Comments on: Australian stock market outlook for 2010.

By: Biker

Biker — Thu, 04 Nov 2010 11:46:14 +0000

We’re all in the same boat then!~ Finished the last house over six months ago and we haven’t seriously considered the next one since. Instead, we’ve committed the funds into offsets.

If WA does take off next year, all hell will break loose. Maybe we _should_ be considering reducing rental leases from twelve to six months, as both our agents suggest!~

By: Greg Atkinson

Greg Atkinson — Thu, 04 Nov 2010 11:40:00 +0000

Ned I reckon you might be right. I am pretty much doing nothing at the moment, just waiting and watching.

By: Ned S

Ned S — Thu, 04 Nov 2010 11:16:42 +0000

The ‘hattens are still batched down’ here blokes!

I figure I’ll poke my head up again in maybe 6 or 7 more months time and have another look around then?

By: Greg Atkinson

Greg Atkinson — Thu, 04 Nov 2010 11:02:45 +0000

I see even Craig “running with the bulls” James from Commsec reckons the RBA might be misreading the tea leaves:

From an article today:

“….the economy is not as robust as what the Reserve Bank feels and it clearly has to reduce future expectations for rate hikes in 2011″ Mr James said.

See: Soft retail data shows cracks in economy’s strength

By: Biker

Biker — Thu, 04 Nov 2010 10:39:36 +0000

HaHa… Love it!

Must confess I have little confidence in those we entrust with leadership, mate.

Yes, it was a strange move, but as Greg notes, it may have been intended to cool off the property market. That’s OK with us, but we’re (all) pretty lucky to be where we are. I note that the World Bank has just given China the Big(ger) Tick!~

By: Ned S

Ned S — Thu, 04 Nov 2010 09:24:50 +0000

“Stevens is about as clever as Swan” -- I couldn’t let THAT pass without comment … I think you are being rather unkind to Stevens mate! Even my neighbour’s pooch that yaps a lot is smarter than Swanny surely? Oh, I get it … You were just trying to REALLY emphathise how strange the RBA’s last move seemed maybe???

Pic of Wayne executing all his vast intellectual property follows:

http://www.google.com.au/imgres?imgurl=http://www.smh.com.au/ffximage/2008/02/09/wayne_swan_wideweb__470x350,2.jpg&imgrefurl=http://www.smh.com.au/news/national/treasurer-to-hold-lenders-to-account/2008/02/09/1202234226883.html&h=350&w=470&sz=28&tbnid=3HcEX86L6kf95M:&tbnh=96&tbnw=129&prev=/images%3Fq%3Dwayne%2Bswan%2Bpic&zoom=1&q=wayne+swan+pic&hl=en&usg=__01KWJFBbEi6wJgwWXBGY7CcQk-A=&sa=X&ei=MHvSTOfIC4yKvQOxwMTBDw&ved=0CCIQ9QEwAA

Google ‘wayne swan pic’ for lots more that inspire no more confidence.

By: Biker

Biker — Thu, 04 Nov 2010 05:57:47 +0000

“I wonder if the RBA is trying to cool the housing market..(?)”

Possibly… and using the shortest, bluntest tool in the shed.
Consider the fallout:

* Australia’s third largest industry, construction, fails…

* …precipitating a major housing shortage… and

* … increasing unemployment… and

* …reducing the tax base… while

* …increasing welfare.

A falling housing supply suggests:

* increased rents… and

* …rising housing costs.

As I inferred, all this works for us. Our offsets insulate us from any pain and Stevens is about as clever as Swan.

By: Greg Atkinson

Greg Atkinson — Thu, 04 Nov 2010 03:12:49 +0000

Biker -- I wonder if the RBA is trying to cool the housing market and correct an imbalance in the economy before it becomes a problem?

By: Biker

Biker — Thu, 04 Nov 2010 02:11:47 +0000

“…let’s not forget they never spotted the GFC coming and were raising rates back in 2008 when they should have been sitting on their hands…”

Well, they really _had_ to raise rates this time, otherwise we’d all be wondering what they are there for, right? Can’t have an economy humming along without some economists tweaking the controls and making engine noises… !

Seriously, it’s a silly call, but it works for us.

By: Vince L

Vince L — Wed, 03 Nov 2010 22:30:37 +0000

Well the stock market may crawl to near 5000 by the end of the year but I guess you have given up on much more than that Greg? Your call on the oil price looks good though.

By: Ned S

Ned S — Wed, 03 Nov 2010 13:12:23 +0000

Never for even one moment does it leave my mind how badly the RBA missed the GFC Greg -- Truth be told we should have had interest rates at about 10% in 2006 maybe? But that’s wisdom in hindsight perhaps.

I agree about China’s stimulus. With the same not having been done for Oz’s benefit obviously.

Seems that destroy the value of fiat currency remains the ‘go’ though. With the likes of even China having no real response but to manipulate their currency also.

The thought flicks through my mind as to at what point just might the BRICs collude to gang up on USD declines? I’d say we are just maybe getting closish? But perhaps they simply don’t have the pull?

I’m all at sea I must admit.

By: Greg Atkinson

Greg Atkinson — Wed, 03 Nov 2010 10:27:39 +0000

Ned I hope the RBA know what they are doing as well, but let’s not forget they never spotted the GFC coming and were raising rates back in 2008 when they should have been sitting on their hands. The RBA may reckon their track record is good, but I think they were lucky China jumped in and started spending big which in turn effectively covered their backs.

By: Senator13

Senator13 — Wed, 03 Nov 2010 07:49:20 +0000

You would hope so, Ned!

By: Ned S

Ned S — Wed, 03 Nov 2010 04:58:51 +0000

The RBA is talking in terms of a “large expansionary shock” -- Strong wording indeed I’d say! Liked Greg’s comment about checking what is in their water cooler … At this point I’m just hoping their actions don’t contribute to a “large contractionary shock”.

Though they presumably do know way more than a few bloggers who read a few reports on various financial matters occasionally.

By: Ned S

Ned S — Tue, 02 Nov 2010 08:12:34 +0000

And what might I ask are the rest of us (as in non WA types) supposed to make of this? :

http://www.abc.net.au/news/stories/2010/11/02/3055203.htm?section=business

Effectively the WA Premier reckons his state economy is OK so he’d appreciate it if the banks lend there. Hmmm …

I gather the RBA reckons the economy is going to heat up in 2011. So considers this a somewhat preemptive strike?

By: GoWest

GoWest — Tue, 02 Nov 2010 07:34:18 +0000

You only have to look at CBA shares to see why Norris is raising interest rates -- He is a New Zealander who was in charge of a bank that was taken over by CBA so I can understand why he is foolish.
Andrew Bolt’s blog has an explanation under “Why Hockey is right” of why the market, govt and RBA are warning CBA not to act like mavericks in this post GFC time.
It will be interesting to see if they lose their government guarantee!

By: Senator13

Senator13 — Tue, 02 Nov 2010 05:08:30 +0000

Wow that was quick -- they did not mess around. Maybe they think they need to do it under the cover of the Melbourne Cup?? I suspect the others will follow.

Greg is right about the profit downgrades -- it just does not feel like the booming economy in need of raising interest rates at the moment.

You do have to wonder if the RBA are living in the same world as the rest of us… This has the feel of the “one too many” which the RBA is renowned for.

By: Ned S

Ned S — Tue, 02 Nov 2010 04:55:43 +0000

CBA has increased their variable mortgage rate 45 pips.

http://www.businessspectator.com.au/bs.nsf/Article/CBA-lifts-rates-by-45bps-pd20101102-AT7E3?OpenDocument&src=hp3

That should draw some attention and comment.

Tricked if I know Greg, maybe they just want people to stop building houses and head over to WA and work on mining industry construction. It’s just an out and out strange result for mine.

By: Greg Atkinson

Greg Atkinson — Tue, 02 Nov 2010 04:55:28 +0000

Ned, I am not sure I can make any sense out of the RBA these days. I fail to see how raising rates now will help curb inflation unless they are trying to wipe out small businesses as part of their cunning inflation fighting plan. The Government and RBA seem to be pulling the economy in different directions.

Listed companies have been issuing profit downgrades one after another recently (expect banks) and even BHP has been a little gloomy of late. So maybe the RBA board need to check what is in their water cooler?

The stock market is still stuck below 5000…one wonders if it will even get above that mark for any extended period of time next year?

By: Ned S

Ned S — Tue, 02 Nov 2010 04:26:05 +0000

“I doubt small business would think it is a good time to put them up either with Christmas just around the corner” -- God no; There’s going to be some very unhappy Santa’s little helpers out there in Retailland.

Looking forward to reading Greg’s take on it.