We spend so much time trying to figure out what’s ahead that we forget a simple fact: what’s happening now has its causes in previous actions and decisions. That is a fancy way of saying that maybe it’s a good time to stop prognosticating and take a look back at the origins of the credit crisis. Instead of guessing what each piece of news means, let’s just look at the facts. Fortunately, the Bank for International Settlements has done it for us!
July 8th, 2008 | Dan Denning | 1 comment | ContinuedArchive for Dan Denning
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). A specialist in small-cap stocks, Dan draws on his network of global contacts from his base in Melbourne, Australia and pens the small cap newsletter, The Australian Small Cap Investigator. He is also a contributing editor to the Australian resource investing publication Diggers & Drillers.
Reader Mail: Economic Growth
Where to begin? First, growth is not the same as inflation. Inflation is always and everywhere, as the Friedmanites point out, a monetary phenomenon. If you grow the money supply faster than the natural demand for money (lowering rates) then you stimulate a kind of growth we would call unnatural.
July 7th, 2008 | Dan Denning | 7 comments | Continued
The Mother of All Housing Booms
Without new buyers coming into the market, it will be interesting to see what house prices do the rest of the year. Individual sellers are always reluctant to lower their asking price. They believe higher prices are always just around the corner. Builders and developers are quicker to cut prices so they can liquidate inventory. More on housing below, with plenty of reader mail.
July 4th, 2008 | Dan Denning | 5 comments | Continued
All Ordinaries Reach 52 Week Low
It’s pretty bad out there. Before he left to have his Visa renewed in New Zealand, our technical analyst Gabriel told us to watch 5,050 on the All Ordinaries. We’re watching. The All Ords opened up and promptly fell two percent to 5,105. It’s a new 52-week low. What about that data yesterday on the housing market and retail sales? Retail sales rose by 0.7% in May. Apparently that was stronger than analysts expected. Should it surprise anyone?
July 3rd, 2008 | Dan Denning | 5 comments | Continued
Increased Oil Production Won’t Solve the Energy Crisis
If we try to solve the energy problem with increased oil production, we’ll just buy ourselves some more time. But eventually, demand will exceed supply, or prices will rise so high that an economy based on cheap energy will perish from the earth.
July 3rd, 2008 | Dan Denning | 5 comments | Continued
No Spike in Oil Price Following IEA “Third Oil Shock” Announcement
The International Energy Agency (IEA) gave the oil market a boost when it said supply would remain tight and that the world was in the middle of its third oil shock. Thanks for the newsflash IEA. The IEA announcement did not create a super spike in oil. This leads us to believe oil may be running out of gas, at least in the short-term. Event-driven price increases are almost all played out, barring an Israeli attack on Iran.
July 2nd, 2008 | Dan Denning | 2 comments | Continued
Fed Vice Donald Kohn Urges Emerging Markets to Drop the Dollar Peg
Fed Vice Chairman Donald Kohn said the world would be a lot better if emerging markets simply dropped their dollar pegs. This means they would stop importing U.S. inflation by matching the Fed rate cut for rate cut. In a speech earlier this week Kohn said, “In those countries where strong commodity demands are associated with rapid growth in aggregate demand that outstrips potential supply, actions to…
July 2nd, 2008 | Dan Denning | 6 comments | Continued
Thorium as a Nuclear Fuel
The nuclear industry is actively looking at Thorium as a nuclear fuel. The Parliament of Australia briefly explored the potential for a Thorium producing industry in Australia. According to GeoScience Australia, Australia has monazite resources of 5.2 million tonnes. With an estimated Thorium content of 7%, that gives Australia a Thorium resource of around 364,000 tonnes. Nolan’s Bore-the location of Arafura’s REO operations-is a Thorium hot bed.
July 2nd, 2008 | Dan Denning | 1 comment | Continued
BHP Billiton, Rio Tinto and the American Civil War
The S&P ASX/200 limped home yesterday to finish the fiscal year down 16.9%. Let’s call it 17. It was the first down year since 2002, or 1 BB (Before the Boom). If not for the iron-ore solid performance of BHP Billiton (ASX: BHP)-up 24.7% on the financial year-it would have been much worse for the ASX 200. Rio Tinto (ASX: RIO) did its part to hold the line for the resource sector as well. Rio was up 38.2% for year, from $98 to $135.50.
July 1st, 2008 | Dan Denning | 0 comments | Continued
All Ordinaries Down 17%, Worst Showing in 30 Years
The All Ordinaries is set to finish the financial year down around 17%. That would be its worst showing in nearly 30 years. The financial year performance is what matters to super investors. But it doesn’t really tell you the whole story, does it? Since June 30th, 2003, the ASX/200 is up 72%. That includes the 23% fall we’ve had from the early November high of 6,828. It all depends on how you define your terms, doesn’t it? The RBA’s latest chart pack has three interesting charts.
June 30th, 2008 | Dan Denning | 2 comments | Continued