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June 13, 2013 – 4:41PM
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The stock market ends lower, all but wiping out the gains for 2013 as the global equities selloff continues.
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- It seems investors will continue to exercise caution in the near term until we get further clarity from the Fed at next week’s FOMC meeting.
- QE uncertainty along with the World Bank cutting its growth forecast for China to 7.7% (from 8.4%) saw Asia get off to a subdued start. As a result, it has been one-way traffic in Asia, with equities slumping further in a sell-off led by Japan.
- Yen strength has been the order of the day, and USD/JPY has printed a low of ¥94.43, its lowest level since April 4. With the BoJ not delivering any further stimulus at this week’s meeting, investors have been nervous about buying dips in USD/JPY.
- Yen strength generally has an adverse effect on Japanese equities and this is what’s dragging the Nikkei lower. We are likely to start hearing rhetoric from Japanese officials soon enough should the current selling frenzy continue. After all the hard work officials have put in, they are unlikely to just sit on their hands and watch it become undone.
- Japan (Nikkei): -4.65%
- Hong Kong: -2.7%
- Shanghai: -3%
- Taiwan: -1.8%
- Korea: -0.8%
- ASX200: -0.5%
- India: -0.85%
- Singapore: -1.45%
- New Zealand: -0.9%
- BHP: -2.79%
- Rio: -2.35%
- ANZ: +1.24%
- Westpac: +2%
- Telstra: -0.54%
- Qantas: -0.73%
- Newcrest: -3.52%
- Woolworths: -1.06%
- Harvey Norman: -2.88%
- Myer: -2%
- Alacer Gold: +7.17%
- Mirabela Nickel: +3.85%
- Macquarie Atlas: +3.68%
- Maverick Drilling: +3.08%
- Nufarm: +2.97%
- Coalspur: +2.22%
- Boart Longyear: +1.61%
- Skilled: -6.41%
- Lynas: -6%
- Aquila: -5%
- Karoon: -4.44%
- Transfield: -4%
- Seven West Media: -3.88%
- BlueScope: -3.81%
- BHP: -1.67%
- Rio: -1.19%
- Fortescue: -2.13%
- CBA: -0.35%
- ANZ: +0.49%
- NAB: +0.34%
- Westpac: +0.69%
- Consumer disc.: -1.71%
- Energy: -1.66%
- Materials: -1.61%
- Industrials: -0.99%
- Utilities: -0.74%
- Health: -0.6%
- “Provision of solid financial targets and other details from the recent Investor Day support our positive investment view on the stock”;
- “The company is generating strong performance from its general insurance division and it boasts a well-capitalised balance sheet. Barring significant adverse events, these factors could potentially lead to a special dividend later this year.”
my 2 cents is that anywhere above 4000 is ‘market froth’ – i.e. could be blown right off the top very quickly. How far below that things could go I wouldn’t have any idea. I do recall the days of Australian banks having close to half their market cap ‘vanish’ for a little while though .. it was a fairly enlightening experience. I had to re-evaluate a few truisms.
Commenter
sun
LocationDate and time
June 13, 2013, 4:58PMIf everyone is selling, I am going to buy. I have been waiting for a while now. The Allord is close to my first target 4600 now (by looking at the chart).
With huge drop in Asian Mkt today, I guess US would have a bad day tonight, and tomorrow our Mkt will drop too, ( It is Fri as well, no one dare to buy on Fri). So I think AllOrd will close to 4600 in a day or two. I will buy some blue chips then.Commenter
Will Feng
Location
Melb
Date and time
June 13, 2013, 4:04PM@3.15pm
Wow so some-one is finally getting it….. great. All options are a default essentially.
It’s just a matter of who is shafted, and how they are shafted, none-the-less someone, or more realistically groups of people are going to be shafted. Seeing as the JGB market is as big as the US-Bond market, but 1/3rd the size I’m sure it’ll create a massive noise in all the other worldwide bond markets (*cough UK could be next*).Commenter
Bye Bye Fiat Money
LocationDate and time
June 13, 2013, 3:28PMSelling shares in a company should require a signature on a piece of paper.
Clicking a button and riding market trends that are base largely on perception is idiotic and encourages get rich quick maneuvers that require fraction of a second accuracy to maximize profit.
This is a game that is being played by a select few that can jeopardize the financial well being of millions and millions of people.
Investing in shares should be a thought out process based on long term wealth creation. Not a game for fools with the fastest computer spitting out simulations and predictions at a thousand times a second.
It is the the long term future prospects of a company, and the people that work in it that give it value.
The way the stock markets work at present will 100% cause another major crash within the next 20 years.Commenter
PWat
LocationDate and time
June 13, 2013, 3:25PMGo jump in the lake. I’m sure others agree.
Commenter
Gordon Gekko
LocationDate and time
June 13, 2013, 3:52PM
CommSec limits retail investors to a trade worth $500 or more and charge $20 a pop but automated trades for fractions of a cent occur with no charge for those transactions. This is no level playing field. To eliminate the unfair advantage conferred on high speed traders located near exchanges there should be a flat charge on every parcel of shares regardless of size starting with a minimum of $5. Another option is more competition between exchanges and also between brokers to lower costs for retail investors.
Commenter
The walking dead
LocationDate and time
June 13, 2013, 4:11PM
I doubt very much that you actually have much (if any) knowledge of the actual behaviour and underlying profitability of the hft’s you criticise. Why would you? This is an anonymous market, and any profitable strategy is unlikely to be widely publicised.
If, as you say, what they do is idiotic, and does not reflect the true value of a company then you, or other market participants collectively, can exploit that. In my experience, idiotic behaviour in markets is rarely profitable……in the long term.Commenter
WhocanIblamenow?
Location
the Bunker
Date and time
June 13, 2013, 4:52PM
Look at the reverse Jonaze chart. ASX really is the standout Global performer today.
Commenter
4500
Location
The New Black
Date and time
June 13, 2013, 2:56PMThis correction is overdone. I haven’t been in the oz market for over 12 months (needed the money o/s for other things), so missed both the up and the down but considering getting back in now. Anyway, just wanted to say thanks for the banter all. Keeps me amused during the morning commute.
Commenter
Green Sheep
Location
fast asleep
Date and time
June 13, 2013, 2:52PMHere we go again..the only thing propping up the ASX200 are the big 4…the exchange really IS a one trick pony!
Commenter
Looking for Value
LocationDate and time
June 13, 2013, 2:47PMLadies and Gentlmen. A perfect storm beckons. In the words of an analyst from IG Markets: “The storm clouds are building, the Dow has just suffered its first three-day losing streak for the year…Europe is sliding off its highs; China is slowing down faster than expected, and the BoJ is holding the line on additional stimulus action”. Hold tight to your cash if you’re long. Hold your short positions if you’re short.
Commenter
Gordon Gekko
LocationDate and time
June 13, 2013, 2:46PMIf you’re a long trader, cash rich and out of the market right now, do you realise that you are getting richer every day the stock prices fall? The further it falls, the more stock you can buy [at lower prices] with your cash. You can make it even better if you develop short trading skills as well.
Commenter
Gordon Gekko
LocationDate and time
June 13, 2013, 2:14PMLike your attitude…
Specially now, when chips r down…Commenter
CeylonPsych
LocationDate and time
June 13, 2013, 2:44PM
very true mr gordon
Commenter
Looking for Value
LocationDate and time
June 13, 2013, 2:51PM
Just bought NCM. Took some guts. I hope to be rewarded in the medium to long term.
Commenter
player1
LocationDate and time
June 13, 2013, 2:05PMGood buy. You have obviously bought it much closer to the bottom then the top. If you didn’t finance the purchase with debt and are happy to wait 1, 2 or 5 years for it to come good you will do fine. Just make sure you sell it when it gets anywhere near $40 and then go through and pick the bones of something else out of favour at that time and repeat the feeding cycle
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 2:47PM
good luck player…medium to long term does look ok..
Commenter
Looking for Value
LocationDate and time
June 13, 2013, 2:59PM
I moved into cash earlier in the year as blind freddie could see it wasn’t going to last and that the Fed was going to ease up on QE so I am well ahead
Commenter
Lance
LocationDate and time
June 13, 2013, 1:53PMI make most of my income in USD and for the last six months I’ve been hoarding US dollars, struggling by with my AUDs. It’s paid off. But there’s still room for more. When it’s hitting 0.80c then I’ll start converting. Anyway it was obvious the AUD bubble wouldn’t last.
Commenter
hr
Location
melbourne
Date and time
June 13, 2013, 2:28PM
1:31 pm – likely RBA views on employment
Soft would be the correct view.
They had already accepted volatility based on the new sampling data from ABS.
Factors leading to more rate cutting are;
- currency strength
- low credit growth
- decent savings rate
- less intensive labour requirement in mining
- lower inflation
- incorrect and optimistic forecasts based on high commodity pricesAs usual the RBA and the mainstream commentators will continue to be behind the curve for the next 6 months and will completely misread 2014 growth.
Commenter
Opinion Only
Location
Melbourne
Date and time
June 13, 2013, 1:51PM@ Gordon, actually eBay just increased their fees on May 1 to 9.9% commission. Add to that the PayPal charges and you’re donating over 12.5% to the eBay empire just for the privilege. If you want a viable alternative you should give quicksales.com.au a go. Aussie owned (backed by carsales.com.au) and it is completely free. eBay (and eBay owned Gumtree) have been throwing their weight around for years… time an Aussie company took the fight to them!
Commenter
Santi
Location
Melbourne
Date and time
June 13, 2013, 1:49PMSanti, thanks for the update. I didn’t know about the price increase because I’m usually a buyer on ebay rather than a seller. Do you know if they reduce their fees for larger sellers? I see many big sellers on ebay with thousands of items listed and tens and hundreds of thousands of positive feedback. Don’t you think those large sellers would only sell from their own websites and pay for advertising to get buyers to their websites if that was cheaper/better? Do you think stand alone websites pay more or less than 10% of their revenue on advertising? This is quite an interesting topic and I’m glad I concerned myself with this topic today rather than the dreadful run of red ink that has washed over the ASX 200 recently.
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 3:50PM
Bears have just been awaken. I better be saving up some ammo to shoot them down later.
Commenter
average guy
LocationDate and time
June 13, 2013, 1:29PMMore like an awaken Bull to me..
Commenter
CeylonPsych
LocationDate and time
June 13, 2013, 2:29PM
Sell in May and go away. Typically end of year profit taking. Get a grip. However, Australia is no longer the international market’s little darling and everyone knows it. Expect AUD moving much lower settling around .73USD over next 18 months which will be exactly what is needed for the next round of silver linings. Unfortunately pain will precede pleasure. Happy trading.
Commenter
Yanky Doodle
Date and time
June 13, 2013, 1:19PMThe bottom dropped out of Kentucky Fried Chicken overnight…..You’ve got to admit this is a great country.
Commenter
zac48
Location
Melb.
Date and time
June 13, 2013, 1:13PMIts interesting that we get unhappy over declines in prices when its the market price mechanisms that leads to the declines. Do people believe that governments should intervene in equity markets? all instrument markets? Should we restrict trading freedom by restricting short-selling or setting leverage limits and requirements? I don’t think so. all of these things contribute to efficiency in price discovery. Ultimately inefficiencies financial markets come from inequalities in information, and although it could be argued there is huge information inequality now, it has definitely been trending down over time.
Commenter
Sam
LocationDate and time
June 13, 2013, 1:09PMshould HFT be allowed by insto’s then? If it is to be a fair and level playing field? The truth is that its not level, as an investor you just need to catch the trend they’ve decided to set.
Commenter
worried33
LocationDate and time
June 13, 2013, 1:58PM
Contribute to price discovery. More like how low can I make you go and destroy people’s super in the process. But never mind, the taxpayer will pick up the tab because decimated super funds don’t pay out as much in taxes or pensions and the age-pension is taxpayer-funded.
Commenter
mitch of ACT
LocationDate and time
June 13, 2013, 2:21PM
There’s nothing to stop you renting some server space in Sydney’s CBD and running some simple arbitrage functions yourself. If you have the skills (and capital) to program more speculative or manipulative automated trading then there’s nothing to stop you from that either. Should institutions be punished because they are more sophisticated than most individuals? Reminds me of winner’s curse in IPO pricing.
Commenter
Sam
LocationDate and time
June 13, 2013, 2:32PM
@mitch .. ” … like how low can I make you go and destroy people’s super in the process …. ” If people’s super were in cash or bonds, a crash in the ASX would not affect them one little bit …
Commenter
Not in asx
LocationDate and time
June 13, 2013, 3:25PM
From 10:05
Alacer’s two mines near Kalgoorlie in WA were already considered among the more expensive gold mines in Australia, but the company this morning revealed that costs had blown out by a further $US187 per ounce at the Higginsville mine, and $US274 per ounce at the South Kalgoorlie mine during the March quarter.
Could we have the ‘actual’ price per ounce to produce so we can have all the facts.
If the total costs to produce are $US287 per ounce at the Higginsville mine, and $US374 per ounce (having only been $US100 previously), it kinda makes little difference.
If however they were previously $US1,200 each, then there’s no profit and it paints a very dim (yet far more informed) picture of this news item.
Commenter
Joe
Location
Geelong
Date and time
June 13, 2013, 1:06PMWho cares for any economic data or any result or any blah blah blah. This CASINO is based on “printing”Lol
Commenter
RD
LocationDate and time
June 13, 2013, 12:52PMWould like to hear from chart jockeys as to their opinion of the Nikkeii chart. As well, is there any other opinions as to where the Nikkeii goeth. Opinions, of course, need to address the QE conundrum. What on earth is their plan!!!!
Commenter
Bearishly Disgruntled
Location
Forget 88 cent dollar, try 80 cents
Date and time
June 13, 2013, 12:51PMCash, Cah, Cash, Money is King…….
Commenter
Kogarah Dragon
Location
Sydney
Date and time
June 13, 2013, 12:49PMNothing to worry and buy the dips. Helicopter Ben will save the Titanic on 19th June
Commenter
RD
LocationDate and time
June 13, 2013, 12:49PMHow can he save something that’s sinking?
Commenter
Gordon Gekko
LocationDate and time
June 13, 2013, 2:03PM
I’ve heard the same rot by someone everyday for the last 6 weeks now.
Commenter
4500
Location
The New Black
Date and time
June 13, 2013, 3:00PM
ASX now below 4700, what a fiasco this turned out to be for anyone who got sucked into the market following the early rally this year.
Commenter
Ticky’s Fullertons
Location
Brazil
Date and time
June 13, 2013, 12:43PMIn aviation terms we would call the current situation with QE as being in “Coffin Corner”. A point in a jets performance envelope, that if you speed up you will stall, if you slow down you will stall. The only way out of this situation safely is with a good pilot at the controls and to lose altitude very carefully. Get it wrong and as the name sake infers it will go very badly indeed. The question here is, do we have a good pilot behind the controls or bad??? Will we loose a little bit of altitude or enter a death spiral…..Remember loosing altitude is the only way out of the predicament.
Commenter
overload
Location
Mel
Date and time
June 13, 2013, 12:42PMYou massively over rate Canberra’s importance.
Commenter
Jim Jones
LocationDate and time
June 13, 2013, 1:04PM
It’s not Canberra that worries me….
Commenter
overload
Location
Mel
Date and time
June 13, 2013, 1:20PM
Good question…… but they seem to have their hands on some kind of joystick.
Commenter
4500
Location
The New Black
Date and time
June 13, 2013, 3:03PM
Don’t worry guys, its just a short term market panic. We will be back to black by 2020 if Chinese decide to spend some money.
Commenter
Not Happy
Location
Brisbane
Date and time
June 13, 2013, 12:36PMWhen there’s a fall the amateurs go running and the seasoned traders pull out their wallet.
Numerous company’s such as Ausdrill and NRW Holdings are trading now at 3x earnings, which is total stupidity. Earnings may slow in the coming months or year, but these are solid company’s that’ll be up several hundred percent in a couple years.
People sell because they have no idea on how to value company’s.
Commenter
Markets Live: All Ords hits 2013 low
Location
Sydney
Date and time
June 13, 2013, 12:36PMOnce again I took profits weeks ago as even a blind squirrel could see this coming. WIll be happy to buy again when all of you sheep have exited for a loss. People obviously dont study the markets enough….
Commenter
Mortimer
Location
Double Bay
Date and time
June 13, 2013, 12:30PMRight you are Mortimer! Time to buy frozen OJ
Commenter
Randolph
Location
Chicago
Date and time
June 13, 2013, 1:16PM
Maybe you could build a moat around your ivory tower with all your money!
Sheeesh some people.
Commenter
Superiority complex
LocationDate and time
June 13, 2013, 1:39PM
Caught the tail end of a very dapper Joe H commenting on the employment situation. He was also disappointed with the figures and made reassuring comments regarding his future plans. I must have missed the part where he put some meat into what exactly his plans are. Oh well, at least it is a start. We urgently need positive comments to supply some bullish opposition to what appears to to be one way bear traffic. Joe, you are the hope of the team!
Commenter
Bearly Gruntled
Location
Forget 88 cent dollar, try 80 cents
Date and time
June 13, 2013, 12:17PMWhat, are you meaning to say that Joe’s plans to sack upwards of 20,000 public servants is not going to add to the ranks of the unemployed. Also don’t forget that there are many people employed in the private sector supplying services to those soon-to-be-sacked public servants who will also likely lose their jobs as as well. If a sacked public servant no longer has a salary coming in then he/she and their family spends less on everything but the very essentials. Thatalso means less GST on spending and less income tax overall on profits and wages.Good luck Joe. You always looked like you ate the magic pudding that you are going to need to get out of this one.
Commenter
mitch of ACT
LocationDate and time
June 13, 2013, 1:32PM
ED. 12.07 comment says “302″ point drop in the Nikkei. Should be 3002 points.
Commenter
Gordon Gekko
LocationDate and time
June 13, 2013, 12:13PMThe lesson in the last 30 days is this; Economists are the modern day Snake Oil Salesmen. Not a single one had it right and only this morning they were revising up unemployment and revising down the dollar…. Can we please (especially you Koukalis) stop the “Pie In The Sky” twitter commentary. Same goes for you Colebatch. Seriously, how often do you two have to get wrong before you accept incompetence? As for you Glenda Kwek, you had “Unemployment at 10 Year High” this morning and “Jobs Show Strength before Midday.. You worry me to Glenda.
Commenter
Adam I
Location
Keilor
Date and time
June 13, 2013, 12:10PMYou only have to look at the chart of the ASX All Ords for the last 3 years. All show a very definite drop in the index from mid-April onwards (sell in May and go away) reaching its low point around mid-July. 12/13 the drop started a little late after a climb upwards but we are more than catching up to past years’ performance.
Commenter
mitch of ACT
LocationDate and time
June 13, 2013, 12:32PM
Shane Oliver has to be on top of your list
Commenter
Delay No More
LocationDate and time
June 13, 2013, 12:34PM
3000 here we come !
Commenter
got brain
LocationDate and time
June 13, 2013, 11:52AMAs i’ve mentioned repeatedly…short short short every day to 3000 as billions wiped off the market in the EASIEST way to make money ever!!
Commenter
assad
LocationDate and time
June 13, 2013, 12:50PM
This market is gold!!! Short on short.
Commenter
Liberator
Location
SEQLD
Date and time
June 13, 2013, 1:22PM
QE…..the drug that is a million times more potent than heroin. It is THE ONLY thing keeping the entire world economy from spinning off it’s axis. Unfortunately, at the self same moment, it paints us into the MOTHER OF ALL FINANCIAL CORNERS. If you haven’t already (and it really should be required reading to post here…sorry), go to You Tube and watch Paul Crignon’s excellent series, “Money As Debt”. You will see why we have a fatally flawed economic system.
Commenter
The Seer
LocationDate and time
June 13, 2013, 11:51AMSo how many people’s June retirement plans have been blown out of the water by this plunge in the ASX. I know of at least 3. A short-seller’s gain is retirement pain. Serves them right if it happens to them when it’s their turn to retire.
Commenter
mitch of ACT
LocationDate and time
June 13, 2013, 11:49AMMitch, it’s had no direct effect on my retirement plans. I’ve been in cash for a long time. I hate to think about the effect of this on the poor sods who’ve fallen for the “don’t miss the recovery” rubbish that has been relentlessly peddled by commentators.
Commenter
Stephen
LocationDate and time
June 13, 2013, 12:41PM
If you’re relying on stock market returns to fund your retirement, then you shouldn’t be retiring. Go back to work, and save enough to survive on fixed interest sized returns, then you will sleep at night.
Commenter
4500
Location
The New Black
Date and time
June 13, 2013, 3:05PM
Ahhh, are we going down the old “massage the stats via altering the participation rate” game again….. oh well, as long as it keeps the sheeple happy…..
Commenter
Bye Bye Fiat Money
LocationDate and time
June 13, 2013, 11:45AMThe recent market action is not some ‘correction’ or minor sell-off but a continuing bear market. People are asking when the low will be and the answer to that is when everyone is sick of the market. Because there are still so many people saying it is time to buy; the low is a long way off…
Commenter
Les
LocationDate and time
June 13, 2013, 11:44AMJapan is where the market direction is heading….DOWN!! Wow this is starting to get ugly.
Commenter
Bingus
Location
Cooly
Date and time
June 13, 2013, 11:44AMCorrect……but when the stock market detaches itself from reality, then there is real trouble. Right now, it is a fair assessment to say that a return to a bull market in stocks would have ANY CORRELATION to what is happening in the wider economy. It just Casino speculators, that is all, and I929 will look like a small nose bleed when compared to the savage uppercut and right hook that is coming globally and soon….it is called R E A L I T Y.
Commenter
The Seer
LocationDate and time
June 13, 2013, 12:21PM
Guys, could you let me know which broker you use for trading market indexes e.g. ASX200.
Commenter
Not Happy
Location
Brisbane
Date and time
June 13, 2013, 11:36AMNot if this is what you are after but STW tracks the ASX 200 is listed on the ASX – you trade it through any broker (commsec, etrade etc…)
Commenter
king_con
LocationDate and time
June 13, 2013, 12:05PM
Thanks, sadly there is not short facility in etrade or commsec. I work with interactive brokers, they don’t have short facility either. How about other indexes? Where can I find the codes?
Commenter
Not Happy
Location
Brisbane
Date and time
June 13, 2013, 12:45PM
what is the worlds greatest treasurer going to blame now the aussie dollar is not so high. Surely manufacturers will do better now, if we had any left that is.
Too little too late for the aussie dollar.Commenter
Genghis`
Location
Lounge
Date and time
June 13, 2013, 11:14AMAgain with the worlds greatest treasurer. The treasurer of the Phillipines (the current holder of this title) has little to do with the aussie market.
Commenter
cuturhair
Location
MEL
Date and time
June 13, 2013, 11:49AM
cuturhair you seem to have some memory loss on how bad the $ was during the liberal years. As the $ currently stands its doing double the value it was 3-4 years ago.
Commenter
honor
LocationDate and time
June 13, 2013, 12:50PM
honor, I was referring to the usage of the ‘worlds greatest treasure’ tag by ghengis. Wayne Swan is no longer the holder of this title as it is passed on each year, the treasurer of the Philippines is now the holder. I don’t believe the filipino treasurer has much impact on the AUD.
Commenter
cuturhair
Location
MEL
Date and time
June 13, 2013, 1:26PM
even with the falls in prices, where is the value? the ‘good’ stocks remain at high PE low dividend yield(e.g. health, IT shares), the bad stocks have uncertain earnings outlook.
I’ll give em all a miss still folks.
Commenter
nihal bhat
LocationDate and time
June 13, 2013, 11:05AMI thought you were looking at big Aussie banks? ANZ at under 13 times earnings yesterday was too expensive for you?
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 11:16AM
Confuscious says: Bear who stick head in bear market bee hive get quick sugar fix but then many stings in the ass! Couldn’t resist some PRY sugar, now waiting for the sting.
Commenter
Bearly Gruntled
Location
Forget 88 cent dollar, try 80 cents
Date and time
June 13, 2013, 11:38AM
The problem with better PE ratios giving possible BUY signals at the moment is they are being calculated as past earnings on current prices. Drop those earnings by 10-15% as see if they look so good. Having said that there are quite a few dividends/distributions about to be announced that will go ex-div on 24th June – property trusts and the like. Some are becoming tempting.
Commenter
mitch of ACT
LocationDate and time
June 13, 2013, 12:26PM
@Bearly Gruntled – pretty sure it was Arctic polar bear that said it and not Confucius.
Commenter
Gerson
Location
Sydney
Date and time
June 13, 2013, 12:42PM
LYC getting smashed,
Gap at 29.5-38c would be good buying maybe
Commenter
Bassy
LocationDate and time
June 13, 2013, 11:01AM45c and I’m in!
Has good prospects in the long term, most issues have been dealt with. Shouldn’t need more cash until mid 2014 if things go bad, good value if you have a 5 year outlook.Commenter
worried33
LocationDate and time
June 13, 2013, 12:48PM
If you’re still in CAB you should have taken the money at $6 and run. Their business model is broken.
Commenter
Allan
Location
Prahran
Date and time
June 13, 2013, 11:01AMA business model that makes billions of dollars profit – hardly “broken”. Lay off the hyperbole.
Commenter
Fred
LocationDate and time
June 13, 2013, 11:12AM
Sorry Allan, misread your post as CBA. I agree on CAB!
Commenter
Fred
LocationDate and time
June 13, 2013, 11:52AM
hahaha, good one Fred. We are all anxious. These errors happens.
Commenter
Not Happy
Location
Brisbane
Date and time
June 13, 2013, 12:21PM
Short FMG at 3.40 looking good. Iron ore is not rare you know.
Oh and SDL under 8c. Hope you didn’t pay more than 8c for it.
Commenter
Allan
Location
Prahran
Date and time
June 13, 2013, 10:59AMDing dong 4700.
Keep telling yourself this is just a correction but fair value is @ 3500.
Commenter
Allan
Location
Prahran
Date and time
June 13, 2013, 10:56AMLooks like poor employment figures will give your prediction a kick.
Commenter
Bearly Gruntled
Location
Forget 88 cent dollar, try 80 cents
Date and time
June 13, 2013, 11:25AM
I certainly hope we get down to 3500 because I’ll be buying with my ears pinned back. But, sadly, I doubt we’ll ever see that number again.
Commenter
player1
LocationDate and time
June 13, 2013, 2:18PM
Finding it hard to make sense of this shale gas and oil boom. NY Times is running a controversial series on what many see as a ponzi. Works like this: shale gas and oil wells are expensive but produce a lot in their first year but then they deplete very rapidly, most seem to be only producing at 5 percent of their first year within 7 years. The only reason they can claim profits is by underestimating their wells’ rapid depreciation and also, in the early years doing a lot of new wells in the “sweet spots”. The premier shale gas company, Chesapeake Energy is rated junk, and is selling assets to meet its heavy debt and drilling commitments to keep that “sugar hit” of early production going. Oil pipelines for shale oil are being deferred because the sources of supply change so rapidly that trains are the only economic method of transport, requiring a dense train network. Making things more complex is the very uneven distribution of the resources even in the “sweet spots”. Add in the immense amounts of highly polluted water needed and the high costs all round, this starts to look a much more marginal business ready for major correction. It will help alleviate peak energy supplies but only if their prices are high. But as I said, for somebody like me, its hard to make any sense out of so much noise.
Commenter
Catch 22
LocationDate and time
June 13, 2013, 10:55AMThe basic problem is a shale gas well costs more to install, more to run and has a short life compared to a conventional gas well. This article tells the long story http://www.globalresearch.ca/the-fracked-up-usa-shale-gas-bubble/5326504.
Commenter
DW
Location
Warana
Date and time
June 13, 2013, 11:52AM
I’ve been reading all over the place and it would be nice to read some investigative reporting instead of industry propaganda, a lot of money, let alone the environment, will be risked. Journalism anyone?
Commenter
Catch 22
LocationDate and time
June 13, 2013, 11:55AM
Got out the bull suit last night and woke up to a sea of red. The reaction of the multi millions ,who hold overseas shares, whenever there is a sniff of an end to QE defies belief. Am I missing the mark when I say that the end of QE means the USA economy is improving? So what can we expect when QE finally ends? If they borrowed at low interest rates, we could assume they have an exit plan.
Commenter
Bearly Gruntled
Location
Forget 88 cent dollar, try 80 cents
Date and time
June 13, 2013, 10:44AMMy take on it is QE weakened/weakens the USD. Now that Bernanke has told market participants that an end to QE is on the horizon that means a strengthening USD and rising interest rates may also be on the horizon. Therefore, US money borrowed at ridiculously low interest rates and invested overseas is scurrying home to the US before it is caught out in 1-2 years when QE starts to taper and 2-3 years when US interest rates start to rise. Also, the US stock markets have outperformed most overseas stock markets this year so there’s plenty of good investment opportunities in the US now.
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 11:15AM
The exit plan is there is no exit plan….
The central bankers have been jawboning the markets every which way, and seeing as markets are traded by computers how hard can it be? The overseas and local media tout their rubbish that money printing and central bankers can defy economic reality, they cannot. The economies of the western worlds are in deep trouble, as is the banking system. Look at what the big boys have done, they are cutting and running from consumer disc. on the DOW, and have sold huge stakes in the financials.The exit plan is an overnight currency devaluation of 50-80%…
Commenter
Bye Bye Fiat Money
LocationDate and time
June 13, 2013, 11:16AM
Assume – LOL, read the minutes of their meetings.
Only 1 board member saw the derivatives problem before the GFC. Bernanke was asked about a housing bubble popping before the GFC and he said – it’s never happened, won’t happen, can’t happen. We all know it did happen.
Recent mintutes indicate they can’t agree on an exit strategy.
The big problem is all central banks havn’t co ordinated the money printing QE progrmas, so as 1 ends, bond yields will rise and you can bet the remaining printed money will migrate seeking a better yield.
Commenter
nolongerconfused
Location
Sydney
Date and time
June 13, 2013, 11:25AM
We (not just Australia) needed a correction, the markets were getting out of hand and beginning to defy gravity (the economy), especially America and Japan.
I am glad this correction has arrived, for if it had gone on much longer we may have seen a catastrophic crash. Now that a correction has come in a relatively orderly fashion, methinks its safe to get involved again. The correction may go on for a little while yet, but there is great value at the moment, and I for one am buying up where a month ago I’d been a Hanrahan.
The herd is always slow. They didn’t see this correction coming, they won’t see the recovery coming.
Commenter
Fred
LocationDate and time
June 13, 2013, 10:31AMWe need the dollar at USD 0.90 ASAP.
Commenter
Catch 22
LocationDate and time
June 13, 2013, 11:01AM
Well put Fred, this time last week i was waiting to hear the correction word, was thinking how the fall was starting to feel like early days of previous GFC when experts were smugly saying “don’t sell or you’ll lock in the loss”, wish i had sold earlier then now. But as someone said yesterday, Tony and Joe will fix all cometh September.
Commenter
toxic
Location
illlawarra
Date and time
June 13, 2013, 11:33AM
Funny I thought the herd started the so called correction, you don’t actually think anyone knows why they’re selling and others obviously buying do you, that would be giving credit where no credit is due.
Commenter
DHT
LocationDate and time
June 13, 2013, 1:03PM
Correction to continue for another 4 weeks, it’s scary to see the falls now worse than GFC July 2008, it’s going to be nasty for those holding, but a dream for those that buy in at the bounce
Commenter
panda
Location
perth
Date and time
June 13, 2013, 1:46PM
wow, over 10% franked div on Westpac, this is a dream scenario, no wonder their surging up, buy while you can.
Commenter
Davidend
LocationDate and time
June 13, 2013, 2:14PM
Uhhh, correction? The XJO has lost less than 1% today, hardly a correction!
Commenter
Jay
Location
Melbourne
Date and time
June 13, 2013, 3:31PM
Re EBAY .. try a weekly chart .. it is called Distribution .. the path of least resistance on this stock is down .. all the market majors have made what they need to on the way up and are now selling down .. the rolling over mushroom top is the give away .. basic Wyckoff behavior pattern on how the markets .. really work FYI .. http://www.wyckoffstockmarketinstitute.com/ .. Hope this helps
Commenter
Nelson
Location
melbourne
Date and time
June 13, 2013, 10:27AMThanks Nelson. Yeah I think it has had about 10 percent short interest from hedge funds. That doesn’t scare me at all. What I find more interesting is how badly many hedge funds have under-performed the US markets recently. I’m happy to hold my ebay stock because I built my position around US$46 and even though it has under-performed most of my other US stocks I’ve still done fine with the AUD/USD exchange rate in that period.
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 11:02AM
4,690 close today on the button. Place your bets. Place your bets.
Commenter
Doug
Location
Sydney CBD
Date and time
June 13, 2013, 10:26AMClose, but no cigar
Commenter
Doug
Location
Sydney CBD
Date and time
June 13, 2013, 4:01PM
down down down. followed closely by wages, education levels and house prices. say it with me everyone – 457 visa is coming for your job soon. everything needs a balance so watch for crime to go up up and up.
Commenter
smilingjack
LocationDate and time
June 13, 2013, 10:22AMShorts are brilliant – how are we all going?
Commenter
Liberator
Location
SEQLD
Date and time
June 13, 2013, 10:07AMWell done Lib. What did you short? I’m sitting on the fence. Watching for this to stabilise. I don’t do shorts, but am thinking of opening an account with IG Markets since I reckon it’s on a downer for some time to come yet. Could even get worse if Ben Bernanke pulls the wrong levers. Who do you do shorts with, if I may ask?
Commenter
Gordon Gekko
LocationDate and time
June 13, 2013, 10:29AM
Not to offend anyone here, but consider the parallels of the shorter and a virus: both go into the host (body / market) with the SOLE purpose of helping themselves, not the host. Both also thrive on the breaking DOWN of the host ‘s basic mechanisms (whilst in reality, their actions cannot even exist without a host in the first place.) This is retrograde in the extreme….and is why a virus is known as an infection….which needs to be killed off, so that the host (again, body / market) can regain it’s strength. Whilst I am sure our friends Liberator and his merry band here are fantastic people, he and other shorters use the market in the same way a virus uses any living organism. That is the saddness of their way. Making money from others ‘losing” theirs is, in the end analysis, a self defeating action. If it isn’t, perhaps soemone can tell me how they could theoretcially make money if they shorted something down to “zero”? That indeed is the death point….ask any clever virus. Problem is, when the host dies…so does the virus…that is why it isn’t a clever organism after all.
EDS: The most successful virus’ do not kill, they move from host to host, evolve and return. I would consider the common cold a very clever organism.
Commenter
The Seer
LocationDate and time
June 13, 2013, 1:49PM
Correct EDs….but perhaps you gloss over my point, or you miss it entirely. What is to be served first….the needs of the host or the needs of the virus? Moreover….when you catch the common cold Ed, do you cheer on it’s arrival? Didn’t think so. You reach for some medicine. Removing shorting from global finance will be like Fleming’s penicilin when it is prescibed……a huge step up in world financial morality (not to mention health) will be on it’s way.
Commenter
The Seer
LocationDate and time
June 13, 2013, 2:17PM
Yes, a smart virus or parasite does not kill its’ host.
Commenter
JohnB
LocationDate and time
June 13, 2013, 2:49PM
Is it too late to dump the banks? Alpha?
Commenter
geoff
Location
burraneer
Date and time
June 13, 2013, 10:05AM..with commodities going down and the Aussie starting to settle and recover…..perhaps its time to buy??
Commenter
mirage
LocationDate and time
June 13, 2013, 10:18AM
I think that this depends on which bank.
Commenter
tango8
LocationDate and time
June 13, 2013, 10:35AM
Why would the banks be up in anticipation of poor employment data? Does someone know something that the market doesn’t?
Commenter
hlnbidoffer
LocationDate and time
June 13, 2013, 10:36AM
Time to buy. The ostriches who didn’t see this correction coming are the now the same ostriches who can’t see the recovery coming. Plenty of value in the banks at the moment.
Commenter
Fred
LocationDate and time
June 13, 2013, 10:51AM
Banks going well so far. Would be nice to know if overseas money is buying them?
Commenter
Bearly Gruntled
Location
Forget 88 cent dollar, try 80 cents
Date and time
June 13, 2013, 10:57AM
AVB, in PRE NR, looking likely
Commenter
Bassy
LocationDate and time
June 13, 2013, 10:03AMYesterday, someone made a comment that ESI was going to explode today. Not sure who it was but do you care to shed some light into this? At 0.9 cents, a small rise in the share price is going to create some positive gains.. Thanks.
Commenter
hlnbidoffer
Location
Melbourne
Date and time
June 13, 2013, 10:02AMWell someone was wrong lol
Commenter
jconnor2500
Location
Sydney
Date and time
June 13, 2013, 10:37AM
Potential Funding for CDP Commercial Demonstration Plant Via DEPI to be announced shortly with CSI MCG Monash Capital Group also to be announced shortly. MCG were going to fund the whole amount to build the CDP prior to the ALDP being announced. They are the only ASX listed Co. currently in the public domain who have announced they are short listed to receive a slice of the governments $90M via the ALDP .MOU with AGL at Loy Yang to become concrete and announced where CDP is being built. Currently trading at 12 month lows. Has the potential, if it plays out, to become the new ASX market darling with 12c ST not out of the question. 1st to market new Technology patented worldwide
DEPI to let Co’s know who are/n’t getting funds mid month(June), those that miss are are obliged to announce, those that are are under confidentiality agreement not to, no brainer IMO
Commenter
Bassy
LocationDate and time
June 13, 2013, 10:40AM
Pershing Australia Nominees.now on the register, DYOR
Commenter
Bassy
LocationDate and time
June 13, 2013, 4:42PM
Anyone know why ebay (EBAY – NASDAQ) has been struggling the last few months? It seems like a great company to me with the ebay and PayPal business units particularly. It’s about 24/25 times earnings which doesn’t seem expensive to me and has an average one year price target of about US$64 from analysts. Am I missing something? Is it worries about competition to PayPal in mobile payments? I think that’s over done. It takes years to build customer trust with payment solutions and anyone who thinks PayPal is going to get pushed aside doesn’t understand customer behaviour online. Any opinions on this stock would be appreciated.
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 10:00AMeBay and Paypal rely on ripping off the seller about 10%, that’s obviously passed on to the buyer. I cannot work out why someone with cash (Richard Branson) don’t compete against them. They have humungous revenue, I’d imagine low running costs. It is absolutely ripe for new competition, I can’t work out why it hasn’t happened. Maybe there’s rumors of it coming?
Commenter
JohnB
LocationDate and time
June 13, 2013, 10:22AM
I am an ebay buyer for family and friends, with 100% positive feedback 2200+ times dating back to the days when buyer could get negative feedback. I believe that as the economy deteriorates, the supply of quality used items at giveaway prices on ebay also is drying up. Bargains on new items are obtained mostly via closing down sales, and this source also will eventually dry up.
Commenter
nester
LocationDate and time
June 13, 2013, 10:33AM
No JohnB those fee figures are incorrect. Just go to PayPal’s website and you can see their fee structure. For the purchaser transaction frees are $0. For the merchant where accounts have monthly receipts of up to $5000k they are 2.4% + $0.30. 2.0% + $0.30 for accounts with monthly receipts between $5000.01 and $15000. 1.5% + $0.30 where accounts have monthly receipts between $15000.01 and $150000. Do you think other banks in Australia or around the world provide their SME online merchants 1.5% transaction fees? lol No PayPal is the price leader and also has far more sophisticated fraud detection technology and consumer recognition/trust around the world. PayPal is perfectly positioned to drop fees even further if necessary to destroy earnings of any new entrants. Any other ideas? Their July earnings report will be interesting. It has been heavily shorted by Hedge funds recently. It will be interesting to see how they are positioned going into that next earnings report.
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 10:54AM
@Gordon Akman. I’m an occasional seller and reported to you 10% from DIRECT experience. They are absolutely ripe for a competitor to come in and blow them out of business.
Commenter
JohnB
LocationDate and time
June 13, 2013, 11:09AM
@JohnB, oh I think I know what you mean. Like 7.5% ebay fees + 2.5% PayPal fees = 10% total fees to sell on ebay? What we would need to compare that to would be how much Amazon charges in fees to sell through them + credit card/merchant fees (Amazon doesn’t allow PayPal to be used as a payment option – vicious competition with ebay at it’s finest.). Also, we would need to compare those ebay merchant fees with other online merchants who pay for advertising to get people to buy from their own site. I’m guessing most would spend a lot more than 10% in advertising but also be able to charge higher prices because the price competition on ebay between merchants is the most brutal I have seen online including Amazon.
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 11:24AM
That’s right. 10% combined fees. An outrageous amount. What do I get for that? On carsales (that is also a rip off), I can advertise a 20k car for $70, a 0.35% charge. We’re protected by consumer law and don’t need all the BS Paypal say we get for their outrageous fees. We’ve also got feedback scores to guide us. It is a ripoff and please someone step up and compete with them. You’ll be a gazillionaire in no time.
Commenter
JohnB
LocationDate and time
June 13, 2013, 12:42PM
Ebay’s business model was acting an an agent of the sale. The idea was the socialising of the sales mechanism. You could be a seller and a buyer too.
So by charging the user (ME and YOU) 10% to use its service is forcing it to become a vendor only service as the like of you and I will not appreciate losing 10% of the agreed price. It is a discouragement or barrier to business.
Why would anyone take the risks of buying via Ebay when you have far better controls, sale ownership, and warranties with Amazon?
Not a particular fan of either, but the dross on Ebay worries me so I avoid it.
It’s alot like Google search. It is so advertiser centric, it is now undoing itself from the core out.
You now have to be Google savvy in order to work out how to get to the results you want and not the results Google’s advertisers want you to get.It’s a shame therefore to have to be search smart in order to outsmart the algorithms to use it as it was ‘originally’ intended.
I suspect (wouldn’t know coz I don’t use them) the same must be happening to Facebook and Twitter.
Commenter
Joe
Location
Geelong
Date and time
June 13, 2013, 1:15PM
JohnB, Google “credit card merchant fees” and click on the RBA’s MS Excel spreadsheet which is updated daily. You will see Visa and Mastercard charge 1.45%, American Express charge 2.51%, and Diners Club charge 2.36%. Then a merchant also requires a separate “payment gateway” service provider’s software/facility to be installed on their website – Google “Payment Gateway Reviews in Australia” and add on their fees. Then you will understand that PayPal is cheaper than all those options. PayPal is a separate business unit within ebay. If you want to compare ebay’s fees in the marketplace you would need to compare it to a competitor/alternative online sales or auction site of that size. Amazon is the only other one. People of suggest Google has the resources to take over any industry. However, the reality is it is much harder to unseat an entrenched market leader by just throwing money at it. Look how Google Plus has fared against Facebook in social media or how Microsoft has fared against Google in search.
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 1:51PM
Good points Gordon Akman. I think facebook is unique as people are set up for it and rely on the herd moving (or not). As opposed to eBay. It looks on the surface 7.5% to sell something (plus 2.5% paypal) is way over the top. Bring it on Google. I’m with you Joe, I’m not going to use ebay any more. There’s conviction. Protest with my feet.
Commenter
JohnB
LocationDate and time
June 13, 2013, 2:35PM
I get the feeling many retail investors don’t know that ebay bought PayPal, PayPal now accounts for 42% of ebay’s revenue, most of the transactions PayPal processors are not ebay transactions, PayPal provides physical eftpos machines/equipment in bricks and mortar stores for numerous fortune 500 companies, ebay is growing between 10% and 16% year on year but PayPal is growing between 22% and 29% year on year. Soon PayPal will generate more money than ebay’s marketplace and auction business units. I invested in ebay because of PayPal – not because of the ebay marketplace and auction parts of the business. In 2013 ebay forecasts PayPal will process over US$20 billion on PayPal mobile alone. Mark my words ebay’s share price has gone up 500% since 2009 and this stellar growth is far from over…
Commenter
Gordon Akman
Location
Broadbeach
Date and time
June 13, 2013, 3:11PM
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4:59pm: That’s it from us here at blog central – thanks everyone for reading this blog and posting your comments.
Here’s our evening wrap of today’s session.
4:24pm: The market’s losses were broad based – all sectors bar financials posted losses. The biggest cuts were in the materials sector, which slumped 2.4 per cent.
Financials – banks and insurers – bucked the trend as investors sought the safety of higher-yielding stocks, with the sector posting a 0.7 per cent rise.
4:22pm: Today’s losses mean the market has lost just over 10 per cent since its May 14 highs, which qualifies as a “correction” (20% fall would be a ‘bear market’).
The ASX200 is now up 1 per cent since the start of the year, while the All Ords boasts a gain of just 0.4 per cent.
4:17pm: The stock market has closed lower, but well off the morning’s troughs. The benchmark SP/ASX200 index fell 29.7 points, or 0.6 per cent, to 4694.8, its lowest close since January 8. The broader All Ords lost 31.2 points, or 0.7 per cent, to 4684.9.
Shortly before midday, the ASX200 dropped as low as 4658.6, bringing it within a smidgen of the year’s lows. The All Ords hit 2013 lows at 4650.0.
4:09pm: The Nikkei has closed in bear market territory. Japan’s benchmark index tumbled 6.4 per cent to 12,445.38, down nearly 22 per cent from its May 22 high.
Meanwhile, European stock futures are pointing to a sharply lower open, tracking steep losses on global markets on growing concerns the US Federal Reserve might scale back its stimulus operations sooner than expected.
Futures for Euro STOXX 50, UK’s FTSE 100, Germany’s DAX and France’s CAC are 1.6 to 2 per cent lower.
Wall Street futures are down between 0.5 and 0.7 per cent.
4:02pm: Executives responsible for managing hundreds of billions in retirement savings are the most pessimistic they have been in nine months, a new survey suggests.
The Financial Services Council’s Chief Investment Officer Index says confidence slumped from a “very high” reading of 35 points in March to 7 in the current June quarter.
The index has a range of -100 to 100. It is based on interviews with big money managers including BT, Colonial, Macquarie, Goldman Sachs and AMP. This is the lowest reading since September last year.
FSC chief economist James Bond said sentiment was still positive, but the slump reflects a view that shares were “well priced”.
“What we are seeing this quarter is that the strong, positive view of equities from CIOs that has underpinned market confidence in previous quarters, has waned.”
3:43pm: One of the key factors to keep in mind when looking at the month-to-month labour force data is the sample survey the Bureau of Statistics polls to get a sense of employment growth in Australia.
The Bureau says it is adjusting the sample survey from May to August to make it better represent Australia’s population. But as ANZ senior economist Justin Fabo notes, “the ABS expects this to increase the standard errors (volatility) of monthly movements in employment and unemployment by 10 per cent over this period”.
“Instead of rotating one-eighth of the sample, they are rotating one-quarter of the sample and that’s basically to match their updated view of what the Australian population looks like,” Macquarie economist Gabby Hajj says. “There’s no big concerns yet as … it doesn’t look like it has impacted the data.”
But Hajj says it’s also important to note that the Bureau is rolling out an online feature that will poll respondents about their employment conditions via the internet instead of face-to-face.
“You wouldn’t expect that to have an impact. But what’s happened so far is that the respondents that have come through online have stronger employment dynamics. … That could make the labour force survey a lot stronger than what it should expect. So that’s something in the back of our minds as well,” he says.
3:32pm: We have seen a rapid unwinding of some amazing trends which had emerged across different asset classes this week, says IG’s Stan Shamu:
3:15pm:Should Japan default? finance professor Noah Smith asks in his blog:
There are two reasons to think about what happens in the eventuality of a Japanese sovereign default. The first is that Japan’s debt might be big enough, and its bond market reluctant enough, that it is forced to either default, hyperinflate, or go into severe austerity mode. In that situation, a default might be the best option.
After all, after Argentina defaulted on its debt in 2001, its economy suffered for three years but then did quite well, substantially outperforming its pre-default trend.
The precedent for a default is not apocalyptic. Whether this is better than hyperinflation I will leave unanswered, but it seems likely to be better than a long grinding period of austerity-induced stagnation.
The second reason to contemplate a default is microeconomic. Observers of Japan’s economy are nearly unanimous on the need for “structural reform”. But Shinzo Abe’s offerings on that front were extremely anemic.
And given the huge edifice of special interests in Japan, and the weak political system there, we can probably expect little progress on that front.
3:10pm: Patrick Snowball has got the monkey off his and Suncorp’s back with the announcement that the group has sold a $1.6 billion package of property and corporate loans to Goldman Sachs at a price of 60 cents in the dollar, Malcolm Maiden writes:
The group will book a post-tax loss of between $470 million and $490 million in the June half as a result of the deal with Goldman and provisions it is taking on the balance of the portfolio, but this is a major desk-clearing deal for Snowball, who inherited an $18 billion ‘‘bad bank’’ loan portfolio when he took over as chief executive of the insurance and banking group in September 2009.
He has been spending up to half his time in investor briefings fielding questions about how Suncorp would finally rid itself of the loan book it created under former CEO John Mulcahy’s leadership ahead of the financial crisis with an aggressive expansion of corporate lending, property development lending, property investment lending and lease financing.
At $18 billion when it was carved out of the group’s more stable regional banking franchise in the first half of 2009 what Suncorp called its ‘‘non-core’’ loan book equalled about 20 per cent of group assets, and that was dangerously high.
Read more
2:50pm: Unknown to many investors, some traders commonly buy early access to market-moving data from nongovernment sources, the Wall Street Journal reports:
On the morning of March 15, stocks stumbled on news that a key reading of consumer confidence was unexpectedly low.
One group of investors already knew that. They got the University of Michigan’s consumer report two seconds before everyone else.
Infinium Capital Management, a high-speed trading firm in Chicago, used the information to launch a wave of trading in futures contracts, in just one example of the activity that followed.
2:47pm: Here’s how the region’s markets are doing:
2:42pm: The worst of the day’s storm seems to have passed through and the market’s losses have more than halved.
But it’s really only the financial sector that is keeping the broader market’s losses in check, while all other sectors are deep in the red. Materials are leading the losses, slumping 2.3 per cent.
The big banks are up between 0.8 per cent (CBA) and 2.3 per cent (Westpac).
2:30pm: Market expectations that Suncorp will reward shareholders with a special dividend later this year remain intact, despite news it will take a hefty impairment charge.
The company today said it had sold $1.6 billion worth of troubled property and corporate loans to Goldman Sachs for 60 cents in the dollar, and unveiled plans to wind down the rest of its ‘‘non-core’’ banking portfolio over the next year.
The deal will see the “non core” bank, which houses troubled loans, make a loss of up to $490 million this year. Analysts reckon this could drag down group earnings by about 25 per cent. However, they say it will not prevent the company from returning excess capital to shareholders.
An analyst at Deutsche Bank, Kieran Chidgey, says the company will have about $1.2 billion in surplus capital, allowing it to pay a special dividend of 23 cents a share, on top of a final ordinary dividend of 27 cents a share.
“We see the trade-off of potentially greater capital extraction for immediate risk reduction as a net positive,” he says.
Suncorp share are down 1 per cent at $11.745.
2:06pm: No news is the real news on jobs numbers, according to BusinessDay’s Tim Colebatch:
Let’s be honest. For anyone following the economy closely, there is really nothing new in the Bureau of Statistics’ latest jobs estimates, released on this morning. And perhaps that’s the real news.
The figures show no evidence that the economy is sliding into recession. They show no evidence that it is springing into a new phase of growth. They leave us where we thought we were: moving ahead slowly, having slipped down into third gear as the mining boom in the West winds down.
In the past two months, the Bureau’s seasonally adjusted figures zigged and zagged; this time they just stood still. At face value, the figures show we gained almost 30,000 jobs in February, lost 34,000 in March, gained 45,000 in April, and have now added just 1100 in March.
Seasonally adjusted unemployment started the year at 5.4 per cent, climbed to 5.6 per cent in March and April, and is now back at 5.5 per cent.
But ignore that. Most of that is just static, statistical noise resulting from the fact that the Bureau tries to derive national estimates from a sample of 30,000 households. The Bureau itself tells us to focus on its trend figures, which aim to give us the signal, not the noise, smoothing out the zigs and zags to make a gently curving path.
1:41pm:Rio Tinto has agreed to sell its Eagle project in the US to Lundin Mining Corporation for an estimated $US35 million ($37.26 million) in cash.
The transaction, which is subject to regulatory approval, is expected to close in the third quarter of 2013, Rio says.
Construction on the project, which includes a high-grade underground nickel-copper mine in the Upper Peninsula of Michigan, is around 55 per cent complete after beginning in 2010, it says.
Rio chief financial officer Chris Lynch says the sale reflects the company’s renewed discipline in allocating capital, and its focus on core assets.
‘‘We are making good progress on a number of other potential divestments as part of our goal to achieve substantial proceeds from divesting non-core assets,’’ he said in a statement.
Rio shares are down 2.4 per cent to $51.56.
1:31pm: Here’s another view on how today’s jobs data could be seen by the RBA, which next meets at the start of July to make a decision on interest rates.
CommBank analyst John Peters says employment growth in the first half of 2013 ‘‘reduces the chance of a further multiple rate cuts this cycle’’.
‘‘The central bank will take comfort that the labour market is holding up particularly well in 2013,’’ he said.
‘‘Today’s figures, coupled with the jobs surge in April, and the positive bounce in consumer confidence in June, will boost the central bank’s confidence that the 200bpts in official rate cuts since November 2011 are having the desired positive effect on the economy and labour markets.’’
1:22pm: A quick look at how some of the blue chip stocks are performing.
In a nutshell, the banks are up and everyone else is down, down, down:
1:17pm: Here’s an interesting side note to the jobs data out earlier, which you can read more about here:
Youth unemployment rate hits lowest level in 4-1/2 years in May; down from 15.7% to 15.2%. Rate has fallen from 17.3% over past 7 months.
— Craig James (@craigjamesOZ) June 13, 2013
1:14pm:The dollar has quickly shed the gains it picked up in the wake of the stronger than expected jobs data, as it got caught up in the general equities market selloff.
It’s currently fetching 94.57 US cents, well down from the day’s peak of 95.22 just after the data was released.
1:12pm:Cooking equipment group Breville had a breath-taking recovery from the loss of key north American distribution earlier in the year, recovering from a June-half sell-off from $7.25 to $5.50, to trade recently at $7.50 before succumbing to some moderate profit taking.
Even so, JP Morgan reckons there is still some upside prospects, putting a $7.90 price tag on the shares, with an “overweight” recommendation.
Breville “has exposure to growth in both the Australian and offshore markets,” it told clients today.
“Domestically, the home appliances category is a relative growth market vs broader discretionary retail while North America and the UK present significant high margin growth potential in large markets off a low base. We believe this growth is yet to be fully reflected in the share price.”
In early afternoon trading, Breville was down 5c at $7.13.
1:05pm:The biotech space usually proves to be a handy port in a storm, but it has proven to be a bit trickier in the latest market sell-off.
CSL, for example, has been pushed back to fresh three month lows, shedding 47c to $57.73, as Resmed slipped a more modest 7.5c to $4.95.5c. with Cochlear easing just 2c to $56.98 after its sell-off on a profit-warning.
Ansell finally succumbed to some quick selling following its recent upswing to trade early afternoon down 61c at $17.46. Sirtex was off 31c at $11.81.
1:00pm:Both the All Ords and the ASX200 have bounced up off the canvas, regaining about 0.4 per cent after slumping to a loss of about 1.4 per cent. Both the major indices are now down 0.9 per cent or thereabouts, recovering some of the ground lost after the announcement of the jobs figures.
12:44pm:Another note on jobs, this time on the effect of today’s jobs numbers on the likelihood of another rate cut.
‘‘The fact that employment maintained most of April’s increase is fairly encouraging,’’ said Annette Beacher, Singapore-based head of Asia-Pacific research for TD Securities.
‘‘This report doesn’t sway the RBA either way — they can certainly still cut on a soft labor market and low employment, but I don’t think any of these are a trigger.’’
Ahead of today’s release, financial markets were pricing in a 44 per cent chance of a rate cut in July, but that has since fallen to 29 per cent.
12:37pm: Amid the share mayhem, it’s easy to forget the jobs numbers, which did came in a bit better than expected. Here are some economist reactions:
ANZ’s head of Australian economics Ivan Colhoun says despite the headline numbers, the trend growth in employment, coupled with other job indicators, suggests the jobless rate will continue to edge up over the next few months.
“All of that is saying that we are still going to see the unemployment rate drift up in Australia. We are not creating enough jobs to stop unemployment from rising,” Colhoun says.
“Overall it’s still not that strong. If you looked at hours worked, it’s only up 0.6 per cent in trend terms over the year and for the month, they are below the levels of a year ago.”
Citi economist Paul Brennan says fears that employment will fall sharply after April’s rise were not borne out. But the new data continues to point to softness in the labour market.
“Full-time employment has been flat over the last four months and the labour force participation rate remains below the levels of a year ago,” Brennan says.
Read the full story here.
12:30pm: The All Ords has slipped to fresh 2013 lows after hitting an intraday low of 4650, a loss of 66 points on the day and down from 4664.59 at the close of the last day of trading last year.
The ASX200, meanwhile, is 0.55 per cent off a fresh 2013 low.
12:25pm: And just in case you were wondering what a bear markets looks like, here’s the Nikkei chart for 2013:
Nikkei in 2013.
12:23pm: It’s not just Japanese jobs data that’s playing havoc with the local market.
Credit Suisse strategist Damian Boey says reports are coming though that the People’s Bank of China is not injecting much-needed emergency liquidity in financial markets, which is hurting resources stocks.
“This is a big problem,” he said. “They’ve had some payment failures in the interbank system. Some banks are facing some stress there, and if the PBOC doesn’t inject that liquidity, then it’s saying it is prepared to tolerate banks experiencing stress – or even going under.”
“If you think China is prepared to accept very weak growth outcomes, and even embrace risk, then that’s terrible for our resources outlook.”
12:17pm:Japan’s Nikkei share index has now plunged 6.2 per cent, snapping back into bear market territory with a vicious selloff pulling it to a 10-week low, as investors worry about the sharp spike in the yen on the back of concerns that the US Federal Reserve will roll back its massive stimulus.
The Nikkei was recently down 818.55 points at 12,470.77. The benchmark has fallen more than 21 per cent since hitting a 5-1/2 year peak on May 23, slumping into bear market territory.
12:07pm:The Nikkei has slipped into bear market territory.
It peaked on May 23 at 15,942 and has slipped today to 12625 – that’s 3317 point loss, or 20.8 per cent.
A 20 per cent slide form the peak signifies a bear market.
11:58am: On the ASX200 at the moment, it’s very much a case of ‘down and down it goes, where it stops nobody knows‘.
The slide has surpassed 1.35 per cent now, with the benchmark index touching 4659, just 11 points above where the ASX200 started the year.
11:54am:A bit of context on the Japanese rout. The Topix surged 48 per cent this year through May 22 on optimism Japan can exit deflation. The gauge entered a correction on May 30 after dropping more than 10 per cent from its May high. Today’s fall extends the correction to 17 per cent.
11:52am: The dollar rose half a cent after a better-than-expected jobs report prompted markets to pare back the chance of an interest rate cut in July. It has since stabilised.
Investors had anticipated higher unemployment, forcing the dollar down moments before the announcement.
The currency rose as high as $0.9525, from $0.9440 before the data, to last fetch $0.9483.
11:49am: As local investors digest the jobs numbers, the ASX has quickened its losses. Local shares are now 1.2 per cent lower, and dangerously close to wiping all of the gains of the year to date.
But Japanese shares are having a shocker. A few moments ago, the Topix lost 3.3 per cent to 1,060.33, with all 33 industry groups falling. The Nikkei 225 Stock Average slumped 4.1 per cent to 12,736.29, but volume on both gauges was about 37 per cent lower than their 30-day intraday averages.
‘‘Investors are worried that the yen may strengthen even further,’’ said Tomomi Yamashita, a fund manager at Shinkin Asset Management. ‘‘There isn’t any good material to boost the market right now, and investors who had bought too much are feeling uneasy and now dumping shares.’’
11:41am: The jobless rate is steady but the participation rate was 65.2 per cent, down from 65.3 per cent in April.
The participation rate is the proportion of the population that have a job, are looking for work or ready to start work.
This may have helped keep a lid on the overall umemployment rate during May.
11:39am: 5,300 full-time jobs were lost, and 6,400 part time jobs were gained, taking the total number of new jobs to 1,100.
11:38am:Unemployment rate (per cent, seasonally adjusted)
May: 5.5
April: 5.5
March: 5.6
February: 5.4
January: 5.4
December 2012: 5.4
New jobs added
May: 1100
April: 50,100
March: -36,100
February: 71,500
January: 10,400
December: -5500
11:34am: The Aussie fell sharply ahead of the data – it slipped to 94.41 from just below 94.8 US cents, but when the result arrived the dollar jumped above 95 US cents.
11:31am: Economists prediced 10,000 jobs to be lost, but the economy added 1,100.
11:30am:JUST IN: The jobless rate has remained flat at 5.5 per cent for May, following a strong gain in employment the previous month.
11:26am:Westpac has become the latest lender to buy back a big chunk of taxpayer-guaranteed debt, in a sign of the improving conditions on funding markets.
The bank today said it would shell out $US3.75 billion to buy back bonds issued under the government guarantee scheme, which threw the banks a lifeline at the peak of the financial crisis.
It comes after a wave of purchases in the industry that has seen the amount of government-guaranteed debt on issue fall by more than $40 billion to $53.5 billion in the year to April.
At the program’s peak in early 2010, the taxpayer was guaranteeing more than $169 billion in bank debt.
The scheme, which closed to new borrowing in early 2010, requires banks to pay a fee for their use f the guarantee, so it makes sense or lenders to repurchase the debt once funding markets return to more moderate levels.
11:23am:Lynas shares have tumbled 6.1 per cent, to 46.5c, after it decided to draw a line in the sand for its own prices.
Current spot prices of typical light rare earths are $US16-$US20 ($A17-$A21) a kilogram, 25 per cent below the minimum sustainable level for producers, according to Lynas.
Major industry participants in China, which controls most of the world’s supply, agreed the price falls were not sustainable, it says.
Less than three years ago prices hit $100.
Lynas has set a new “minimum price schedule”, which will come in on July 1.
11:09am: Just a reminder that we will be reporting the May jobs figures as they come out at 11.30.
Expectations are for unemployment to rise to 5.6 per cent, up from 5.5 per cent in April.
10:58am:Australian shares are more than 10 per cent below their recent peak, entering correction territory, after a string of poor data and a sharply weaker currency has forced investors to exit the market.
The market opened sharply down on Thursday, dropping 34.7 points, or 0.7 per cent, to 4689.8, while the broader All Ordinaries lost 34.7 points, or 0.7 per cent, to 4681.4.
With Australian shares up just 0.8 per cent since the start of the year, the local market is the worst performing of global sharemarkets since the start of the year. Significantly the Australian market has trailed behind Wall Street.
Since its mid May high, the local bourse has lost 10.1 per cent, joining other developed markets in a global rout that has seen the Japanese bourse drop 15 per cent.
10:50am: Now for the major gainers in early trade:
10:45am:Japanese shares fell a third day, with exporters dragging down the Topix index, as the yen rose against the dollar for a third day.
The Topix lost 2.5 per cent to 1,069.75 with about nine stocks falling for each that gained. The Nikkei 225 Stock Average sank 3.1 per cent to 12,869.04.
‘‘Investors’ spirits were too high before,’’ said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management in Tokyo.
‘‘Investors globally who had taken on risk in both stock and currency markets are now having to correct their stance.’’
10:43am: A quick look now at the worst performed companies on the ASX200 in opening trade:
10:34am: The big miners have had a bleak start to the day:
10:33am: It’s a sea of red among the blue chips, except for three of the big four banks:
10:32am: Sector by sector on the ASX200 now:
10:30am: Investors seem to like Alacer Gold’s vow to sell off its Australian assets, with the stock 19 cents higher at $2.56 in early trading.
Some analysts are tipping Alacer will be happy to sell the mines for less than book value.
10:20am: The Australian share market’s opened more than half a per cent lower.
The benchmark SP/ASX200 index was down 31.3 points, or 0.66 per cent, at 4,693.2, while the broader All Ordinaries index was down 30.8 points, or 0.65 per cent, at 4,685.3.
On the ASX 24, the June share price index futures contract was down 35 points at 4,695, with 8,497 contracts traded.
10:08am:Early take – as markets open the ASX200 is 0.4 per cent lower.
10:05am: Resources reporter Peter Ker writes that the purge of Australia’s marginal gold mines is gathering pace, after Colorado based miner Alacer Gold announced plans to sell its collection of Australian assets.
In comments that could stoke controversy in the upcoming federal election campaign, Alacer named “Australia’s carbon tax” as being one of the factors that had forced up costs and helped convince the company to focus on other nations.
Alacer’s two mines near Kalgoorlie in WA were already considered among the more expensive gold mines in Australia, but the company this morning revealed that costs had blown out by a further $US187 per ounce at the Higginsville mine, and $US274 per ounce at the South Kalgoorlie mine during the March quarter.
The problems were then exacerbated by the significant drop in the gold price in April.
While the carbon tax was named as one of the factors that had pushed up power costs by $US31 per ounce, it was not the biggest contributor to Alacer’s problems.
10:01am: Tim Radford, global analyst at Rivkin, said “a positive night on commodity markets should lend some support to the local market,” but he adds that with unemployment data due out late morning ‘‘we may see some cautious trading prior to the release”. In a note this morning, Mr Radford said:
“Buyers continue to wait on the sideline for an opportunity to re-establish positions in depressed Australian shares.
“Better than expected jobs number could provide a catalyst for traders to take advantage of beaten down Australian shares, leading to a much anticipated reversal in the recent broad selloff of the Australian dollar and Australian shares.”
9:56am: With the ASX poised to move into correction territory (10 per cent below its peak), here’s a chart showing the ASX200, the financial sub index and the materials sub index since the start of the year. It clearly shows the slide in the resources sector (yellow line) began in mid February, while the slide in the banks (orange line) began more or less at the same time as the ASX200 (white line) began sliding.
Since the start of May, Westpac shares are down 19 per cent, ANZ shares have lost 16.2 per cent, CBA is off 10.7 per cent and NAB shares are 17.4 per cent lower. While the big four banks had gained more than the general market since the start of the year, their aggregate decline since the start of May has been greater – about 15 per cent compared to almost 10 per cent.
Banks vs miners vs ASX200
9:52am: A bit more on Suncorp. Brian Han at Fat Prophets has reiterated a buy recommendation on the shares. In a note released today, he says the recommendation is based on:
9:51am: In local corporate news this morning, Suncorp has sold a $1.6 billion non-performing loan portfolio to Goldman Sachs at 60 cents in the dollar, the AFR quotes unnamed sources as saying.
The outcome of 60 cents in the dollar is double what Bank of Queensland and Lloyds achieved in the recent sales of their non-performing loanbooks, the AFR says.
An announcement is expected later this morning.
9:45am: The main piece of economics data today arrives in the form of jobs figures for May, due at 11.30am from the ABS, with most economists expecting a slight rise for last month.
The Bureau of Statistics is expected to show the jobless rate climbed to 5.6 per cent, from 5.5 per cent, in May. The number of people with jobs is expected to fall by 10,000, compared to a rise of more than 50 thousand in April.
JP Morgan Australia chief economist Stephen Walters says April’s figure appeared too good to be true and he doesn’t expect it to continue, with a fairly flat result likely for May.
9:40am:Local stocks go into today’s session with weak leads from offshore but a stronger Aussie dollar. Wall Street fell, with the Dow recording its first three-day losing streak for 2013, while shares in Europe closed in the red amid persistent concerns about global stimulus.
The Aussie market is only one bad day from slipping below where it started the year. And as we noted late yesterday, another down day today would make it 13 from 17.
So, what was driving the pessimism offshore? The same things that have been worrying investors for a couple of months now.
‘‘Persisting fears about impending Federal Reserve tapering of asset purchases together with the Bank of Japan’s decision Tuesday to hold steady on stimulus measures has left liquidity addicted markets feeling uncomfortable,’’ said Ishaq Siddiqi, strategist at ETX Capital traders.
‘‘Traders are worried about a market place with reduced liquidity against a backdrop of slowing growth in some parts of the world, notably China.’’
9:36am: Good morning all. Welcome to the Markets Live blog for Thursday.
Contributors: Thomas Hunter, Jens Meyer, Max Mason
This blog is not intended as investment advice
BusinessDay with agencies
Related Coverage
Nikkei plunges into bear territory
12:17pm Japan’s Nikkei share average dived 6 per cent and entered bear market territory today, extending early falls after the US dollar fell to a 10-week low against the yen.
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Markets Live: Shares stem bleeding
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June 13, 2013, 10:31AM