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1.Market Observations

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22 June 2017 (AFR,SMH) – ASX sheds $27 billion as global investors sell out

(22 June 2017, AFR, p15, Myriam Robin, SMH) ‘Selling by foreign investors exacerbated the biggest single-day fall in the benchmark S&P/ASX200 since Donald Trump’s election last November, with $27 billion, or 1.6 per cent, wiped off the value of the local market on Wednesday. The vicious sell-off took the index convincingly below the 5700 mark and erased all its gains this … Continue reading

17 June 2017 (AFR) – ASX shakes off US tech rout to post strong week – strongest in two months

(17 June 2017, AFR, p35, by Jessica Sier) ‘Australian shares posted their strongest weekly advance in more than two months, ignoring selling pressure in the materials sector, a slumping oil price and a widespread distaste for technology stocks on Wall Street.  Healthcare stocks were the best performing over the shortened week, followed closely by real estate companies … Continue reading

16 June 2017 (AFR) – Why markets ignored the Fed hike – Falling inflation is the new concern for traders

(16 June 2017, AFR, p32, by Philip Baker) ‘It’s not often you get the US Federal Reserve hiking interest rates at the same time as predictions are made that Dow Jones can reach a new high-water mark. But that’s what’s happening now. The blue-chip index closed at a record high of 21,374 early on Thursday morning, … Continue reading

16 June 2017 (TheAge) – Record 44pc of fund managers say equities are overvalued: BoA Merrill Lynch

(16 June 2017, The Age, BusinessDay, p25, Myriam Robin) ‘A record 44 per cent of global fund managers believe sharemarkets, particularly those in the US, to be overvalued after years of overstimulative monetary policy, according to a monthly Bank of America Merrill Lynch survey. In the note, titled “Fed up with Bubbles”, three quarters of … Continue reading

16 June 2017 (TheAge,SMH) – Superannuation deadline sees ‘huge inflow of cash into equities’, says Richard Coppleson

(16 June 2017, The Age, BusinessDay, p25, Myriam Robin) ‘Voluntary contributions into superannuation funds doubled between April to May, and are so far having another strong month as investors race to beat a deadline on low-tax superannuation concessions, according to one of the country’s largest superannuation managers. Superannuation experts said there was no doubt this … Continue reading

15 June 2017 (AFR) – ASX surges for second day as investors beat super deadline

(15 June 2017, AFR, p28, Myriam Robin) ‘The ASX blew back above the 5800 mark on Wednesday, in its second day of strong performances, which one senior trader is attributing to investors cramming funds into superannuation accounts in a bid to avoid regulatory changes coming into effect on July 1. The benchmark S&P/ASX200 index added … Continue reading

15 June 2017 (AFR) – Commodity prices likely to be softer, due to China

(15 June 2017, AFR, p40, by Alexandra Cain) ‘Mining commodity prices are expected to decline over the next 12 months, largely as a result of slowing demand from China. But supply dynamics in markets such as iron ore and oil will also play a role in moving prices. “Our negative outlook is driven by end-user … Continue reading

15 June 2017 (AFR) – China’s skyscraper age is likely coming to an end

(15 June 2017, AFR p37, by Adam Minter) ‘At more than  600 metres, Shanghai Tower is the world’s second-tallest building. It looms over its neighbours – the world’s ninth and 19th tallest buildings – in a super-cluster of super tall structures unlike any other in the world. The only problem? Finding people to work there: … Continue reading

15 June 2017 (AFR) – Either business or consumers are wrong on the economy

(15 June 2017, AFR, p30, by Philip Baker) ‘The combination of debt, a slowing economy and concerns about property prices topping out doesn’t seem to bother the business sector but it sure has spooked consumers. Not for the first time business is upbeat at the same time as consumers are anything but. One of them … Continue reading

15 June 2017 (AFR) – Credit Suisse sees eight ASX stocks activists should target

[COMMENT: The debate continues about active versus passive funds management. It seems as though there is something to be said for an active investor who remains nimble. But do note the details of the accompanying bar chart “Returns for different hedge fund styles (%pa)” (From 2005 till now, and Past 10 years) – with Activist, … Continue reading

15 June 2017 (AFR) – Macquarie goes ‘mystery shopping’ for mortgages – Major banks cut loan values for first-home buyers by up to 26pc

(15 June 2017, AFR, p19, by James Eyers) ‘A mortgage “mystery shopping” exercise by Macquarie has found banks are offering first-time home buyers in Sydney substantially lower loan amounts after tightening living expense assumptions and applying more conservative interest rate buffers. Members of analyst Victor German’s team at Macquarie posed as potential bank customers at…’ … Continue reading

15 June 2017 (AFR) – China’s economy holds up in May, but slower investment points to cooling

(15 June 2017, AFR, p12, by Kevin Yao and Elias Glenn) ‘China’s economy generally remained on solid footing in May, but tighter monetary policy, a cooling housing market and slowing investment reinforced views that it will gradually lose momentum in coming months.’ Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

15 June 2017 (TheAge,SMH) – Five charged over alleged $30 million cold call scam

[COMMENT: Very interesting story … a good warning for all of us…] (15 June 2107, The Age, BusinessDay, p23, Jorge Branco) ‘Five people have been charged over a cold calling scam that allegedly milked $30 million out of about 2000 victims across Australia. Queensland police raided a series of Gold Coast businesses on Wednesday, along … Continue reading

14 June 2017 (AFR) – Too late to invest in Europe’s recovery? – Bargain hunting harder as Europe moves to recovery mode

(14 June 2017, AFR, p28, by Steve Johnson) ‘…Evidence for a widespread economic recovery in Europe is becoming irrefutable. The first place to look is in the skies. Forager monitors more than 20 major European airports. The 13 airports that report in a timely fashion suggest the continent is booming. Passenger numbers over the first … Continue reading

14 June 2017 (AFR) – ASIC says four out of five managed funds aren’t compliant

(14 June 2017, AFR, p25, by James Frost) ‘Surveillance by the Australian Securities and Investments Commission found four out of every five fund managers failed some aspect of compliance in the regulator’s annual review of the sector. The operation involved 28 fund managers with $100 billion in assets under management and was conducted in 2016. … Continue reading

14 June 2017 (AFR) – Baby Bunting shares crunched by fear of Amazon

[COMMENT: Most technical analysts who might have been holding this stock in late 2016, would have spotted the downtrend in late 2016, which continued into 2017, and they most likely sold their position to lock in profits and preserve their capital. See the chart below.] (14 June 2017, AFR, p19, by Simon Evans) ‘In just … Continue reading

14 June 2017 (AFR) – NAB survey shows business conditions best since pre-GFC

(14 June 2017, AFR, p6, by Jacob Greber) ‘An influential survey – watched closely by the Reserve Bank of Australia – which showed businesses have just enjoyed the best month since the 2008 global financial crisis may be giving a more accurate reading of how the economy is doing than last week’s weather-blighted GDP report. … Continue reading

14 June 2017 (AFR) – SumoSalad ‘canary in the coalmine’ for shopping centre landlords

(14 June 2017, AFR, p3, by Matthew Cranston) ‘Food retailer Sumo Salad’s decision to withdraw up to 14 stores from Westfield shopping centres after failing to renegotiate leases is the “canary in the coal mine”, say tenant advocates who monitor Australia’s retailing scene. SumoSalad co-founder Luke Baylis on Tuesday told The Australian Financial Review the company … Continue reading

14 June 2017 (AFR) – ‘Tough’ retail outlook triggers calls for personal tax cuts

(14 June 2017, AFR, p3, by Sue Mitchell) ‘The weak outlook for retail spending has prompted renewed calls for personal tax cuts to offset rising household debt, anaemic wages growth and higher living costs. After the toughest quarter for retailers in six years, Deloitte Access Economics expects retail spending growth to slow to 3 per … Continue reading

14 June 2017 (TheAge) – Business conditions stay upbeat in May: NAB

(14 June 2017, The Age, BusinessDay, p24, Reuters) ‘A measure of business conditions eased just a touch from decade highs in May with growth reported across all sectors, a sign the economy may have picked up speed after a sluggish first quarter. National Australia Bank surveyed more than 400 firms to compile its index of … Continue reading

14 June 2017 (TheAge) – Ten Network scrambles to escape corporate undertaker

(14 June 2017, The Age, BusinessDay, p19, Elizabeth Knight) ‘It is difficult to see how Ten Network can escape the corporate undertaker after losing the support of the three billionaires, Lachlan Murdoch, James Packer and Bruce Gordon, who until last weekend had been keeping it afloat. The network has a $200 million loan with the Commonwealth … Continue reading

14 June 2017 (TheAge) – Ten board mulls options – Puts shares on ice while it considers company’s future

(14 June 2017, The Age, BusinessDay, p19, Lucy Battersby) ‘The board of Network Ten has until Thursday to consider the company’s future, after two key shareholders pulled their backing for the broadcaster’s debt. The board must now decide whether it places Ten into voluntary administration or finds a new source of funding and restructures the … Continue reading

13 June 2017 (AFR) – Tech meltdown raises bubble fears

(13 June 2017, AFR, p27, by John Kehoe) ‘A huge sell off in American technology stocks on Friday signalled the so-called “FAANG” momentum trade has abruptly reversed and raised fears about a possible tech bubble bursting. Share prices of the world’s high-performing tech companies, Facebook, Amazon, Apple, Netflix and Google’s (FAANG) parent Alphabet, all plunged … Continue reading

13 June 2017 (TheAge) – ‘There has rarely been a better time to be a grazier’ – farmer confidence surges

(13 June 2017, The Age, BusinessDay, p24, Darren Gray) ‘Confidence levels have surged among Victorian and NSW farmers thanks to record beef, lamb and mutton prices, and favourable seasonal conditions in Victoria and the NSW Riverina, a survey shows. The rising farmer optimism is welcome news for regional and state economies, with confident farmers much … Continue reading

13 June 2017 (TheAge,SMH) – UK business confidence slumps after election: survey

(13 June 2017, The Age, BusinessDay, p23, Reuters) ‘British business confidence has fallen sharply since last Thursday’s inconclusive election that left Prime Minister Theresa May weakened ahead of Brexit talks, according to a survey by the Institute of Directors published on Monday. The survey of nearly 700 members of the business group also exposed deep … Continue reading

12 June 2017 (TheAge) – Tech sell-off wrecks record day for US stocks

(12 June 2017, The Age, BusinessDay, p18, Samuel Potter) ‘A sell-off in technology shares spoiled an otherwise buoyant day in the US stock market as companies from Apple to Nvidia tumbled.’ Read more at SMH.com.au

10 June 2017 (CNBC) – Apple, Facebook and other big tech stocks tank, weigh on Wall Street

(10 June 2017, CNBC online, Patti Domm) ‘Big tech was slammed Friday as investors took profits from the group, which some fear has become a massive market bubble. The sell-off accelerated in afternoon trading, with the Nasdaq falling 2.4 percent, and names like Facebook and Apple, down 4 percent. The S&P tech sector was down … Continue reading

10 June 2017 (AFR) – “Disastrous” land tax soars 1200 per cent in 12 months – Owners caught out by soaring land tax

(10 June 2017, AFR, p34, by Duncan Hughes) ‘A 73-year-old grandfather may have to sell his retirement property nest egg after a near-1200 per cent increase in land tax in 12 months, or a rise from $5300 to more than $67,900.’ <snipped…> ‘Flawed process – Property specialists claim the state government land tax grab is hitting … Continue reading

10 June 2017 (AFR) – Sacked FBI chief James Comey accuses Donald Trump of ‘lies’, President hits ‘leaks’

(10 June 2017, AFR, p12, by John Kehoe) ‘Sacked Federal Bureau of Investigation director James Comey has accused Donald Trump of spreading “lies” about the FBI and suggested the US President pressured him to curtail the agency’s investigations into Russia’s meddling in the 2016 US election. But in a partial vindication for Mr Trump, the former FBI boss … Continue reading

10 June 2017 (AFR) – Brexit strategy thrown into chaos by hung parliament – Brexit just got a lot harder and the exit options greater

(10 June 2017, AFR, p11, by Geoff Winestock) ‘Britain faces a long period of uncertainty that could delay Brexit talks and it will be doubly hard without a parliamentary majority. Citgroup said in a research note that it expected Theresa May would have to resign after losing a parliamentary majority even if the Conservatives cling … Continue reading