How about that? Contrary to our gloomy disposition yesterday, the stock market has taken off like a rocket this morning. The material sector is up 2.9% today alone. It was the worst performing sector in Australia on the ASX in 2011, down 25% thanks to lower commodity prices.
January 4th, 2012 | Dan Denning | 7 comments | ContinuedAll Posts Tagged With: "credit depression"
Is There Hope for a Santa Rally?
From Slipstream Trader Murray Dawes:
“The US markets had a huge rally overnight on the back of some fudged housing figures. Whether this is the beginning of the Santa rally remains to be seen.”
How the Banking Crisis Affects the Real Economy
What Australia has – commodity wealth – is strategically important. But what it doesn’t have – capital – is economically urgent.
The banking crisis will mean small Aussie businesses may start to feel the crunch of Europe’s credit crisis in 2012.
December 19th, 2011 | Dan Denning | 5 comments | Continued
Which Stock Investment Decisions Will You Make in a Credit Depression?
What stock investment decisions should you make when you recognise: government debt is no longer risk free, bank failures resulting from bond defaults by governments will feed asset deflation and lower stock prices and real money is better than unsound money.
December 12th, 2011 | Dan Denning | 0 comments | Continued
A Real Asset Call Option
The Aussie market is still tightly correlated to the US market. This, we suspect, is because global asset prices are keyed off of the global supply of credit. If we’re in a credit depression, US stocks will stagnate. Aussie stocks will track that stagnation.
December 6th, 2011 | Dan Denning | 1 comment | Continued
MF Global the Broken Dealer
The collapse of broker-dealer MF Global Holdings Ltd. The firm declared bankruptcy on October 31st after making a $6.3 billion bet on European government debt. And that was the good part of the story.
November 21st, 2011 | Dan Denning | 3 comments | Continued
ABARE Explains How Much Australia Can Make from Selling Silver, Iron Ore and Coal
The main conclusion was that Australia would see rising export earnings on higher volumes but moderating commodity prices. In other words, the China boom will drive export volumes for the next five years. But you won’t see any more mammoth increases in commodity prices.
March 3rd, 2010 | Dan Denning | 2 comments | Continued
Stocks Better than Bonds When Inflation is a Big Threat
What we make of it is that dividends used to account for a much larger percentage of your total return in stocks than they have in the last twenty years. Times change. There’s no rule that says the future has to be just like the past. But if stocks beat inflation, should you invest in stocks for income or capital appreciation? That’s the second question.
October 19th, 2009 | Dan Denning | 4 comments | Continued
Equity Premium Will Be Replaced With a Tangible Asset Premium
Geez. Last Friday we made the case that the equity premium in stocks is going to revert to its historic mean. Remember that the equity premium is your willingness to pay more for future corporate earnings today because you believe stocks do better than bonds and cash over time.
July 27th, 2009 | Dan Denning | 2 comments | Continued
Your Actively Managed Superannuation Fund Cannot Beat the Market
There are at least two points worth noting in this survey, three actually. First, actively managed funds, on average, don’t beat the market. Unless you know a genius manager, paying for results doesn’t deliver them.
July 6th, 2009 | Dan Denning | 10 comments | Continued
Attack of the Bond Yields
Just to be clear though, the big trends now are soaring inflation and falling financial asset prices, along with increased energy scarcity. This produces a variety of pair trades, which include: short government bonds, long energy, short residential housing, long gold, and probably short commercial real estate and corporate bonds as well, while going long farmland and agriculture.
June 11th, 2009 | Dan Denning | 4 comments | Continued
A Credit Depression
You don’t need to own subprime loans to take loan losses in a credit depression. Smith said the area that concerned him most was the surge in small and mid-size businesses simply closing up shop unexpectedly. “In the real economy,” he said, “there is no evidence that the world economy is yet bottoming.”
April 30th, 2009 | Dan Denning | 5 comments | Continued
The Mining Finance Black Hole
Could this have worked out any better for China? We’re talking about the position Rio Tinto put itself in by taking on US$38 billion in debt to acquire Alcan—and stave off the unwanted advance of an amorous BHP. Now, in a world where refinancing that debt is near impossible for one of the world’s largest miners, it must sue for peace with a strategic partner…
February 13th, 2009 | Dan Denning | 4 comments | Continued
A $4 Trillion ‘Big Bang’
In The Monthly, Rudd plants a Neo-Marxist flag in the ground of the current debate with the kind of jargon-laden elitist preening that makes academic critics of the free market (who’ve never spent a day in the business world creating value) so nauseating. (…)Why not proclaim, since he is apparently in the position to make such proclamations, that the experiment in paper money and the deliberate policy of inflation it implies is theft?…
February 2nd, 2009 | Dan Denning | 21 comments | Continued
Australian House Prices Are Severely and Seriously Unaffordable
Let’s consider a new study on global housing affordability by Performance Urban Planning. The report concluded that Australia has the most unaffordable housing of all the nations surveyed. Not only that, but according to the report, Australia doesn’t even have a single urban area in which housing is merely “moderately unaffordable”…
January 27th, 2009 | Dan Denning | 312 comments | Continued
