Shareswatch Australia

Unfortunately I was sick the past few weeks and I am just now getting back into the swing of things. Similar to the demand pull that the warmer than usual spring has had on macroeconomic data, the warmer spring caused me to have an earlier than usual sinus infection as well as some horrific allergies. I suppose I am pushing it a bit far when I am comparing my health concerns to economic data, but alas I fly my nerd flag proudly.

One of the world’s largest countries, sparsely populated, with extensive minerals in its remote hinterland deserts. Sound like Australia? This is Mongolia. On the cusp of an investment boom, fuelled by Chinese demand for resources and driven by Mongolia’s position just to the north of China’s industrial heartlands. Mongolia’s economy, like Australia’s, has defied the global gloom.

This week the Australian stock market slid into what I would call a bear market although some would argue that it has avoided such fate by a whisker. The reality is however that the ASX All Ordinaries did close below 4000 recently and that represents a drop of just over 20% from levels seen in April. If it looks and feels like a bear market, then for me it is a bear market.

Over the last few months media commentary regarding the Australian economy has turned decidedly gloomy. The wonders of the mining boom are now being questioned,  the U.S. and European economies matter again and people are starting to wake up to the reality that an economic strategy that basically relies on China dragging Australia along for the ride might not be that clever.

Fosters Group Limited (ASX:FGL) is a blue-chip ASX-listed Australian beverage company with a wide range of brands covering beer, wine, spirits and ciders.  Over the last few years the company has faced a number of challenges and is now in the process of trying to improve it’s underlying business and deliver better value for shareholders.

Well the Dow Jones closed this morning below 10,000 and for those financial writers who focus more on grabbing reader’s attention rather than on facts, that can only mean one thing: the U.S economy is heading for a double dip recession! Of course the fact that the U.S economy is actually expanding, as are other major economies like China, Japan and Germany, appears irrelevant to many market commentators who seem intent on making investors fear that another economic crisis is at hand.

Over the last week the Australian stock market has taken a turn downwards pretty much inline with markets across Asia, Europe and the U.S.  Once again no mater how much the RBA talks up our economy, the fact is that Australia’s economic health depends on how our major trading partners are doing and investors are starting to get worried about the global economic outlook.

In the frenzy to churn out China growth stories most financial and business journalists in Australia appear to live in a world where the European Union either no longer exists or does not matter. I must admit I also do not pay enough attention to European economic data, so today I will have a quick look at the European Union and outline why I believe we should all pay more attention to developments on the other side of the planet.

One of the many misjudgements made by the Rudd Government in managing the Australian economy this year has been their almost fanatical belief that Australia would be shielded from the worst of the global financial crisis because of our trade with China. For the first part of this year in addition to the “War on Inflation”, Rudd and Swan were also pushing the line that our significant exports to China would keep the Australian economy ticking over nicely despite the problems brewing in the economies of the United States and the Eurozone.