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1.Market Observations

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17 Aug 2019 (AFR) – Domain sees ‘encouraging signs’ but market still weak

(17 August 2019, AFR, p27,  Max Mason, Media & Marketing Editor) ‘Domain chief executive Jason Pellegrino says the signs are there that home buyers are returning to the Australian property market after “an extraordinary series of events”, which has seen the percentage of houses for sale drop to more than 20 year lows. National listings … Continue reading

17 Aug 2019 (AFR) – The bond market and recession: Is this time different?

(17 August 2019, AFR, p25, Vesna Poljak, Markets Editor) ‘The terrifying signal sent by the inversion of the US yield curve cannot be ignored, but neither is it fully understood, even though its strike rate in predicting recessions could be about to extend to eight from eight. There was no recovery in the sharemarket on … Continue reading

17 Aug 2019 (AFR) – Earnings season: What we learnt from results this week: Gap between the haves and have-nots

(17 August 2019, AFR, p22, James Thomson, Columnist) ‘As investors battle to come to grips with the grim reality of heightened market volatility, the second week of reporting season has presented a stark contrast between the haves and have-nots of the ASX. The first group of companies is focused, dependable and universally long-term in their … Continue reading

17 Aug 2019 (AFR) – Strong earnings weather global market sell-off

(17 August 2019, AFR, p22, William McInnes, Reporter) ‘The second week of earnings season proved difficult for many companies, as a global market sell-off and fears of recession pushed the vast majority of shares on the local market lower. The S&P/ASX 200 was caught in the worldwide drawdown, falling 178.9 points, or 2.7 per cent, … Continue reading

17 Aug 2019 (AFR) – Recession fears push ASX lower for second week

(17 August 2019, AFR, p33, William McInnes, Reporter) ‘Australian shares fell heavily for a second week running, as global recession fears mounted following the inversion of the US yield curve. The S&P/ASX 200 Index fell 178.9 points, or 2.7 per cent, to 6405.5 while the broader All Ordinaries lost 177.5 points, or 2.7 per cent, … Continue reading

16 Aug 2019 (AFR) – Why the yield curve recession warning may be wrong

(16 August 2019, AFR, p31, John Kehoe, Senior Writer) ‘Global bond yields are flashing recession warning signs, but as former US Federal Reserve chairman Janet Yellen suggested there are reasons to believe this time could be different. An “inversion” of the US Treasury bond yield curve – interest rates on long-term bonds unusually falling below … Continue reading

16 Aug 2019 (AFR) – Why you don’t need to fear the inverted yield curve recession story: RBC

(16 August 2019, AFR, p31, Matthew Cranston, Economics correspondent) ‘Fears of a US recession because of an inversion of the yield curve should be disregarded this time, analysts at the Royal Bank of Canada have suggested. As the two-year US Treasury securities traded above the 10-year note yield for the first time in 12 years, … Continue reading

16 Aug 2019 (AFR) – Big US investors use summer sell-off to ramp up bets

(16 August 2019, AFR, p29, David Randall and Jennifer Ablan) ‘New York | The summer sell-off is finally here – and not all US investors are rattled by it. After a record-setting first half of the year that pushed US stock markets to new highs, a more than 760-point drop in the Dow Jones Industrial … Continue reading

16 Aug 2019 (AFR) – Yield inversion floods Wall St with recession fears

(16 August 2019, AFR, p12, Jacob Greber, United States Correspondent) ‘Washington | Mayhem returned to the world’s biggest and most important financial market as the first benchmark yield inversion since 2007 triggered storm warnings and fears the US economy is headed towards slower growth or even recession. Evidence is mounting for US investors that fallout … Continue reading

16 Aug 2019 (AFR) – ‘Self-fulfilling’ downturn ahead, but Australia insulated: RBA

(16 August 2019, AFR, p5, Matthew Cranston, Economics correspondent) ‘Reserve Bank of Australia deputy governor Guy Debelle has warned of a “self-fulfilling downturn” globally because of the uncertainty over the US and China trade and technology war, but expects Australia will be insulated due to Chinese fiscal stimulus. After the Dow Jones Industrial Average sank … Continue reading

16 Aug 2019 (AFR) – Jobless rate stuck at 5.2pc

(16 August 2019, AFR, p4, Matthew Cranston, Economics correspondent) ‘The economy created 41,100 new jobs last month – outstripping expectations of a gain of 14,000 – but it was not enough to reduce the overall jobless rate from 5.2 per cent, which has been unchanged for the fourth consecutive month.’ Read more at AFR.com (might … Continue reading

16 Aug 2019 (AFR) – Full-time earnings return to strong growth

(16 August 2019, AFR, p4, David Marin-Guzman, Workplace correspondent) ‘Average earnings growth for full-timers have reached a six-year high, growing by more than 3 per cent and adding to a pattern of upbeat labour market data. Figures released by the Australian Bureau of Statistics on Thursday show full-time workers are earning an average of $1634.80 … Continue reading

16 Aug 2019 (AFR) – RBA resists bond market’s distress call

[COMMENT: Now isn’t this interesting? The whole world is hypothesising about the likelihood of a global recession, but our local reserve bank is talking down the prospects!] (16 August 2019, AFR, p1, Vesna Poljak, Patrick Commins, Jemima Whyte, James Eyers and David Marin-Guzman) ‘The distress call being transmitted by seismic moves in the global bond … Continue reading

16 Aug 2019 (TheAge) – Woodside warns of trade war blow to energy demand

(16 August 2019, The Age, Business, p24, By Nick Toscano) ‘The head of the nation’s largest oil and gas producer has expressed deep concern about the escalation in the US-China trade war that wiped billions of dollars from world markets on Thursday, warning a sustained conflict will suppress global demand in the energy sector.’ Read … Continue reading

16 Aug 2019 (TheAge) – Fallout from payment scandal overshadows Super Retail’s solid result

(16 August 2019, The Age, Business, p24, By Dominic Powell) ‘Super Retail Group has warned of additional costs to make up for underpaying its store managers for several years, overshadowing an otherwise robust full-year result.’ Read more at TheAge.com.au

16 Aug 2019 (TheAge) – The ‘doom loop’ that could bring on a global recession

[COMMENT: Now I have to somewhat agree to the premise of this article, that too much thinking about, and scaremongering about, a possible recession might just bring it on as a self-fulfilling prophecy. I never realised that the term ‘doom loop’ is in the economist’s lexicon.] (16 August 2019, The Age, Business, p20, By David … Continue reading

16 Aug 2019 (TheAge) – Markets signal Trump’s trade wars could lead to US recession

(16 August 2019, The Age, Business, p20, Stephen Bartholomeusz) ‘Perhaps the only surprise about the carnage in global financial markets overnight is that it hadn’t happened earlier. It has been evident for quite some time that the Trump trade wars were doing increasing damage to the more trade-exposed economies – China and Germany in particular … Continue reading

16 Aug 2019 (TheAge) – Top Australian CEOs fear further turmoil amid market rout

(16 August 2019, The Age, Business, p20, By David Scutt and Sarah Keoghan) ‘Top Australian chief executives say they are concerned about further turmoil for the global economy amid the ongoing threat of a trade war between the world’s two superpowers and fresh fears of a recession in the United States. The local sharemarket suffered … Continue reading

16 Aug 2019 (TheAge) – What is an ‘inverted yield curve’ and why does it matter?

(16 August 2019, The Age, p4, By Jonnelle Marte) ‘Stock markets tanked on Wednesday (US time) after the bond market sounded a loud warning that the US economy might be headed toward a recession. Investors are spooked by a scenario known as the “inverted yield curve,” which occurs when the interest rates on short-term bonds … Continue reading

16 Aug 2019 (TheAge,SMH) – Australian stocks thumped amid US recession fears

(16 August 2019, The Age, p4, By David Scutt) ‘Australian stocks were thumped on Thursday, logging their worst trading session in a year after moves in the US bond market stoked fears of a recession in the world’s largest economy. Around $60 billion in sharemarket value was torched as the benchmark S&P/ASX 200 tumbled 2.85 … Continue reading

16 Aug 2019 (AFR) – ASX loses $60b on worst day in 18 months

(16 August 2019, AFR, p29, William McInnes, Reporter) ‘The Australian sharemarket recorded its worst session since February 2018 on Thursday, as the inversion of the US yield curve sparked fears a recession was imminent, wiping $60 billion from the ASX boards. The S&P/ASX 200 Index plummeted 187.8 points, or 2.9 per cent, to 6408.1 while … Continue reading

15 Aug 2019 (NYTimes) – US Stock Markets, Jolted by Economic Worry, Suffer 2nd Worst Drop of 2019

[COMMENT: In trading Thursday, the major US equity indices all fell almost 3 percent. Now that is a large amount for an index to fall in just one day.] (15 August 2019, New York Times online, By Matt Phillips) ‘Trade-war worries hammered financial markets again on Wednesday as data from Germany and China showed trouble … Continue reading

15 Aug 2019 (AFR) – Retail property sentiment back at GFC levels: ANZ

(15 August 2019, AFR, p33, Larry Schlesinger, Reporter) ‘Investor sentiment towards retail property has sunk to levels last seen just after the global financial crisis a decade ago, according to a new report by ANZ Bank. Titled Retail malaise hits the property side, the report paints a troubling picture of operating conditions in the sector … Continue reading

15 Aug 2019 (AFR) – A contrarian investor’s guide to the trade war

(15 August 2019, AFR, p29, Patrick Commins, Columnist) ‘There are scenarios where a US-China trade deal happens sooner than the market believes, which could lead to a “violent” reaction in a very one-sided market. As 10-year bond yields in Australia fell below 1 per cent for the first time last week, my colleague wondered whether we … Continue reading

15 Aug 2019 (AFR) – China’s industrial output growth slumps to 17-year low

(15 August 2019, AFR, p13, Huizhong Wu, Stella Qiu and Kevin Yao) ‘Beijing  | China reported a raft of unexpectedly weak July data on Wednesday, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the United States intensifies. Activity in China … Continue reading

15 Aug 2019 (AFR) – Shrinking German economy ‘on edge of recession’ as exports stutter

(15 August 2019, AFR, p12, Michael Nienaber) ‘Berlin | A slump in exports sent Germany’s economy into reverse in the second quarter, data showed, as its manufacturers bore the brunt of a global slowdown amplified by tariff conflicts and uncertainty over Brexit. Gross domestic product (GDP) f…’ Read more at AFR.com (might need AFR login … Continue reading

15 Aug 2019 (AFR) – Wages steady at 2.3pc despite June quarter lift

(15 August 2019, AFR, p4, Matthew Cranston, Economics correspondent) ‘Wage growth has remained unchanged at 2.3 per cent per year despite a better than expected June quarter reading, according to official figures. Wages grew 0.6 per cent in the June quarter, more than the 0.5 per cent gain that the Bloomberg consensus of economists expected.’ … Continue reading

15 Aug 2019 (AFR) – Consumer confidence bounces on rate cut pause

(15 August 2019, AFR, p4, Matthew Cranston, Economics correspondent) ‘Consumer confidence has bounced 3.6 per cent, according to the latest Westpac Melbourne Institute monthly reading, reversing a 4 per cent fall in July largely due to expectations around interest rates. Westpac chief economist Bill Evans said the improvement was probably due to consumers’ expectations of … Continue reading

14 Aug 2019 (TheAge) – Suburban shopping strips fight back

(14 August 2019, The Age, Business, p26, By Simon Johanson) ‘It’s perhaps the only upbeat retail story around, and it’s playing out on Melbourne’s much-loved suburban shopping streets.’ <snipped…> ‘Inner-city hipsters are underpinning retailers in vibrant Smith Street, where vacancy fell to 2.7 per cent, and in trendy High Street in Northcote, which recorded vacancy … Continue reading

14 Aug 2019 (AFR) – Retail woes blow through iconic Melbourne strips

(14 August 2019, AFR, p29, Larry Schlesinger, Reporter) ‘Once a lively melting pot of espresso-sipping mobsters and pasta-eating hipsters, Melbourne’s Lygon Street has become the unfortunate new poster child for the ill winds blowing through the retail sector. New figures show the vacancy rate on Lygon Street on the fringe of the Melbourne CBD has … Continue reading

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