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1.Market Observations

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22 Feb 2018 (TheAge) – Hot housing lifts profits for nation’s biggest developers

(22 February 2018, The Age, Business, p27, Simon Johanson) ‘Sydney and Melbourne’s heated real estate prices have buoyed the country’s biggest diversified property developers, helping deliver strong profits despite weak retail conditions and record levels of household debt. Property giant Stockland delivered a $684 million first half statutory profit, reporting underlying earnings growth of 18 … Continue reading

22 Feb 2018 (TheAge) – Wages flatline for 10 million Australians despite small general lift

(22 February 2018, The Age, p5, Eryk Bagshaw) ‘Ten million Australians working in the private sector are getting pay rises that are neck-and-neck with inflation, while the pay packets of professionals, miners and retail workers are going backwards compared to the cost of living. Figures released by the Australian Bureau of Statistics on Wednesday show … Continue reading

22 Feb 2018 (AFR) – Company earnings: Profit shocks spark day of wild moves – A2 Milk’s surge helps ASX higher

(22 February 2018, AFR, p29, by Sarah Turner) ‘Australian shares scraped into the black on Wednesday, after a push-pull session where earnings drew extreme but contrasting reactions from investors.’ <snipped…> ‘In a heavy day of earnings reports, A2 Milk was a standout on the upside, with the dairy company climbing 29.7 per cent to $11.30 over the session. A2’s … Continue reading

21 Feb 2018 (AFR) – High transaction costs: home sales below 10-year average, Corelogic says

(21 February 2018, AFR, p34, by Michael Bleby) ‘Tighter credit conditions and transaction costs have pushed housing transactions in Melbourne and Sydney below their 10-year average, CoreLogic head of research Tim Lawless says. January’s 11.7 per cent year-on-year decline in settled transactions in Melbourne and the 8.4 per cent fall in Sydney – along with … Continue reading

21 Feb 2018 (AFR) – RBA pushes back against debt doomsayers

(21 February 2018, AFR, p3, by Jacob Greber) ‘The Reserve Bank of Australia has hit back at  warnings about the ability of debt-laden households to weather higher interest rates, expressing renewed optimism that wages growth will gradually firm and renew consumer spending appetites. Revealing fresh research into how few households are struggling to pay their … Continue reading

21 Feb 2018 (TheAge) – RBA keeping close eye on ‘pockets’ of mortgage stress

(21 February 2018, The Age, p1, By Clancy Yeates & Eryk Bagshaw) ‘The Reserve Bank says there are “pockets” of financial stress among the highly-indebted household sector, and it is closely watching how customers with interest-only loans manage when they are required to start paying back principal over the coming years. The central bank’s assistant … Continue reading

20 Feb 2018 (AFR) – Melbourne and Sydney office rents to skyrocket

(20 February 2018, AFR, p39, by Larry Schlesinger) ‘Premium and A-grade office rents in Sydney and Melbourne are set to surge this year as corporate tenants compete for limited space in the country’s two top performing CBD markets, where vacancies site at just 4.6 per cent.’ Read more at AFR.com (might need AFR login access, or … Continue reading

20 Feb 2018 (AFR) – Too much optimism: Equity, bond markets ‘wildly overvalued’

(20 February 2018, AFR, p31, by Sarah Turner) ‘The equity market may have shrugged off the recent Wall Street correction, but not all global fund managers are convinced market conditions signal a return to easy gains. Tony Cousins, chief executive of fund manager Pyrford International believes there’s “far too much optimism” embedded into wildly overvalued … Continue reading

20 Feb 2018 (AFR) – Why emerging markets were spared in the sell-off

(20 February 2018, AFR, p31, by Mark Mulligan) ‘Emerging markets were spared additional pain in this month’s equities and bonds sell-off, and Alex Wolf of Aberdeen Standard Investment reckons he knows why. The group’s Hong Kong-based senior emerging markets economist says a relatively weak US dollar, coupled with robust commodity prices and healthy growth across … Continue reading

20 Feb 2018 (AFR) – ASX strengthens as earnings provide a lift

(20 February 2018, AFR, p30, by Sarah Turner) ‘Australian shares advanced firmly on Monday, with investors welcoming earnings from a diverse range of companies in what’s shaping up to be a solid reporting season. The S&P/ASX 200 index ended the day up 37 points, or 0.6 per cent, at 5941 while the All Ordinaries index … Continue reading

20 Feb 2018 (AFR) – Banks warned customers will leave for Apple Pay as study shows users lock into Apple or Android

[COMMENT: Now this is an interesting disruption to conventional banking.] (20 February 2018, AFR, p23, by John Davidson) ‘Australians are now so committed to their mobile phones that millions of them would rather change banks to one that supported their phone than change phones to one that supported their bank, a new study has found. … Continue reading

20 Feb 2018 (AFR) – ASX defends tech stock supervision amid GetSwift, Big Un, Buddy Platform controversy

(20 February 2018, AFR, p23, by Michael Bailey) ‘The Australian Securities Exchange has denied it faces a disclosure crisis in its swelling ranks of small cap technology listings, with its listings chief describing recent rule-skirting behaviour from the likes of GetSwift and Big Un as “outlying”. ‘ Read more at AFR.com (might need AFR login … Continue reading

20 Feb 2018 (AFR,Reuters) – All aboard for hedge funds as trade tide lifts shipping

(20 February 2018, AFR, p16, Jonathan Saul, Maiya Keidan, Reuters) ‘LONDON (Reuters) – Forced to abandon ship after mistiming their investments five years ago, hedge funds are venturing back in a bid to profit from growing global trade flows. Around 90 percent of traded goods by volume are transported by sea and global shipping sectors, … Continue reading

20 Feb 2018 (AFR) – Big Un revelations as ASX market darling goes into trading halt

[COMMENT: This revealing news story is an eye opened about how some companies finance their operations. Investors beware.] (20 February 2018, AFR, p16, by Jonathan Shapiro) ‘Big Review TV, a subsidiary of ASX listed Big Un Limited, granted security over its assets to FC Capital, the small business lender that is advancing funding to facilitate the … Continue reading

20 Feb 2018 (AFR) – GetSwift plummets 55pc on reinstatement to ASX

(20 February 2018, AFR, p1, p13, by Michael Bailey) ‘GetSwift shares plummeted 55 per cent on Monday after the logistics software maker told the market that less than half its announced contracts had progressed to a revenue generating stage. After last trading at $2.92, before their suspension on January 22, GetSwift’s shares closed on Monday … Continue reading

19 Feb 2018 (AFR) – Profit season underlines The Great Churn

(19 February 2018, AFR, p27, by Chanticleer) ‘We’re just over the halfway point of earnings season and it’s hard not to feel at least a pang of sympathy for chief executives who are trying to understand the mindset of the Australian consumer. In talking to the CEOs of three of our bigger consumer facings businesses … Continue reading

19 Feb 2018 (AFR) – Patient RBA risks playing catch-up later: BAML

(19 February 2018, AFR, p21, by Patrick Commins) ‘The Reserve Bank of Australia’s stubborn commitment to keeping rates steady will lead to Australia’s loosest monetary conditions since the global financial crisis and risks putting the central bank “behind the curve”, Bank of America-Merrill Lynch says. Early this year markets were fully priced for a rise by … Continue reading

19 Feb 2018 (AFR) – Three risks for investors as global growth peaks in 2018

(19 February 2018, AFR, p20, by Robert Mead) ‘It would seem that the stars are aligned for a continuation of the “Goldilocks” environment that we saw last year, with above-trend global growth and low but gently rising inflation. Recent growth momentum has been even better than expected…’ <snipped…> ‘But here’s the catch, as described by … Continue reading

19 Feb 2018 (AFR) – Russian interference in US election “incontrovertible”

(19 February 2018, AFR, p10, by Alex Wayne and Margaret Talev) ‘Donald Trump has insisted for more than a year that Russians didn’t try to get him elected. Special Counsel Robert Mueller put an end to those claims, declaring definitively that they did. A federal grand jury indicted 13 Russian nationals and a so-called “troll … Continue reading

19 Feb 2018 (AFR) – Auctions up but Sydney, Melbourne house prices still falling

(19 February 2018, AFR, p9, by Larry Schlesinger) ‘More homes sold under the hammer over the weekend as the clearance rate rose above 70 per cent in Sydney, but house prices are still falling even as the summer selling season heats up. With total national auction numbers rising to 1963 this week from 1490 last … Continue reading

17 Feb 2018 (AFR) – Correction over as inflation bear fails to bite

(17 February 2018, AFR, p29, by Patrick Commins) ‘For a market that tanked this month on a sudden outburst of fear around quickening inflation, Wall Street’s response to a higher-than-expected consumer price number mid-week was instructive. That response? A shrug. Stocks wobbled and then pushed higher in that session. And then the next. So much … Continue reading

17 Feb 2018 (AFR) – Earnings season keeps positive trend intact as mining services shines

(17 February 2018, AFR, p24, by Vesna Poljak) ‘The profit season underway provides further evidence earnings growth is widening to capture more of the market, supported by synchronised global growth and confidence that consumers are coping with high levels of household debt. Led by a healthy contribution from the resources sector, the Australian market has … Continue reading

17 Feb 2018 (AFR) – Sydney’s $7 billion renaissance: Massive construction boom underway

(17 February 2018, AFR, p20, by Matthew Cranston) ‘If you walk down Sydney CBD’s main streets you might notice things are looking a bit messier than usual. Office workers curse the dust and demolition. There’s pneumatic drilling, workers shouting, scaffolding everywhere and the beep, beep, beep of cement trucks. Cranes puncture the skyline. It’s noisy, … Continue reading

17 Feb 2018 (AFR) – RBA head Philip Lowe rings alarm over Trump inflation threat

(17 February 2018, AFR, p5,  by: Jacob Greber, Geoff Winestock) ‘Reserve Bank of Australia governor Philip Lowe has slammed as “very problematic” the inflationary forces being unleashed by Donald Trump’s unprecedented borrowing surge to fund company tax cuts, saying they are landing on a US economy already running at full tilt. Over three hours of … Continue reading

17 Feb 2018 (AFR) – ASX dips into the red at the end of a positive week

(17 February 2018, AFR, p33, by Sarah Turner) ‘The ASX wrapped up a positive week with a small loss on Friday, as financials and miners weighed on the index at the end of another busy week for company earnings. Investors managed to shrug off the recent market turmoil to push the S&P/ASX up 1.1 per cent over the … Continue reading

16 Feb 2018 (AFR) – The end of the artificial market cycle spells trouble ahead

(16 February 2018, AFR, p39, by Elmer Funke Kupper) ‘The fall in equity markets over the last week has created much debate. Most of it is in line with “end of cycle” thinking – it is a modest correction, markets are adjusting to rising interest rates and inflation. But don’t worry, the underlying economic fundamentals … Continue reading

16 Feb 2018 (AFR) – Whatever happened to the Tea Party and its fiscal prudence?

(16 February 2018, AFR, p29, by Edward Luce) ‘The Tea Party is dead. Donald Trump just staged the funeral rites.’ <snipped…> ‘In contrast, Mr Trump stands for nothing but red ink. He inherited a US fiscal deficit of $US587bn in 2016. By next year it will have doubled to $US1.2tn — or more than 5 … Continue reading

16 Feb 2018 (AFR) – Warren Buffett’s deputy Charlie Munger calls bitcoin ‘totally asinine’

(16 February 2018, AFR, p29. by Tim Bradshaw) ‘There cannot be many nonagenarians who spend their time worrying about cryptocurrencies. But Charlie Munger, the 94-year-old billionaire investor, is convinced that bitcoin is “noxious poison“.’ Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

16 Feb 2018 (AFR) – US inflation surprises to upside, pointing to faster pace of rate hikes

(16 February 2018, AFR, p15, by John Kehoe) ‘Stronger than anticipated US inflation in January raised investor bets of multiple Federal Reserve interest rates rises this year and cascaded through global financial markets overnight. The annual consumer price index held steady at 2.1 per cent last month and the closely watched underlying CPI – which excludes … Continue reading

16 Feb 2018 (TheAge) – Jobs rise again, marking longest run of gains on record – Unemployment rate at 5.5pc in January

(16 February 2018, The Age, Business, p27, Reuters) ‘Employment notched up the longest streak of gains on record in January, while unemployment fell a tick and female participation in the workforce climbed to a record high. Thursday’s figures from the Australian Bureau of Statistics showed 16,000 net new jobs were added in January, in line … Continue reading

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