re Gillard not winning the next election I hope you're right but based on the bookies odds, at this stage you would lose your bet. I can't recall when the last time was that an "odds on" political party lost an election. Julia would have to organise some major stumbles between now and election day for her to lose it.

Actually, if she switched sides I would even vote for her. Tony's habit of making up policy on the fly in the end won't cut it with the Australian public.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Thursday, July 08, 2010 - 11:31 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Update for the Wave Watchers on the XJO

Hi folks,

If my count is still correct then the following EW count is in play for the XJO.



We will possibly peak between around 4372 and 4384 sometime today and then I would expect a move down. In other words I think that this leg is probably the end of the rally phase for the time being. In order to sell my STW sometime today I have brought down the sell target to $40.95.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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Rudy - Gillard winning?

A week or so ago I would have thought that a Gillard win would be extremely likely, but now I am far less certain.

1. Tony Abbott is by no means unelectable. Indeed, if Labor had seriously believed that, they would not have changed leaders. They did so because RUDD was, in the polls (not least Labor's own internal polls) unelectable.

2. Gillard was reasonably effective in changing the RSPT around, but she did leave some damaging loose ends: many resources companies are still not happy at all, and there is also other unhappiness, both from the left and from the right. The claim that the government would get 10.5 billion was very carelessly made (to put the best construction on it), and has been amply shown to be quite ill-founded, so there is both a credibility problem for Gillard and a budgetary one.

3. Most seriously, I believe, Gillard has badly played the immigration issue. On the left, people will be disappointed by what is an unmistakable shift to the right. On the right, people are not going to think that what she is offering should lead them to vote for her rather than the coalition. Worst of all, for Gillard, she has grossly underrated the opposition she would encounter in East Timor. It now looks very probable that what she so confidently presented to the electorate will not prove a "solution" at all, and that she will have to try and find some other place to "park" the "illegals": that will not prove an easy matter. I think that her whole approach to this matter, which superficially looked politically deft, has actually been so careless and hasty that it is undermining her credibility greatly. And I am not even speaking of the impact of the policy per se, if successful. There is only a minor need for even considering the policy, at this point, as in fact she cannot be claimed to have a policy: that only exists if something can be implemented, and we have no such thing on the table.
--
So I think we shall from here on see more criticism: there is a lack of care, an impractical kind of sloppiness, in what she actually DOES, as distinct from the careful rhetoric and grooming. Australians are increasingly impatient with people who are not actually coming up with practical policies that can be made to work, but sounding off about all sorts of grand ideas. For one thing it reminds them too much of Rudd, and it is clear that Gillard is - at the level where it really matters - not necessarily better prepared, more practical, or even more politically skilled, than Rudd. Far too much is in the nature of "floss", and turns out to be under-prepared.

I don't think her atheism or being a single (partnered) woman will undo her, as easily enough voters in this country will look beyond such matters (this is not the U.S., at all) and instead search for solid competence. But that IS what they look for, and superficial smartness or lack of well-grounded work before policies are announced will not "cut it".

It always has to be remembered that the negative feelings that many have towards Abbott are not shared by many "ordinary" people. If Gillard comes to look in any way "unsafe", then enough people will help Abbott get over the line.

When I was still an academic, most students I taught thought that John Howard would never be PM of Australia. What happens when people express such opinions is that they too readily assume that others will think like them. In the event, Howard's main skill was that he was a master at identifying what those voters whom he needed - and you only need a very limited number - actually wanted. Wisely - from a POLITICAL point of view - he always totally ignored the large number of people who could not stand him and who thought he was totally unsuitable. Abbott is, in my view, a very astute politician in his own right, and as likely to be underrated as Howard was.

I must confess that, as in selecting shares, I judge my politics clinically. I try to assess what OTHERS think, in the electorate, just as I would never be a fan of the actual pizzas made by DMP. My taste is not what matters, as distinct from what others like. Since 1966, when I came into the workforce, I have only predicted one election wrongly, in any country I concerned myself with: I thought Hewson would beat Keating, and did not watch the ball closely enough in the last few days. Otherwise I have been always right, in this respect. At the moment I am NOT predicting an ABBOTT win, but I am no longer CONVINCED of a GILLARD win! So I am at present keeping an open mind.

One thing that will NOT work to Gillard's advantage, I feel quite sure, would be unseemly haste in rushing to an election. People will not be misled by this and would see her as trying to take advantage of a honeymoon. They will want to see more of her, and need to, for them to get some idea as to whom they are actually voting for. At the moment the whole Gillard story is too much in fairyland.

Does all this matter for our shares? You bet. Economically Gillard is vastly ignorant and impractical. She, for one thing, was the architect of Medicare Gold, one of the most absurdly costly schemes thought up by a recent politician in Australia. She has wasted huge sums on badly planned buildings for schools. These are things for which SHE was responsible - co-culpability with Rudd for other matters is another thing, though of course it should not be ignored.


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ody
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Thursday, July 08, 2010 - 12:06 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy: market moves

I think that what you think will happen makes very good sense. We are still seeing some real tension between bulls and bears. When prices are low enough, in their view, bulls come out, and this has been happening. They will also readily seize on what looks like positive news.

Meanwhile, however, a large number of people has turned bearish and is extremely wary of share markets. Negative news, moreover, certainly predominates, and is now listened to a lot more than it was in the lead-up to 15 April. If the bulls push up the markets even by a moderate amount - it really does not have to be much - then those waiting for just that to happen before they sell will use the opportunity offered for doing just that. And I think there will be a significant number of people who'll be in that category, particularly if bad news continues or at the least "good" news looks unconvincing to them.


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rdumas
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Hi Ody,

I won't go into the whys and wherefores of the actual politics. My only indicator is the betting ring. When it comes to a two horse race such as we effectively have, when there is a odd's on favourite, they very rarely lose.

As I say, Gillard will have to make some major blunders before now and the election date for her to lose. That in on way indicates who I will be voting for.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Hi Ody,

I decided to not stuff around and try to extract the best price out of the market for my STW and have now exited my position. I am more than happy with the profit I made in the 3 day trade.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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Thursday, July 08, 2010 - 12:40 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The following article, published in Business Spectator, seems to me to provide an excellent analysis of what is happening (or failing to happen) in the global economy.

I reproduce the piece exactly as it stands in Business Spectator. It's long - but good.

-------------------------------------------------------
At the threshold of mediocrity

Bill Gross, PIMCO

Published 6:21 AM, 7 Jul 2010 Last update 10:18 AM, 7 Jul 2010


Global financial market returns stand at the threshold of mediocrity. With bonds priced not for recession but near-depression, most major global bond indices now yield less than 3 per cent, surely a forerunner of returns to come. Stocks, long the volatile vamp of investor optimism, have not yet adjusted to the 'New Normal' of half-size economic growth induced by deleveraging, re-regulation, and deglobalisation and have low single digit prospects as well. Yet, what has seemed obvious to those of us collectively at PIMCO for several years now is less than standard fare in the trading rooms of institutional money managers.

While the phrase 'New Normal' has been welcomed into the lexicon of reporters and commentators alike, the willingness of investors to accept its realities is fog-ridden and whispered, or perhaps softly whistled, much like midnight passersby at a graveyard. Our 'New Normal' two-word duality seems to resonate more on the 'normal' than the 'new' to economists whose last names aren’t Roubini, Reinhart, Rogoff, or Rosenberg.

It’s as if 'R' has been eliminated from the financial alphabet, and 'new' from investors’ dictionaries worldwide.

Perhaps the enigma arises from a multi-generational acceptance of debt as common scrip, available for the asking and seemingly forever productive in boosting living standards – until, that is, liabilities became so large that the interest burden and probability of repayment overwhelmed borrower and lender alike in near unison. To understand why debt may have become a burden instead of a boon it is instructive as Philip Coggan points out in a recent Economist article, to ask why people, companies and countries borrow in the first place.

They do so, he intelligently argues, to boost their standard of living, to bring consumption forward instead of languishing in the present. How could almost any of us have afforded a home without a mortgage? By the time we would have saved enough money we’d have been close to retirement with the kids grown and facing a similar predicament. And so we turned to the wizardry of borrowing on time to be able to purchase and then repay in full. Crucially, since debt is a handshake between at least two parties, the lender had to believe that it would be repaid, and that belief or 'credere', was based on several rather rational expectations when observed on a macro level from 30,000 feet.

First of all, capitalistic innovation fostered productivity, and an increasing standard of living through technology and innovation. Debts could be paid back via profits and higher wages if only because of rising prosperity itself. Secondly, the 20th century, which fathered the debt super-cycle, was a time of global population growth despite its interruption by tragic world wars and periodic pandemics. Prior debts could be spread over an ever-increasing number of people, lessening the burden and making it possible to assume even more debt in a seemingly endless cycle which brought consumption forward – anticipating that future generations could do the same.

But while technological innovation – much like Moore’s law – seems to have endless promise, population growth in numerous parts of the developed world is approaching a dead end. Not only will it become more difficult to transfer high existing debt burdens onto the smaller shoulders of future generations, but the over-levered, aging 'global boomers' themselves will demand a disproportionate piece of stunted future goods and services – without, it seems, the ability to pay for it. Creditors, sensing the predicament, hold back as they recently have in Greece and other southern European peripherals, or in the US itself, as lenders demand larger down payments on new home mortgages, and other debt extensions.

Aging and population change of course are just part of the nemesis. We could have 'saved' for this moment much like squirrels in wintertime but humanity’s free will is infected with greed, avarice and in a majority of instances, hope as opposed to commonsense. We overdid a good thing and now the financial reaper is at the door, scythe and financial bill in one hand, with the other knocking on door after door of previously unsuspecting households and sovereigns to initiate a 'standard of living' death sentence.

What is harder to understand in this demographic/psychological/sociological explanation of the crisis is why it should morph into a global phenomenon. There are 6.5 billion people in the world and will soon be 1 billion more. Many of them are debt-free and have never used a credit card or assumed a home mortgage. Why can’t lenders like PIMCO lend to them, allowing developing nations to bring their consumption forward, developed nations to supply the goods and services, and the world to resume its 'old normal' path toward future profits, prosperity and increasing standard of living? To a certain extent that is what should gradually happen, promoting more rapid growth in the emerging nations and a subdued semblance of it in the G7 – a 'new normal'.

But they – the developing nations – are not growing fast enough, at least internally, to return global growth to its old standards. Their financial systems are immature and reminiscent of a spindly-legged baby giraffe, having lots of upward potential but still striving for balance after a series of missteps, the most recent of which was the Asian crisis over a decade ago. And so they produce for export, not internal consumption, and in the process leave a gaping hole in what is known as global aggregate demand. Developed nation consumers are maxed out because of too much debt, and developing nations don’t trust themselves to stretch their necks for the delicious leaves of domestic consumption just above.

It is this lack of global aggregate demand – resulting from too much debt in parts of the global economy and not enough in others – that is the essence of the problem, which only economists with names beginning in R seem to understand (there is no R in PIMCO no matter how much I want to extend the metaphor, and yes, 'Paul (K)Rugman' fits the description as well!).

If policymakers could act in unison and smoothly transition maxed-out indebted consumer nations into future producers, while simultaneously convincing lightly indebted developing nations to consume more, then our predicament would be manageable. They cannot. G20 Toronto meetings aside, the world is caught up as it usually is in an 'every nation for itself' mentality, with China taking its measured time to consume and the US refusing to acknowledge its necessity to invest in goods for export.

Even if your last name doesn’t begin with R, the preceding explanation is all you need to know to explain what is happening to the markets, the global economy, and perhaps your own wobbly-legged standard of living in recent years. Consumption when brought forward must be financed, and that financing is a two-way bargain between borrower and creditor. When debt levels become too high, lenders baulk and even lenders of last resort – the sovereigns, the central banks, the supra-national agencies – approach limits beyond which private enterprise’s productivity itself is threatened. We have arrived at a 'New Normal' where, despite the introduction of 3 billion new consumers over the past several decades in 'Chindia' and beyond, there is a lack of global aggregate demand or perhaps an inability or unwillingness to finance it. Slow growth in the developed world, insufficiently high levels of consumption in the emerging world, and seemingly inexplicable low total returns on investment portfolios – bonds and stocks – lie ahead. Stop whispering (and start shouting) the words 'New Normal' or perhaps begin to pronounce your last name with an RRRRRRRRRRRR. Our global economy, our use of debt, and our financial markets have changed – not our alphabet or dictionary.

© Pacific Investment Management Company LLC (Pimco). Reprinted with permission. All rights reserved.


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ody
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Thursday, July 08, 2010 - 12:46 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy: quitting STW

I agree with your decision. The market had jumped very nicely for you, and at the moment seems to have reached a stage where it appears to be "waffling". I cannot imagine that your decision would be seriously wrong: it sounds like good safe timing to me that you have practiced, both in buying and in selling. People like you and I are not concerned to squeeze the absolute maximum out of the market, but (a) to win when when we are in it, and (b) not to lose by overstaying. So as far as I am concerned you have fully lived up to your own principles.

After all ... who knows: with a market so unsteady you may get another chance for a short-term trade at a later point. But I think you would then probably want to look for a lower low??


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ody
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Thursday, July 08, 2010 - 01:06 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio: Gillard's atheism and the Australian public

The evidence below shows how well Abbott understands Australian voters, and how well he knows how to turn something "discovered" about Gillard to his own advantage: impeccably fair and professsional, he is seen not to harm her in any way about the matter of atheism, but deftly explains, at the same time, that similarly he should not be blamed for being a believer.

But perhaps the most interesting reaction is that of the people who responded to the poll. In the US it would be unthinkable that only about a quarter of such voters would care as to whether someone is religious or not. But Australians are practical above all.
----------------------------------------
From the SMH:


Don't judge Gillard on lack of faith: Abbott
July 8, 2010 - 11:34AM

* Vote

Poll: Does a politician's lack of faith affect your vote?
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1. Please select an answer. Yes
2. No
3. View results

Yes

26%
No

74%

Total votes: 2859.
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These polls are not scientific and reflect the opinion only of visitors who have chosen to participate.

Prime Minister Julia Gillard should not be judged on her absence of faith, Opposition Leader Tony Abbott says.

"[Faith] is a personal thing," Mr Abbott told ABC Radio today.

"Just as my Catholicism should not be held against me, her views or lack of views on the subject should not be held against her."

Ms Gillard, who was raised in the Baptist tradition, has said she does not believe in God and can't pretend to have a faith she doesn't feel.

Mr Abbott said religion was not an issue that should be central to the governance of Australia.

"I have never ever let religion dictate politics because decisions that are made by politicians in a secular, pluralist democracy like Australia have got to be driven by what are objective, standard, ordinary commonsense considerations."

AAP


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ody
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Thursday, July 08, 2010 - 01:30 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Additional stock for consideration: MMS

McMillan Shakespeare is run by well-informed people who have specialised notably in such an essential service as advice on salary packaging. It has for some years in essence been a strong company, though with some ups and downs. (Its area of operation is not the easiest, but it has apparently managed to get on top of matters.)

It is now in the category which I have been looking for: stocks that manage to stay in the black over a full year (obviously one has to KEEP looking, as some come in while others go out). And, of course, I would not draw attention to them if I felt they were certain to fall in the near future (though that can easily happen to any of them).

This is a Stock Doctor star stock, probably nearly well enough valued, with a PEG of 0.83, and not much below the point which SD indicates as an appropriate price according to its criteria. Nevertheless, if the market holds up well enough for the stock, it may inspire confidence that its predicted earnings per share price growth for 2011 is held to be above 52%. It's on a PE of 14.64, which is unlikely to frighten people, and it looks as though it is still in quite a good uptrend. The dividend is 4.25% fully franked.

The company seems to have greatly strengthened, both in its earnings - including forecast earnings - and in its standing in the market.

I shall continue to report on companies I am watching - NOT because I think one should invest in them now (though I know some are interested in doing so), but more so as to share my approach with others and hopefully to be of use over time.


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rdumas
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Thursday, July 08, 2010 - 02:53 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Looks like we are about to start the move to the 4372~4384 level now.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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(From Business Spectator)

Actually this is not about Australia, but New Zealand in the early 80s. It is not as though "Rogernomics" were an unmixed blessing, but from my reading (engaged in here in Australia) at the time I remember that NZ had no real alternative but to adopt them, and the effect was probably positive rather than negative. There is no question that Douglas DID reduce the deficit. New Zealand had until that time been a rather smug, European-style social democrat nation, which had got poorer and poorer. Douglas totally revolutionised the way things were done, though not necessarily the intrinsically unrealistic, complacent NZ mindset. (My wife and I lived there from 1966-76: New Zealanders at that time had an absurd notion of their own standard of living, and were quite out of touch with what was happening elsewhere while they in essence had not moved beyond the 50s. It was a joy to leave in 1976, and we should have done so well before.)
--------------------------------------------------------

West looks for austerity lessons down under

Gillian Tett, Financial Times

Published 9:13 AM, 8 Jul 2010 Last update 10:01 AM, 8 Jul 2010


FT.com

In normal circumstances, western financial officials do not spend much time pondering New Zealand. Right now, however, these are not normal times as far as harassed European and American budget officials are concerned.

As 2010 wears on, bureaucrats and politicians in places ranging from California to Athens are being forced to get serious about cutting public debt. And this in turn is prompting some officials to engage in a furtive historical quest, scouring the past for examples of how other countries or public entities have – or have not – managed to make radical cuts.

Positive examples are pretty thin on the ground, given that most governments that have contended with vast debt burdens before have removed them by default, devaluation (or a war).

One country starting to promote debate among some European and American policymakers, however, is New Zealand.

This week Sir Roger Douglas, New Zealand’s former finance minister, was in London to talk with policymakers and pundits about his own country’s experience of fiscal reform. What Sir Roger had to say about his experience offered investors and policymakers unnerving food for thought.

Back in the early 1980s New Zealand – like many western countries today – was gripped by economic woes. Its budget deficit was almost 10 per cent of gross domestic product while growth was stagnant.

However, in 1984 a Labour government took control, and surprised many when, led by Sir Roger, it set about implementing radical neoliberal economic policies.

These policies (which came to be dubbed “Rogernomics”) essentially introduced monetarist measures to control inflation. However, they also slashed subsidies and trade tariffs, privatised state assets and cut numerous government functions – often by outsourcing them to private enterprises.

Unsurprisingly, this was wildly controversial, since tens of thousands of state employees lost their jobs. Two decades later, some New Zealand economists insist a more modest reform approach, as in Australia, would have produced much better results.

Rogernomics still provokes intense debate. However, it did reduce New Zealand’s deficit. More surprisingly, these policies also won the government a second term.

Is there a message for Europe here? Possibly. What made the era of Rogernomics so fascinating for economic historians was not just the sheer scale of government cuts, but the fact that these were presented as part of a drive to redefine the operations of the state. The government was not just being shrunk; it was rebranded too.

Over in the US, some cash-strapped municipalities are essentially copying this now, as much out of desperation as design.

But what is notable in most of the eurozone is that there has not hitherto been any real effort to redefine the state. Instead, governments are generally opting for a “salami slicing” approach, imposing across-the-board cuts while keeping current functions intact. Even in the UK, the government appears to be taking a similar tack.

But this timid approach is one factor that makes investors doubt the credibility of the debt-cutting plans, and Sir Roger says this is a mistake. If governments just try to trim budgets, without seriously redefining the state’s role, any fiscal gains are likely to be small and temporary.

Moreover, if politicians want to have any real impact on public debt, it is crucial for them to move fast – rather than endlessly search for social “consensus”. “It is uncertainty which people really hate,” Sir Roger observes, insisting voters will accept cuts as long as these are clearly explained.

Such arguments are viewed with deep scepticism in some European quarters. As one British official says, it was a lot easier for a small country such as New Zealand to take radical action in the 1980s than an unwieldy behemoth such as Germany or the UK today, given that so much of the eurozone is trying to cut at the same time.

Nevertheless, as western governments get cutting, the message from the Rogernomics era is likely to be closely watched by investors; if nothing else because it shows that radical action can sometimes emerge, even in places where the markets (and voters) least expect it.


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rdumas
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What a fizzer. With 10 minutes trade left it looks like the 4354.9 may well be the top for today. That makes me feel even better about getting out of my STW today.

The final pattern that has been evolving since around 12:30pm is quite ambiguous from an EW perspective and could lead to a more in either direction tomorrow at this juncture. Tonight's action in the US market will be 'all important'.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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p3t3
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Thursday, July 08, 2010 - 04:17 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)




rdumas wrote on Thursday, July 08, 2010 - 04:00 pm:

What a fizzer.


I expect the Shanghai trading got in the way of the final move you were expecting:
Shanhai100708


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ody
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Thursday, July 08, 2010 - 04:33 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Slight participation in market rise

For the market to go up convincingly, it needs volume, and we are not seeing that. Sure, most of the volume was UP. But there was not enough of that, and - no less importantly - there was not enough down volume either. Only one, onesided move occurred, in essence, and without widespread conviction.

Unless the pattern of trading changes significantly, this kind of volatility, whether up or down, will not establish any truly significant pattern. The market is far too indecisive at this stage for any move to be sustained, and only very short-term trades can be undertaken with confidence - SOME confidence, anyway.

It is just as possible for the market to tumble again, on any slight piece of bad news, or because sellers feel attracted to the prices (they probably won't need a lot of upside from here), as for the market to go on up.







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rdumas
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Thursday, July 08, 2010 - 04:42 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi P3T3,

I suspect that the slightly negative bias on the US futures didn't help any either. Should be an interesting night.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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