Markets Live: Dollar "massacred"

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June 6, 2013 – 4:17PM

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Australian shares close deep in the red following a late sell-off, while the dollar remains under pressure.

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4:55pm: That’s about all for today from us here at blog central – thanks everyone for reading and posting your comments. We will be back tomorrow from 9.30am.




Just waiting for our evening wrap of today’s session, which should be up in a few minutes.









4:43pm: Today’s hefty losses add to the recent beating the stock market has taken and mean the ASX200 has unwound much of its gains this year.




It was about 12.3 per cent higher for the year until May 14, where it hit a 2013-high of 5220.987. It has since fallen 8.4 per cent. For the year the ASX200 is up just 2.8 per cent.




4:40pm: And here’s a round-up of the main winners (yes, there were some) and losers among the top 200 stocks:







Today’s winners and losers.









4:19pm: All sectors of the market ended lower, with gold leading the losses, down 5.1 per cent. Materials and financials both fell 1 per cent, energy dropped 1.6 per cent and consumer discretionary stocks lost 1.3 per cent.









4:16pm: The stock market has closed sharply lower, following a late sell-off that took the main indices within striking distance of their early lows.




The benchmark SP/ASX200 index slumped 54 points, or 1.1 per cent, to 4781.2, while the broader All Ords fell 53.4 points, or 1.1 per cent, to 4771.8.









4:14pm:Weak economic data is keeping investors wary, says JBWere executive director Mike Kendall:



• I think it’s a question about people examining the outlook for the economy at the moment, and in the short-term it’s looking pretty soft. We had a pretty ordinary lead from overseas yesterday and the GDP numbers came on top of that.


• Then you’ve got this counterbalance, where some people are looking for yields, markets get to a certain point and you’ll see yield buyers come into the market and start to push prices back up, or some people take a view that it gets oversold.



4:10pm: Interesting article in the FT: Google is the General Electric of the 21st century:




Everywhere one looks, Google is doing remarkable things. It could soon overtake Apple in downloads of applications; it is developing self-driving cars; people wear its kooky augmented reality Glass spectacles; it is signing renewable power deals in South Africa and Sweden.




From being a one-product company that tapped a stream of wealth with paid internet search, Google is emerging as the dominant consumer technology company of the early 21st century, along with Amazon. Fred Wilson, a leading New York venture capitalist, accuses it of trying to control the internet, “like Microsoft tried with personal computing … Who will stop Google?”









3:59pm: Some more on today’s wafer-thin trade surplus: JP Morgan economist Tom Kennedy says the 1 per cent fall in exports in April was due mainly to lower commodity prices and weaker non-rural exports such as mining and resources goods. This category accounts for almost 80 per cent of Australia’s exports.




‘‘This weakness in non-rural goods seems to be more of a price rather than volume, phenomenon,’’ Kennedy says. ‘‘The ABS data reveals that both iron ore and coal shipments increased between March and April, an outcome that is consistent with the high-frequency port data over the past few months.’’




Iron ore exports to Japan rose 12 per cent and thermal coal exports to that destination, the world’s third largest economy, rose 14 per cent. Imports rose one per cent, driven by a notable a surge in capital equipment imports.









3:30pm: Turning back to the stock market, IG’s Stan Shamu notes that a fightback by the banks was responsible for some of today’s gyrations, which saw losses in the market halved by early afternoon – before the index started heading back south in late trade. Shamu says:



• We feel the price action in the banks was driven by bargain hunters entering the market on hopes of a near-term bounce. The yield appeal improves on the back of lower share prices.


• Valuations for some of these yield plays had been looking stretched for a while, and this is probably a healthy pullback for value investors out there.


• The fact that domestic data continues to deteriorate vastly is also driving the probability of a rate cut higher (now at 42%). This seems to be lending some support to the market, but not enough to drive equities into positive territory.


• In the mining space, the downgrades are really starting to weigh on Newcrest Mining as the stock drops another 6% today to its lowest level since June 2005. Out of the analysts covering NCM, 41% have a buy rating on it, 29% hold and 29% sell. The average 12 month price target is $18.66.










3:25pm: In the dollar’s slide, the focus has been on the USD exchange rate, with many analysts explaining the sell-off with new strength in the greenback.




However, a closer look at some other important cross rates quickly shows that the real story is one of Australian dollar weakness:



• The dollar has actually tumbled most against the euro this year, falling 11.7 per cent from its peak of 81.73 euro cents at the end of March to 72 euro cents today.


• Against the US dollar, the Aussie has slid 10.8 per cent from its 2013 high of $US1.0598 in January.


• Against the pound, the dollar is down 11.4 per cent from the March high of 69.26 pence.


• And against the yen, the dollar has dropped 11.4 per cent from a 2013 high of 105.21 yen.










2:57pm: Looking ahead, Dow and SP500 futures are pointing to small gains at the open of trade on Wall Street, with both futures up around 0.2 per cent.




London’s FTSE100 futures, however, are about 0.3 per cent lower.




Staying in Europe, the European Central Bank meets today, but economists are confident the bank will leave its benchmark interest rate unchanged. The central bank cut borrowing costs by 25 basis points to an all-time low of 0.5 per cent on May 2.









2:46pm: More on the Australian dollar and comments that traders are looking to short it, as the Aussie plumbs yet another low of 94.35 US cents:




The dollar is in “great danger” of a big correction, Stephen Jen, a partner at London-based SLJ Macro Partners, said in a note to clients, the Wall Street Journal reported.




Bell Potter’s Charlie Aitken added in a note yesterday that the Australian dollar was “over-valued and over-owned, a very bad combination as its fundamental appeal is reduced”.




“This AUD bubble will not end in a whimper,” Potter wrote, adding that there was nothing “structural” about the Australian dollar. “It has previously been grossly overvalued by default. Now as those ‘default’ settings change, and change quickly, the AUD will revert to its true status as a commodity currency.”




Potter said it was not out of the question that the Australian dollar could sink below 90 US cents by the end of this year.




Chart traders are saying speculative sellers are now targeting the October 2011 low of 93.88 US cents.




2:34pm: The dollar’s steep slide over the past weeks has been spectacular – IG’s Chris Weston calls it a ‘massacre’ – but it’s worth keeping in mind that the currency is still trading well above its long-term average as the following chart shows. Incidentally, this year (December 12) marks the 30th anniversary of the currency’s float.







AUD/USD over the past 30 years.









2:14pm: Japan’s Nikkei has dropped back below 13,000 in a volatile session, extending its slide from a 5-1/2 year high hit last month to the verge of bear-market territory.




By the midday break, the Nikkei eased 0.5 per cent to 12,955.71, and has dropped 19 per cent since May 23, undermining Japan’s ambitious plans to put the economy on a sustainable growth track.




“The recent fall in share prices could be seen as the markets urging greater action on growth strategies,” Nomura Securities wrote in a note.




Should the Nikkei fall to 12,754, or 20 per cent from the 5-1/2 year high reached on May 23, it would enter a bear market and could pose a serious threat to Abe’s plan to boost consumer confidence and pull Japan out of deflation.









1:51pm: There’s no end in sight to the dollar’s misery today, as the currency has just tumbled to the day’s low of 94.42 US cents, still its lowest in 20 months.




It’s also buying 93.76 yen, 61.40 pence and 72.22 euro cents.




The Australian dollar in June has so far recorded the biggest fall among global currencies against the greenback at 1.12 per cent. Since, May 6, in the week of the RBA’s rate cut and at the start of the dollar’s recent falls, the currency has fallen 7.51 per cent against its US counterpart.




Only the South African rand, another commodity currency, has fallen further during that period (10.05 per cent).




Some reactions on Twitter:







AUD/USD has now lost 10.6% in last 40 trading sessions. In equity land that would be a correction, in FX that is a massacre #fx #forex




— Chris Weston (@ChrisWeston_IG) June 6, 2013







AUD getting smashed as is our stock market! So much for the view that a lower AUD would boost stocks.#welldonefools




— adam carr (@AdamCarrEcon) June 6, 2013







#forex Nice 50 pip drop in AUD off that Eco. (Trend as I said) Now for the European session. (Asian will probably sleep now)




— Richie Chin (@FxEpic) June 6, 2013









1:48pm: Multinational companies trying to avoid paying tax in Australia may come under closer scrutiny if a raft of new proposals clears federal parliament.




A package of tax amendments passed the House of Representatives on Thursday, despite opposition claims the legislation was rushed and could prompt foreign companies look elsewhere to do business.




The legislation contains 11 technical changes to tax laws that the government says will improve the taxation system and encourage private investment in significant infrastructure projects.




It amends GST law to make certain services provided under the national disability care scheme tax-free, while Pay-As-You-Go instalments will required of larger tax entities on a monthly rather than quarterly basis.









1:40pm: RBS senior currency strategist Greg Gibbs has some insights on the weakness of the Australian dollar.




Firstly, he said markets have latched on to a broad term that is driving the Australian dollar’s weakness against other currencies such as the US dollar and the British pound.




“The GDP report, while only modestly below expected, supported the theme behind many bearish calls that there is a big rotation away from mining investment and evidence is lacking that there will be a pick-up in other sectors sufficient to replace it, at least not without a significant fall in the AUD,” Mr Gibbs said in an FX note today.




Meanwhile, the long term outlook for the Australian dollar/British pound cross is also looking bearish, Mr Gibbs said, noting the fall in Australian services PMI for the second month in a row in May, while the UK service s PMI rose to a high since March 2012.




“It is not hard to see why some traders might be looking at a sell AUD buy GBP strategy.  It is hard to argue other than the divergence in PMIs is to a large extent a reflection of a high AUD dampening confidence in Australia and a low GBP helping underpin confidence in the UK.”









1:29pm: Taking a quick look around the region:



• Nikkei: -0.5%


• Shanghai: -0.4%


• Taiwan: -0.9%


• South Korea: closed


• Singapore: -1.4%


• New Zealand: -1.1%








1:03pm:Maybe the equities and AUD sell of has been a little overdone, says CMC Markets senior trader Tim Waterer.




He said poor macro-economic indicators had contributed to the selling, both in Australia and around the globe, in equities and currencies markets. That data included a weaker-than-expected trade surplus locally and low private sector job numbers in the US.




‘‘Having said that, we are off our session lows, so maybe there is a sense among investors that the selling is a little bit overdone given we were down quite steeply yesterday,’’ he said.




1:00pm: After a rocky opening, Aussie stocks are slowly working their way to breakeven territory. The benchmark ASX200 is now 0.47 per cent lower after falling as far as 1.18 per cent. A couple of hours ago a gain for the day was unthinkable. It may still be unlikely, but it is entering the realms of possibility.









12:50pm: So, with markets falling and the currency in a period of volatility, what should investors do?




Credit Suisse strategist Damien Boey said the underlying focus for investors should be about quality and defensiveness rather than just yield.




“You can have cyclical stocks that offer you a good yield, but they are not necessarily defensive. So as I look across the spectrum, there are a lot of defensives that are being sold – like telcos, utilities and consumer staples – and I think they are actually OK, not because they offer yield, but because they are defensive.”




Mr Boey believes the general decline in the share market has”more to go”. He said factors that could turn the share market around include:



• the US decides not to have more fiscal austerity


• if China decides it can afford to stimulate its economy


• if the RBA moves strongly on easing


• if the Australian government becomes open to having bigger budget deficits



But all these potential catalysts for a re-strengthening of the stock market were unlikely to happen in the short-term, Mr Boey said.









12:37pm:Gold has lost a bit of ground as investors weigh up whether the US economy is strong enough for the US Federal Reserve to pare stimulus and assessed India’s latest move to rein in imports.




Spot gold lost as much as 0.4 percent to $US1398.27 an ounce, and traded at $US1401.50 in Singapore.




Part of the reason for the slide is India’s imports falling as much as 20 percent this year, the All India Gems Jewellery Trade Federation said.




‘‘India is intent to curb gold demand as previous steps don’t seem to have worked,’’ said Feng Liang an analyst at GF Futures.




‘‘Whether or not the measures are successful, it does put a dampener on sentiment. The market will trade in a range as investors look to the jobs data for clues to the Fed’s next move.’’









12:28pm: More on the Australian stock market and investors’ concerns about US and Japanese monetary policy.




Credit Suisse strategist Damien Boey said the extreme volatility across bond and equity markets in Japan were causing Japanese investors to experience mark-to-market losses, forcing them to selling off their higher-yielding holdings offshore, including Australia.




Meanwhile, there is short interest in Australian cyclicals in general, including banks, Mr Boey said.




‘‘A lot of people are seeing job losses, they are seeing mining [capital expenditure] cycles slowing and they are thinking that the more cyclically exposed sectors are looking a bit vulnerable and a bit expensive,” he said.




‘‘On top of that, you also have what’s happening in America, where on the one hand, you have the Fed talking about quantitative easing and suggesting that the economy can handle it, and on the other hand, the data’s basically falling out of bed and suggesting that they can’t.’’




Mr Boey said global equity markets were falling and investors were worried as they were viewing US and Japanese monetary policy as being relatively ineffective in stimulating growth at this time.









12:27pm: The monthly trade figures – which showed a surplus in April by the smallest of margins – have few implications for investors, says CommSec chief economist Craig James:



• The fact that Australia is recording small trade surpluses rather than deficits provides support to the Aussie dollar.


•  Australia has become far more reliant on specific commodities (such as iron ore) and specific trading partners (China) and this can lead to greater volatility.


• Australia will rely more of natural gas imports in future, together with iron ore and coal. Australia is increasingly reliant on imported oil.








12:22pm: Virgin Australia Chief Executive John Borghetti says Air New Zealand’s increased stake in Virgin Australia won’t affect the business.




Air New Zealand is increasing its stake in Virgin Australia by another three per cent to almost 23 per cent, but says it has no intention of taking control of the airline.




Mr Borghetti says Virgin works well with major shareholders Air New Zealand and Singapore Airlines as well as partners Etihad and Delta.




Air New Zealand says the increased stake affirms its belief and confidence in Virgin Australia.









12:16pm: Analysts have sharply cut their forecasts for the Australian dollar in the latest Reuters poll, but they still remain behind the eight ball as the sell-off accelerates.




A poll of 48 analysts put the dollar at 97.00 US cents on a one-month horizon, all the way down from $US1.0300 in the May survey. The currency was not hanging around, however, having already hit a 20-month trough of 94.70 US cents earlier today.




It has lost 8 per cent since last month’s survey, in part on speculation the Federal Reserve may curb its super easy policy soon and concerns of economic growth in China. Disappointing domestic economic news has also reinforced expectations the RBA will cut interest rates again from an already record low of 2.75 per cent.




Paradoxically, the more the currency slides the less need there might be for a rate cut. The RBA has argued for a long time that the currency was too high given falling prices for some of Australia’s key commodity exports.




While one analyst polled saw the Aussie falling potentially as far at 80 US cents, the majority were far more restrained. Indeed, the median forecast was for the Aussie to be at 97 US cents in three months time and 96 US cents a year hence.




12:13pm: The competition regulator has blocked an attempted takeover of Rafferty’s Garden, an organic baby food supplier, by US-based food giant Heinz on concerns that the deal would have reduced competition significantly.




The ACCC said the proposed deal would have removed a strong opponent for Heinz, itself the subject of a $US23.2 billion takeover bid from Warren Buffett’s Berkshire Hathaway and Brazilian financier Jorge Paulo Lemann’s private equity firm 3G Capital.




“The proposed acquisition would combine the two largest suppliers of wet and dry infant food in Australia, resulting in highly concentrated markets where barriers to entry and expansion are high,” ACCC chairman Rod Sims said in a statement.









12:01pm: The ASX200 is now well off the day’s lows, clawing back about half its early losses, not least thanks to the rebound in Japanese stocks.




The local losses are still broad-based, with all sectors in the red.




Material are down 0.7 per cent, financial 0.2 per cent, energy 1.3 per cent, telcos 0.2 per cent and consumer discretionary 1.2 per cent.









11:58am: And here’s how the rest of the region’s stock markets are doing:



• Japan (Nikkei): +0.9%


• Hong Kong: -0.6%


• Shanghai: -0.3%


• Taiwan: -0.8%


• Korea: -1.5%


• ASX200: -0.5%


• Singapore: -1.1%


• New Zealand: -1.2%








11:52am: With the local market is taking quite a few of its cues from Japan these days let’s take a closer look at how the Tokyo market is doing:




The Nikkei has bounced back (+0.7% at 13,117 now) from an early drop to below 13,000 for the first time in two months on the back of disappointing US private jobs data.




Today’s move underscores the recent extreme volatility that has put a spanner in the works of the government’s ambitious plans to revive the economy. The index sank 3.8 per cent yesterday as investors were disappointed with Prime Minister Shinzo Abe’s growth strategy to revive the world’s third-largest economy.




Should the Nikkei fall to 12,754, or 20 per cent from the 5-1/2 year high reached on May 23, it would enter a bear market.




The market has had a torrid time over the past two weeks, with trading characterised by violent price moves and huge drops, as investors were spooked by worries over slowing growth in China, and uncertainty over whether the US Federal Reserve would roll back its stimulus this year.




A senior dealer at a foreign bank said the 12,800-mark is an important level for many investors, who came into the market around that area after the Bank of Japan announced its sweeping stimulus measures on April 4 that jolted global markets.




“The market very clearly got ahead of itself. It was a long way ahead of its (moving) averages. It was very crowded. There was a lot of extremely large positioning among global macro funds and some of the domestic dealing desks as well,” he says.




“What we have seen is a correlated unwind – everybody’s gone for the door at the same time. Everybody is on the same side of the boat and the boat is rocking back and forward.”









11:35am: In today’s main bit of economic data: Australia’s trade balance has stayed in the black for a second month in a row, with a surplus of $28 million in April.




That was however well below expectations of a $180 million surplus, and comes after a revised $555 million surplus in March (originally: $307m).




Imports in April rose to $25.39 billion (from $25.17b), while exports shrunk to $25.42 billion ($25.72b).




The dollar is still hovering below 95 US cents.









11:17am: A quick look at the major gainers on the ASX50, led by Qantas:



• Qantas: +0.47%


• Macquarie: +0.25%


• NAB: +0.17%


• Crown: +0.08%








10:51am: The ASX appears to have found a level … for the time being. The ASX200 is 0.7 per cent lower after dipping as low as 1.18 per cent. Here are some of the early sliders on the  benchmark index:



• Coalspur: -6.25%


• Perseus: -5.45%


• Imdex: -5.42%


• Discovery: -5.41%


• CSR: -5.05%


• Newcrest: -4.63%








10:47am:Here are a couple of interesting points of view on the Aussie dollar.




Kengo Suzuki, the chief currency strategist at Mizuho Securities in Tokyo, says: ‘‘The Aussie’s trend is clearly downward. The Australian dollar remains susceptible to selling when markets are in a risk-off situation.’’




Paul Lambert, the London-based head of currency at Insight Investment, says: ‘‘We are short the Aussie dollar. Australia has reached a new point in its path. Its interest rates are going to start to move toward the rest of the world.’’









10:41am: Bloomberg reports that Qantas and China Eastern Airline’s Hong Kong budget airline venture sold a stake in their airline to a company founded by billionaire Stanley Ho, which will help pave the way for an operating license.




The low-cost carrier, called Jetstar Hong Kong, sold a 33.3 per cent stake to Shun Tak Holdings, Sydney-based Qantas said in a statement today.




Qantas and China Eastern will hold 33.3 per cent each, according to the statement. The total capitalisation of Jetstar Hong Kong remains unchanged at $US198 million.




With the addition of the partner, Qantas group cut its initial planned equity investment to $US66 million from up to $US99 million. China Eastern and Shun Tak will also contribute up to $US66 million each, the statement said.









10:35am: BBY institutional dealer Anson Rosewall said the weakness in the Australian dollar was driving the local stock market down.




The stock market has unwound much of its gains this year. It was about 11.7 per cent higher for the year until May 14, where it hit a 2013-high of 5220.987. Since then, it started to fall, losing about 8.5 per cent in the past 3½ weeks.




“The weakness in the Australian dollar is scaring offshore investors who hold a lot of these high-yield stocks – Telstra, the banks, the REITs – and that’s where a lot of selling has been concentrated towards, and that’s where its likely to be concentrated towards today,” Mr Rosewall  said.




“While a weaker Australian dollar is beneficial for the Australia economy in the longer term, in the short-term it’s a negative for the market because it’s going to keep scaring the offshore investors, especially those offshore yield funds who leveraged up buying Australian high-yield stocks.”




Mr Rosewall said about 45 per cent of Telstra’s register was held by US institutions, while the US ownership of Australia’s big four banks was around 25 and 30 per cent.




10:31am: Today’s loss means the market’s gains for the year have shrunk to less than 3 per cent. Ouch!




At its recent peak on May 14, the ASX200 was up nearly 12 per cent, meaning nearly $120 billion has been wiped off the market’s value over the past weeks.




So, who sold in May and went away?









10:24am:Some more on the dollar. The Australian dollar has fallen below 95 US cents, a new 20-month-low. The currency was trading at 94.83 cents just after 10am, but went as low as 94.78 US cents. The dollar has not been this low since early October 2011 when it troughed at 93.88 US cents.




(An earlier version of this post said the dollar hit a 32-month low. We apologise for the mistake.)









10:23am: Sector by sector on the ASX200 it’s a sea of red:



• Info tech: -2.59%


• Consumer disc.: -1.84%


• Industrials: -1.27%


• Utilities: -1.25%


• Energy: -0.99%


• Financials: -0.93%


• Materials: -0.76%



10:18am:The Aussie dollar has just gone below 95 US cents. It’s currently buying 94.84. More soon.









10:13am:The Australian share market has opened more than one per cent lower.




The benchmark SP/ASX200 index was down 57.1  points, or 1.18 per cent, at 4,778.1, while the broader All Ordinaries index was down 57.3 points, or 1.19 per cent, at 4,767.9.




On the ASX 24, the June share price index futures contract was down 50  points at 4,781, with 9,899 contracts traded.




10:10am: In opening trade, Fairfax shares are down 4.2 per cent to 57.5 cents.




10:08am: Early on, the ASX is down about half a per cent. Gold is down only 0.1 per cent, but financials are 0.7 per cent lower.









9:53am: Miguel Audencial reckons the the ASX is ‘‘poised to display weakness’’ – that is, fall. And he says the slide in the Aussie dollar will contribute:




The further slide of the Australian dollar is likely to provide additional pressure in the local stock market as overseas investors are prone to show concern about the negative currency yields. The market’s increased expectation about another rate cut from the RBA could also further weaken the Australian dollar and consequently weaken the near term prospects of the Australian equities market. 




The Australian Trade Balance is due to be released later today and the Australian dollar desperately needs a strong figure for a recovery. Expect further weakness if the number is below expectations.









9:50am: ANZ analysts have taken a look at the US employment data out overnight. They note that the ADP report has ‘‘proven to be a poor guide to private payrolls, under-shooting actual payrolls by some 60k over the last 3 months and on average by 30k over the last 6 months.’’




The consistent pattern of under-shooting by the ADP series emerged in mid-2012 and has persisted and become larger over recent months. However, the ISM services employment component fell to 50.1 in May from 52.0, which is consistent with a sub-150k non-farm payrolls number on Friday night. The remainder of the ISM services report had a stronger tone, with the headline number increasing to 53.7 from 53.1.









9:38am: While world markets were down and the ASX looks set to follow, the Australian dollar has fallen against a range of currencies and remains under pressure, following concerns about the local economy and renewed expectations the US Federal Reserve would taper its stimulus program.




The currency sank to 95.11 US cents overnight, a 20-month low, and global markets declined as investors fretted about a pull-back by the Fed on its asset buying program.




The dollar was trading at 95.22 US cents at 9.25am.




“A lot of [the Australian"s dollar fall] is to do with the US dollar,” ANZ currency strategist Andrew Salter said.




“The US dollar is very much captive to market expectations for when the Fed is going to taper its large-scale asset purchases. Right now the bias is for markets to favour an early unwind, and  that’s been a reason for US dollar’s strength and weakness in the Australian dollar.”




9:27am: In local corporate news this morning, here’s something that may interest the Markets Live faithful. Fairfax, publisher of this website, has released details of its digital subscription plans.




Fairfax will introduce subscriptions for the digital versions of The Sydney Morning Herald and The Age.




You can read the full story here, but in a nutshell, from July 2, visitors to the smh.com.au and theage.com.au websites and their mobile versions will have free access to the first 30 articles they click each month before being asked to pay under a metered subscription model.




Here’s a link to the various packages.









9:26am: Here’s a bit more detail on the US jobs release, which showed the US private sector added fewer jobs than expected in May, according to a report from payroll firm ADP that came two days ahead of the government’s highly anticipated jobs data.




ADP reported an increase of 135,000 private jobs in May, a pick-up from the downwardly revised 113,000 jobs in April.




The May number was well below the monthly average of net new positions for the first four months of the year, 160,000, and surprised many analysts who had expected a better 157,000 jobs.




Mark Zandi, chief economist of Moody’s Analytics, which helps produce the report, highlighted that job growth had slowed since the beginning of the year across all industries and all but the largest companies.




“The softer job market this spring is largely due to significant fiscal drag from tax increases and government spending cuts,” Zandi said.




9:19am:Aussie stocks pointed down again today following sharp falls on both Wall Street and in Europe overnight. The US losses were driven by weaker-than-expected employment growth, but it wasn’t enough to erase fears about the Fed’s intentions for its stimulus program.




‘‘You got this contrast in what the Fed should do, should they continue to pump the system full of liquidity or is it the time to pull back?’’ Bill Schultz, chief investment officer who oversees about $1.1 billion at McQueen Ball Associates in Bethlehem, Pennsylvania, said by phone. 




‘‘All those cross- currents throw some caution on the whole market. Given how far it’s run and where it can go from here, investors are taking a pause and a more look-and-see approach than they have in the past, where equities are the only place to be.’’




9:14am: Good morning folks. 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














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Featured comment:



• 
  

  
  

  Having been in the market for 30 odd years, I can say that very few of the people in this ‘forum’ know what a bear market looks like. The only result that can happen when debt is at such extreme levels is a global depression. Nothing else can occur.

  
  

  If the idea that pumping liquidity into markets did anything worthwhile then markets would be at record levels many times over. Yet they are not and all that is happening is more debt is being created…

  
  

  Never in the history of the world has excess debt led to growth…it always ends with an economic downturn and given how big the debt level is – the downturn is going to be huge.

  
  

  Good luck to all, even though experience tells me the majority will hold onto their shares until they are broke…

  
  

  
  

  Commenter
  Les
  
  Location

  
  

  Date and time
  
  June 06, 2013, 9:35AM

  
  




• 
  

  
  

  This is only happening because I’m going to the US for 3 months next week :/

  
  

  On the bright side, does this mean our property values will go up?

  
  

  
  

  Commenter
  Pantha
  
  Location
  
  Sydney
  
  Date and time
  
  June 06, 2013, 3:37PM

  
  


• 
  

  
  

  Given the annual interest rate for my savings account, I was chuffed to be advised the other day, is 0.5%, may I say that perhaps the slide in the Aussie dollar is a welcome relief.

  
  

  Not just business (especially primary exporters) but also those on fixed incomes have suffered under the fiscal measures aimed understandably to make investment still attractive despite the exchange rate holding at parity to the USD.

  
  

  I do not want to return to the days of high inflation, but a decent interest rate for personal account holders so they can get a return at least slightly above the CPI I think is hardly unreasonable.

  
  

  We can’t expect the AUD to remain at or above parity forever, and I think the parlous state of the rest of the world barring a few exceptions is the only reason parity has continued for so long.

  
  

  It will encourage shoppers to return to spending their dollars onshore and thus assist business and job growth locally.

  
  

  Thus I find language like ‘massacre’ slightly ridiculous, mischievous and irresponsible when talking about basic economic results and fluctuations – leave that to the pre-election headline chasers please…

  
  

  
  

  Commenter
  Homo Politicanus
  
  Location

  
  

  Date and time
  
  June 06, 2013, 3:36PM

  
  


• 
  

  
  

  Here’s a tip (. but don’t tell anyone else),
  I bought truckloads of WBC at $18.65 on 23/ 09/’11. They hit an all time high of $34.79 the day of the last divvy announcement ( I should have sold, but I don’t have a crystal ball). Today they have touched $27.78 but I’m not buying,….Why?
  Because I’m confident I’ll be buying truckloads more sub $20 within the next 3 to 6 months
  Btw…..WBC = Westpac
  Cheers

  
  

  
  

  Commenter
  John
  
  Location
  
  Melbourne
  
  Date and time
  
  June 06, 2013, 3:32PM

  
  


• 
  

  
  

  Oh puhleeze, I’ve been away in Spain for 7 weeks and when I come back, the comments thread has grown even more loopy if that was possible.

  
  

  To the poster who suggests few have seen a bear market, I’ve seen 5 of them, and after a while you can recite the playbook in your sleep. I said early last year that the equity markets would be ticking up by the end of the year (they did) and there was no property crash coming (and there wasn’t and isn’t). We are now in the last significant market dip before the next upward cycle, and I will be reducing cash in favour of equities and property the next two months, to a near-fully-invested position.

  
  

  Take that advice or leave it as you wish, because I will be heading off on a longer trip to Europe next month. I wish my lifestyle was as glamorous as the doomsayers (ranting at a screen day after day) but I guess all these holidays are the “pain” and “carnage” I have to bear for being a patient and experienced long-term investor.

  
  

  
  

  Commenter
  Balanced
  
  Location

  
  

  Date and time
  
  June 06, 2013, 3:29PM

  
  


• 
  

  
  

  Anyone trying to manage risk can’t ignore the chill currency winds that are howling. Its these rapid drops which freezes the scroogillian bones of the overseas mega rich. We have seen a couple of big waves of share dumping which followed rapid drops in the dollar. Too much risk for me. Looking for positives …… China, probably has been (successfully) foxing to get input prices down, gee who knows. Turning attention to selling my house.

  
  

  
  

  Commenter
  Bearishly Disgruntled
  
  Location
  
  Forget 88 cent dollar, try 80 cents
  
  Date and time
  
  June 06, 2013, 3:27PM

  
  


• 
  

  
  

  It is our turn to become Greece and Spain. Next govt. will not do anything except complain that previous govt. stuffed evrything. New govt. is as useless as the present. There is no end to our misery as cheap labour will be imported from outside and unemployment will keep on increasing. Put up trade barriers – Globalisaation stuffed us. .

  
  

  
  

  Commenter
  xyz
  
  Location

  
  

  Date and time
  
  June 06, 2013, 3:17PM

  
  


• 
  

  
  

  All this stuff about the brave little Aussie dollar punching above its weight, taking a beating, being strong or being weak or somewhere in between. It’s all just stupid, greedy speculator talk and if they take a bath, well all the better. I hope they all go broke. Parasites. The sooner we move toward taxing these creeps out of existence, the better. We can then concentrate on real economic activity, not a finance betting shop, full of grubby, stupid greedy oafs. The real comparison of our dollar to the yank dollar should be at about 65c or so. For all those who want to inject some spurious blather abut the inflationary effects, I say too bad. It is all the speculators making that we have an over hyped currency, that a ‘çorrection’ as so quaintly phrased will occur, is inevitable. The RBA might have been taking actions at a much earlier time to reduce the hype, but did not as its primary task is to keep the rich, rich. The speculators happy and to protect the speculators from themselves and to ensure the costs of the speculators are born by the poor – as is clearly the job of Reserve banks the world over. The RBA, could have reduced interests rates significantly at a far earlier time, but even as now, they argue that such a move might overheat the property market. And why? Well that’s because this country has a special policy of encouraging property speculation through a lazy and greedy tax policy of negative gearing and capital gains tax remissions. Another great Keating and Costello joint initiative. To lower interests rates in that circumstance would pour petrol on the fire. This country doesn’t even know its own interests, why worry about the currency?

  
  

  
  

  Commenter
  Boris Johnson
  
  Location
  
  Melbourne
  
  Date and time
  
  June 06, 2013, 3:10PM

  
  


• 
  

  
  

  The pressure on the Chinese leadership may grow to do more to boost domestic demand,” such as faster approvals of investment projects, said Sun Junwei, a Beijing-based economist at HSBC Holdings Plc.
  http://www.bloomberg.com/news/2013-06-05/china-export-gains-seen-halved-with-fake-data-crackdown.html

  
  

  Get in now while mining stocks are cheap

  
  

  
  

  Commenter
  Artha
  
  Location

  
  

  Date and time
  
  June 06, 2013, 3:05PM

  
  


• 
  

  
  

  Ahhh, to be George Souris. Tell everyone he’s gonna short the $A and all the sheep follow.
  What an easy way to make several billion dollars.
  What a sad, pathetic life if your job is sitting in front of a computer screen watching currencies, commodities and shares going up and down.
  Surf’s up….see ya !!!

  
  

  
  

  Commenter
  Stephen R
  
  Location
  
  Wollongong
  
  Date and time
  
  June 06, 2013, 3:00PM

  
  


• 
  

  
  

  Good! Bad! Best thing! Worst outcome! Great hope! Shocking for industry! Best for industry! About time! The lower the better. The higher the better. And so on…

  
  

  
  

  Commenter
  wik
  
  Location
  
  melbourne
  
  Date and time
  
  June 06, 2013, 3:00PM

  
  


• 
  

  
  

  This is Major Tom to planet earth:
  current div return Westpac 7.839% if you factor in franking, thats 6.03% pure profit no tax, or take Metcash, 9.555% incl franking, 7.35 tax free….hello? anyone out there?

  
  

  
  

  Commenter
  Mulgoan
  
  Location
  
  Mulgoa
  
  Date and time
  
  June 06, 2013, 2:51PM

  
  


• 
  

  
  

  Seriously, Glenn Stevens should be sacked! he has now created Aussie sub prime, for investments as margin calls will be the next we hear about. We wont officially know we are in recession until after the election when the numbers are out, regardless of who gets in. I think there also needs to be a senate inquiry into the national account books as they have been cooked and not telling the entire picture we are led to believe, some super dodgy numbers being thrown about.

  
  

  
  

  Commenter
  Damian Jones
  
  Location
  
  NSW
  
  Date and time
  
  June 06, 2013, 2:49PM

  
  
  • 
    

    
    

    Fed debt alone is every bit of $300B+ as this discussion takes place. According to Gillard and Swan it is still only $265B? How can the Fed debt level have increased $300B during the Labor Govs tenure when we have only had a single forecast deficit?? Am I wrong – of is the way debt spruiked to the Aussie populace and outright con?

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 3:01PM
    

  
  
  • 
    

    
    

    A recession after the election? That will be Tony’s reward for all the hard work he’s done white-anting confidence in our economy. It will also be what Australians earn for being gullible fools. See, there’s my silver lining.

    
    

    
    

    Commenter
    Mr Misery Guts
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:12PM
    

  
  
  • 
    

    
    

    Why should we doubt the numbers the rest of the world are suffering the same problem only worse do you think Australia is immune to the GFC?

    
    

    
    

    Commenter
    AustraliaFirst
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:31PM
    

  
  


• 
  
  • 
    

    
    

    Two months ago Qld was not included in the disussion about the mining boom and unemployment was higher than Victoria.
    I agree some very dodgy numbers being thrown around.

    
    

    
    

    Commenter
    Staz
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:48PM
    

  
  
  • 
    

    
    

    Well I for one am very bemused and question whether the RBA know much at all. Two days ago they announced no rate cut (and I had assumed this was based on up to date info including most of the GDP data) – analysts and financial markets were calling a 19 per cent chance of a 25 basis point cut.

    
    

    Within two days, a flood of data including the GDP data apparently paints a worse picture and the rate cut chance is now 42%. Sounds like the cut should have been made and the last two days of data released would have backed it up?? Would have made them look as though they were on the ball.

    
    

    
    

    Commenter
    The Not-So-Magic Roundabout
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:53PM
    

  
  
  • 
    

    
    

    True, true, Damian Jones. Does anyone think the ABS is not regularly cooking figures to suit the govt? Rents soared 10% YoY for 2 years, and it didn’t impact the CPI figure one iota? And then the RBA and APRA are only there to keep the private banks solvent, not to ensure any measure of social justice in the Australian housing social settlement. And ‘Labor’ have no interest for some reason in social justice in that area either, choosing instead to go into debt to the tune of $70bn to help keep an overinflated and unjust housing market buoyant. Either Wayne Swan, Treasury and all their respective advisers are economic idiots (quite probable) or they really are maliciously looking out for just a few well-heeled vested interests at the expense of the citizenry and attempting to mask it. Just like every other country that allowed their private banks to blow a credit bubble underpinned by nothing. Your ‘elective dictatorship’ has struck again.

    
    

    
    

    Commenter
    Sean
    
    Location
    
    Sydney
    
    Date and time
    
    June 06, 2013, 3:58PM
    

  
  


• 
  

  
  

  ‘The currency is still trading well above its long-term average’ [I deleted the apostrophe for you]

  
  

  Why not lead with this instead of ‘pounding’ (shouldn’t that be dollaring) and massacre. People have been bellyaching for months/years about the high dollar. Why is this a disaster and not good new? Please explain.

  
  

  
  

  Commenter
  gb5
  
  Location
  
  prahran
  
  Date and time
  
  June 06, 2013, 2:41PM

  
  
  • 
    

    
    

    gb5, thank you for saying what i have been saying a lot lately. Albeit to myself…………….

    
    

    
    

    Commenter
    thank you for saying it
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:00PM
    

  
  
  • 
    

    
    

    Its very good news.

    
    

    A competitive services sector adding to exports awaits.

    
    

    Just short term pain for long term gain as someone mentioned recently while it drops (maybe on here).

    
    

    
    

    Commenter
    Opinion Only
    
    Location
    
    Melbourne
    
    Date and time
    
    June 06, 2013, 3:15PM
    

  
  


• 
  

  
  

  So everyone, apart from tourists travelling to the US and Europe, have been complaining about the high AUD for the past 4 years and now that it is falling it is a “massacre”. How about some proper analysis of what impact a falling dollar will have on the broader economy?

  
  

  
  

  Commenter
  JB
  
  Location
  
  Melbourne
  
  Date and time
  
  June 06, 2013, 2:41PM

  
  
  • 
    

    
    

    Hear, hear!

    
    

    
    

    Commenter
    ACT Terrier
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:44PM
    

  
  


• 
  

  
  

  For the folks who insist on going on and on regarding ‘money printing’ in the U.S., please take a quick squizzy at this:

  
  

  http://pragcap.com/stop-with-the-money-printing-madness

  
  

  It is not what you think it is. It just isn’t.

  
  

  
  

  Commenter
  Oh_Mighty_Zeus
  
  Location

  
  

  Date and time
  
  June 06, 2013, 2:38PM

  
  
  • 
    

    
    

    Somebody who gets it..

    
    

    By Zeus!

    
    

    We’re actually more in danger of deflation than serious inflation at this moment. And the US budget deficit has actually been decreasing at a record rate in the last year.

    
    

    
    

    Commenter
    Catch 22
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:24PM
    

  
  
  • 
    

    
    

    When Fed buys assets that nobody wants to touch, that is what means by printing money. It artificially props up banks and other institutions that should have gone under like any other business if they make bad decisions.

    
    

    
    

    Commenter
    Chandra
    
    Location
    
    Gurgaon
    
    Date and time
    
    June 06, 2013, 3:58PM
    

  
  


• 
  

  
  

  manoman, this country’s headed for a major economic hangover.

  
  

  
  

  Commenter
  rotary mo’s
  
  Location

  
  

  Date and time
  
  June 06, 2013, 2:34PM

  
  


• 
  

  
  

  the sky is falling, the sky is falling.

  
  

  
  

  Commenter
  chicken little
  
  Location
  
  sydney
  
  Date and time
  
  June 06, 2013, 2:24PM

  
  


• 
  

  
  

  Whine when the dollar goes up
  Then whine when it drops
  Whine when your stocks take a dive
  Whine! Cause it won’t stop.

  
  

  
  

  Commenter
  MiG
  
  Location

  
  

  Date and time
  
  June 06, 2013, 2:19PM

  
  
  • 
    

    
    

    I think I need a wine.

    
    

    
    

    Commenter
    The Oracle
    
    Location
    
    Oberon
    
    Date and time
    
    June 06, 2013, 3:11PM
    

  
  


• 
  

  
  

  The USA prints money to get out of trouble- an economic basket case. The Aus dollar should be buying two US dollars.

  
  

  
  

  Commenter
  Steveo
  
  Location

  
  

  Date and time
  
  June 06, 2013, 2:07PM

  
  
  • 
    

    
    

    The US problem is more so debt related than productivity. The USofA can still manufacture and export with a competitive outcome. Australia… we cant even keep our local fruit growers going let alone build something. The US also has the biggest military – so them bailing on their creditors is ultimately no big deal!

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 3:12PM
    

  
  


• 
  

  
  

  It’s probably just in anticipation of September 15 when we return to high interest rates and lower dollar. Just like the good ol’ Liberal days.

  
  

  
  

  Commenter
  Jon
  
  Location
  
  Torquay
  
  Date and time
  
  June 06, 2013, 2:05PM

  
  


• 
  

  
  

  Ok who knows what at Sirtex? all of a sudden up it goes, with no news! hmmmm, so much for a level playing field.

  
  

  
  

  Commenter
  oh pleaseeeee!!!!!!!!!!!!!
  
  Location

  
  

  Date and time
  
  June 06, 2013, 2:05PM

  
  


• 
  

  
  

  AUD which was falling like a gracefull swan, has now begun to drop like a dead duck. Would be nice to read more expert opinion as to where it will stop.

  
  

  
  

  Commenter
  Bearly Gruntled
  
  Location
  
  the 88 cent dollar ….. sooner
  
  Date and time
  
  June 06, 2013, 1:41PM

  
  
  • 
    

    
    

    The dollar has a long way to go – about 100 days to be exact. Labor is like a bad tenant knowing they are being evicted – they they are smashing the doors, breaking the or the next tenant being the coalition. It’ll get a lot worse before it gets better – that is for sure.

    
    

    
    

    Commenter
    the Truth
    
    Location
    
    Melbourne
    
    Date and time
    
    June 06, 2013, 2:39PM
    

  
  
  • 
    

    
    

    Not being an expert, but have had recent input from a currency trader based in London. The key message from the firm he works for is “sell everything Australian” including currency, shares, property the lot. My personal view is that the dollar will continue to .5 and probably a bit lower after that as well. Call me crazy, I have been wrong before.

    
    

    
    

    Commenter
    Viking
    
    Location
    
    Sydney
    
    Date and time
    
    June 06, 2013, 2:40PM
    

  
  
  • 
    

    
    

    Ok Viking – you are crazy. Betting on currency is like gambling only gambling is more reliable. There have been billions bet on currency movements that have cost companies like Lloyds their shirts. Remember – there is only 100 days of madness to go.

    
    

    
    

    Commenter
    the Truth
    
    Location
    
    Melbourne
    
    Date and time
    
    June 06, 2013, 2:57PM
    

  
  
  • 
    

    
    

    Do we really think that the LNP will be so bad for the economy that everyone is selling Australian shares?
    I don’t think so, The libs have been woeful managers of the economy but can they be that bad? Thinking we need to look further, I suspect it’s just equilibrium re-establishing itself, the Current Gov has been doing a great job seeding the economy but there is just so long you can push water uphill with the global situation so stagnant. After all the dollar was approaching 50 cents during the Howard era surly Abbott wont get it that wrong (I Hope)

    
    

    
    

    Commenter
    AustraliaFirst
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:08PM
    

  
  


• 
  

  
  

  Buy the dips and be a winner next week

  
  

  
  

  Commenter
  RD
  
  Location

  
  

  Date and time
  
  June 06, 2013, 1:29PM

  
  


• 
  

  
  

  Plenty highlight problems but what would you do to resolve them if you were in a position to?

  
  

  
  

  Commenter
  Opinion Only
  
  Location
  
  Melbourne
  
  Date and time
  
  June 06, 2013, 1:28PM

  
  
  • 
    

    
    

    O O there are more opinions here than bulls on a ship to Indonesia. Mainly light hearted jousting. There is the odd winner too, so look hard enough you will find a usefull answer.

    
    

    
    

    Commenter
    Bearly Gruntled
    
    Location
    
    the 88 cent dollar ….. sooner
    
    Date and time
    
    June 06, 2013, 2:29PM
    

  
  


• 
  

  
  

  Who cares for any data or any result, it is all about printing Lol

  
  

  
  

  Commenter
  RD
  
  Location

  
  

  Date and time
  
  June 06, 2013, 12:50PM

  
  


• 
  

  
  

  $A down, banks down, ducks lining up.

  
  

  Enjoy!

  
  

  
  

  Commenter
  Allan
  
  Location
  
  Prahran
  
  Date and time
  
  June 06, 2013, 12:45PM

  
  
  • 
    

    
    

    I thought that you would be cheering on the pollyanna’s to build things up again by now, the risk of shorting goes up as the market goes down surely.

    
    

    
    

    Commenter
    tango8
    
    Location

    
    

    Date and time
    
    June 06, 2013, 1:23PM
    

  
  


• 
  
  • 
    

    
    

    Pitiful pollyannas plum out of puff. Any other alliterations you need just ask.

    
    

    
    

    Commenter
    Allan
    
    Location
    
    Prahran
    
    Date and time
    
    June 06, 2013, 1:30PM
    

  
  
  • 
    

    
    

    I’d love to see The Age with an honest running commentry on real estate the way they do with the ASX… Ahhh but the ASX does not pay The Age big $$ in advertising like the RE industry does….

    
    

    
    

    Commenter
    SB
    
    Location
    
    Mentone
    
    Date and time
    
    June 06, 2013, 1:35PM
    

  
  
  • 
    

    
    

    How about – the pountry piece of pidgeon p*p from Prahran. (apologies to Derryn Hinch)

    
    

    
    

    Commenter
    CTL
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:15PM
    

  
  


• 
  

  
  

  Guys,

  
  

  look at the upside! For the first time the Liberals will be walking into government when the economy is nosediving. It will irrevocably prove how utterly incompetent our politicians (all of them) are at the moment and how much the party system has corrupted our democracy. Maybe something good will happen then to put paid to that Churchillian maxim about democracy. We can do better than what we have at the moment

  
  

  
  

  Commenter
  Fred from the south
  
  Location
  
  ACT
  
  Date and time
  
  June 06, 2013, 12:44PM

  
  
  • 
    

    
    

    They’ll still blame in on Labor.

    
    

    
    

    Commenter
    worried33
    
    Location

    
    

    Date and time
    
    June 06, 2013, 1:24PM
    

  
  
  • 
    

    
    

    Nothing new for us -always have a defecit when you guys get kicked out. But what do you suggest to replace current system -Communism, Fascism what?

    
    

    
    

    Commenter
    The Tory
    
    Location
    
    Adelaide
    
    Date and time
    
    June 06, 2013, 2:21PM
    

  
  


• 
  

  
  

  Gonna stick my neck on the line – Long SPI 4806 – come on in the waters great! We are going to finish positive today. Any takers?

  
  

  
  

  Commenter
  Dave
  
  Location
  
  Melbourne
  
  Date and time
  
  June 06, 2013, 12:42PM

  
  
  • 
    

    
    

    I’m in been buying banks all morning

    
    

    
    

    Commenter
    anonymous_
    
    Location
    
    The real world
    
    Date and time
    
    June 06, 2013, 1:46PM
    

  
  
  • 
    

    
    

    Short at 4808. Long this week is not a good option. You might get lucky and snag 5 to 10 points?

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 1:50PM
    

  
  
  • 
    

    
    

    Proves my point that the market is just one big casino where no one has any idea what’s about to happen but hey it doesn’t matter, as long as everyone moves in the same direction. I fold thanks.

    
    

    
    

    Commenter
    Adrian
    
    Location

    
    

    Date and time
    
    June 06, 2013, 2:40PM
    

  
  


• 
  

  
  

  Is this really a surprise to anyone? If you look at the fundamentals you can see that they are wrong and that the market has been over valued or a while. So why is it so? It is because countries like the US have printed money which has resulted in more cash chasing stocks while the inherent value of those stocks (i.e. their real worth) hasn’t changed. This has been accelerated by companies now engaging in share buy backs to increase the money in investors hands further while reducing the number of shares those investors can buy. By default the share prices go up while the inherent value of the businesses (i.e. their ability to generate trading revenue by things like selling stuff)s decreased. The market will keep going up if the Fed keeps printing money but now that they realise they can’t keep doing it the market is realising the con is no longer on and we are getting back what the real value is in the stocks. I moved most of my money into cash a while ago and while my palms were getting a bit sweaty over the last month I am pretty happy with the way it is going.

  
  

  
  

  Commenter
  Lance
  
  Location

  
  

  Date and time
  
  June 06, 2013, 12:37PM

  
  
  • 
    

    
    

    Well said. I’ve always wondered why the markets have done so well while the economic fundamentals have not changed globally. Now I understand why

    
    

    
    

    Commenter
    Noob
    
    Date and time
    
    June 06, 2013, 3:21PM
    

  
  


• 
  

  
  

  …’the dollar dives to new lows.’

  
  

  So the dollar has never ever been as ‘low’ as it is now. Hey Subby, keep the hyperbole down to dull roar, will you.

  
  

  ED: Thanks for the comment. I’m all for keeping the hyperbole down to a dull roar. I’ll just point out that a phrase like ‘new lows’ is relative – it always comes with a time frame explaining it.

  
  

  
  

  Commenter
  gb5
  
  Location
  
  prahran
  
  Date and time
  
  June 06, 2013, 12:35PM

  
  
  • 
    

    
    

    ‘Hey darling guess what I read in The Age today? The dollar is at a new low.’ [Because that"s all a lot of people read, and you and I both know that] Cheers.

    
    

    
    

    Commenter
    gb5
    
    Location
    
    prahran
    
    Date and time
    
    June 06, 2013, 1:57PM
    

  
  


• 
  

  
  

  To Sir Arthur “eliminating the creditors”. That’s what Hitler did. Pre-WW2 Germany had borrowed so much to finance its autobahns and armaments building programs that no-one would lend to it anymore. Immediately behind Hitler’s troops entering each country invaded were “gentlemen” from the Reichsbank to seize all gold and foreign currency and shut down their banking systems and send the bankers off to the camps. No creditors = no debts. Problem solved.

  
  

  
  

  Commenter
  mitch of ACT
  
  Location

  
  

  Date and time
  
  June 06, 2013, 12:23PM

  
  


• 
  
  • 
    

    
    

    Actually if you read the story of Hitler’s banker, they already cancelled all the debts before the war, by the simple announcements that they would only pay debts with German products, at expensive prices. Essentially they cancelled the debts and the other (US/British) banks had the haircut. The US recession ended with the New Deal , not just WW2.

    
    

    
    

    Commenter
    No hype..
    
    Location
    
    Melbourne
    
    Date and time
    
    June 06, 2013, 12:54PM
    

  
  


• 
  

  
  

  @Mitch:

  
  

  yes, you are right, the Depression did end, but how did it end? It ended in the greatest war we have had so far. And the capital works you are referring to, were in fact, mostly expenditure for the German/Japanese war machines, apart from a few autobahns and airports @ Berlin and Tokyo, which also served the war purpose actually. And ideology aside, the alternative for war would have been the bankruptcy of these two powers. Sounds eerily familiar? So when the US cannot service its debt any more, hey, let’s just dream up a reason for a war and start again, except that will be the end of all ends this time because of the nuclear option.

  
  

  
  

  Commenter
  paul
  
  Location

  
  

  Date and time
  
  June 06, 2013, 12:17PM

  
  
  • 
    

    
    

    and Hoover dam in the US. Created thousands of jobs and an everlasting benefit to the US economy. Now that was debt and printed money well spent and a model for future govt’s to follow. The only drawback was it facilitated the development of Las Vegas.

    
    

    
    

    Commenter
    mitch of ACT
    
    Location

    
    

    Date and time
    
    June 06, 2013, 2:29PM
    

  
  


• 
  

  
  

  “We have to be globally competitive”, we are told. How can we do that when our dollar should be at US 40 cents. Yes that’s what Americans get paid for what Australians think is $1 worth of work. I am not some type of Palmer / Rinehart creation, I am just a realist who likes to keep busy working.

  
  

  
  

  Commenter
  bg
  
  Location

  
  

  Date and time
  
  June 06, 2013, 12:15PM

  
  
  • 
    

    
    

    @bg
    No, why stop at US$0.40, to be really competative drop it to US$0.01. Plant plenty of Banana, we can export them to other countries around the world. As Paul Keating ( He floated our dollars) used to say, we will become a Banana Repblic. You can then work you butts off to buy A$100,000 flat screen TV. You work for GR?

    
    

    
    

    Commenter
    FromTheEast
    
    Location

    
    

    Date and time
    
    June 06, 2013, 1:11PM
    

  
  
  • 
    

    
    

    Huge exaggeration there out dollar should be closer to 65 cents or 70 cents based on the long term averages.
    A dollar of 40 cents would mean you are the equivalent of minimum wage to every Australian on 80k

    
    

    
    

    Commenter
    trigga
    
    Location

    
    

    Date and time
    
    June 06, 2013, 1:33PM
    

  
  
  • 
    

    
    

    You should see the rates people work for in the US! $6 or $10 an hour is fairly normal I think, that’s what my comment is based on. I am not even talking about rates in Thailand for example, I had a taxi drive me around for several hours, maybe four hours, cost 30 AUD.

    
    

    
    

    Commenter
    bg
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:36PM
    

  
  
  • 
    

    
    

    If many of our businesses have been scraping by at USD 1.05 these last couple of years, then I imagine that 0.90 to 0.80 will be very welcome.

    
    

    
    

    Commenter
    Jimmy Blacksmith
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:50PM
    

  
  


• 
  

  
  

  ‘Exodus from Equities’

  
  

  Seriously? Market down 32 points, and it’s an exodus? Come on. . .

  
  

  
  

  Commenter
  C’est La Vie
  
  Location

  
  

  Date and time
  
  June 06, 2013, 12:14PM

  
  
  • 
    

    
    

    Wasn’t the market around the 4500/4600 market in January? So it’ still 5% up for the year or thereabouts? Look, people, just sell in May and go away . . . all the rest of pontificating is just so much hot air . . .

    
    

    
    

    Commenter
    Susan_66
    
    Location
    
    Melbourne
    
    Date and time
    
    June 06, 2013, 1:47PM
    

  
  


• 
  

  
  

  Mitch of the act is spot on austerity didn’t work in the 30′s and it won’t work now bring on the new ‘new deal’ that is why Europe is a basket case and the US is doing better.

  
  

  Come September we will move into the Europe camp. I know where I am going to invest my money goodbye Tony and Hello Uncle Sam!

  
  

  
  

  Commenter
  anonymous_
  
  Location
  
  sydney
  
  Date and time
  
  June 06, 2013, 12:13PM

  
  
  • 
    

    
    

    In case you live under a rock, Australia is a far better place to be considering relative debt levels. You will regret it when America eventually defaults (which it will) and they take your money as in Cyprus to bailout greedy bankers. Printing money is never the answer, particularly at the rate America has. Their market is propped up with printed money. . .and that’s all

    
    

    
    

    Commenter
    C’est La Vie
    
    Location

    
    

    Date and time
    
    June 06, 2013, 12:44PM
    

  
  
  • 
    

    
    

    It was the answer in the 30′s and will be the answer today either the easy way like the US or the hard way like Europe ie continue to contract social unrest and then stimulate once they are woken up.

    
    

    
    

    Commenter
    anonymous_
    
    Location
    
    The real world
    
    Date and time
    
    June 06, 2013, 1:43PM
    

  
  
  • 
    

    
    

    @ C’est la vie

    
    

    Keep waiting for that American default – just like traders have been waiting quarter of a century for a Japanese one.

    
    

    
    

    Commenter
    AK
    
    Location

    
    

    Date and time
    
    June 06, 2013, 2:31PM
    

  
  
  • 
    

    
    

    C’est La Vie
    Tell how and why the US government will allow the US to default?
    Firstly, it will be a long time for that political party to ever be in government again. The voters won’t forget
    Secondly, the US has immense capacity to raise taxes, it’s jus tthat ideologically they won’t at the moment. The yare one of the lowest taxing developed nations.
    Thirdly, China won’t let it happen given the amount of money it has in bonds there
    Forthly, the US would then look like Russia to the rest of the wrold.
    There is simply no way the US will default in the short or medium term.
    The US has been in deficit since 1921, has this bee na problem before? The deficit percentage is not that bad and the Senate at least admits it has to get its act into gear one way or another

    
    

    
    

    Commenter
    Econorat
    
    Location
    
    Sydney
    
    Date and time
    
    June 06, 2013, 2:32PM
    

  
  


• 
  
  • 
    

    
    

    As we speak, the US Government is in $16 855 585 400 000 debt – it goes up about 100k every 4 seconds roughly. Currently, the Government is unable to keep up with the interest repayments on the debt – it borrows to repay the interest. At the moment the US Government is doing all it can to keep the party going, but it will end at some stage. They have simply been living beyond their means for too long. If the US Government cut it’s entire mandatory spending budget, it would still not be able to finance these loans. It may not necessarily end in default. . .but when it does end, it won’t be pretty. Just stating facts here guys

    
    

    
    

    Commenter
    C’est La Vie
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:36PM
    

  
  


• 
  

  
  

  4800 is the bottom of the medium term (13 months) upward channel so the market should hold here. Losses have been driven by offshore selling due to AUDUSD drop. Once that stabilises (90-92c?) then they will return for AAA rated bank yields of 6% (up to 9% for us Aussies).

  
  

  It’s ridiculous that the RBA didn’t cut rates but not unexpected due to their foolhardy “low inflation at ALL costs” mentality. Low ijnflation is an importnat goal but increasing aggregate demand is the prize. The US started QE3 to stop deflation and the EURO is struggling yet our RBA is worried inflation will spike? Unbelievable!!

  
  

  
  

  Commenter
  Life Is Good
  
  Location
  
  The Real World
  
  Date and time
  
  June 06, 2013, 12:09PM

  
  
  • 
    

    
    

    Hello Mr. Bull. How you doing today?

    
    

    
    

    Commenter
    guddoo
    
    Location
    
    CBD
    
    Date and time
    
    June 06, 2013, 2:59PM
    

  
  


• 
  

  
  

  There are new issues to consider:
  1) The virtual economy outshines the real traditional economy many times over.
  2) Speculation is no longer confined to private local equities and debt instruments, but extends to countries and whole economic zones.
  3) The present phenomenon is the speed with which currencies move. It is not the actual exchange rates, it is the rate of change which makes it difficult to do real business.
  Any of these factors ultimately dents confidence, and combined with high sovereign debt, results in serious irreversible damage to the global economy, and therefore pessimism will prevail.

  
  

  
  

  Commenter
  paul
  
  Location

  
  

  Date and time
  
  June 06, 2013, 12:07PM

  
  


• 
  

  
  

  To Sir Arthur “eliminating the creditors”. That’s what Hitler did. Pre-WW2 Germany had borrowed so much to finance its autobahns and armaments building programs that no-one would lend to it anymore. Immediately behind Hitler’s troops entering each country invaded were “gentlemen” from the Reichsbank to seize all gold and foreign currency and shut down their banking systems and send the bankers off to the camps. No creditors = no debts. Problem solved.

  
  

  
  

  Commenter
  mitch of ACT
  
  Location

  
  

  Date and time
  
  June 06, 2013, 11:59AM

  
  
  • 
    

    
    

    Again using a WW11 metaphor, seems just as applicable today as in 1940.

    
    

    ‘Never in the field of human greed (sic) is so much owed by so many to so few’

    
    

    Apologies to WC.

    
    

    
    

    Commenter
    Bill
    
    Location
    
    Parramatta
    
    Date and time
    
    June 06, 2013, 1:12PM
    

  
  


• 
  

  
  

  No need to panic, there’s plenty of bush tucker for everyone. Grasshoppers in particular are going to be big.
  Chicken Littles everywhere, so I’ll survive on roast chook and fresh vegies, myself.

  
  

  
  

  Commenter
  greg
  
  Location

  
  

  Date and time
  
  June 06, 2013, 11:50AM

  
  
  • 
    

    
    

    Big grasshoppers? What, big like cows? Huh? GM ones perhaps! Wonder if they can play footy?

    
    

    
    

    Commenter
    Gordon Gekko
    
    Location

    
    

    Date and time
    
    June 06, 2013, 12:47PM
    

  
  


• 
  

  
  

  “Print More Money”

  
  

  LOL

  
  

  
  

  Commenter
  Doug
  
  Location
  
  Sydney CBD
  
  Date and time
  
  June 06, 2013, 11:44AM

  
  


• 
  

  
  

  What is the problem?

  
  

  When the dollar is high, the many shout it is to high it will hurt xyz.

  
  

  When the dollar is lower. the other many shouts it is too low, it will hurt abc.

  
  

  Since the value of the $A compared to the $US is determined by the currency market what are the alternatives if this deemed unsatisfactory.

  
  

  The government through the RBA determines the exchange rate . That was done in the past over 30 years ago . over time it also was deemed no longer satisfactory.

  
  

  There you are, so far two systems both unsatisfactory.

  
  

  There is another way to do it, the Chinese way. a combination of the two system above. The market comes up with a rate and if the government deems it unfavourable to the Chinese economy it intervenes through the Chinese central bank and moves the rate to a level it deems favourable to the economy.

  
  

  It works for the Chinese but the US and others, in particular in the west, don’t like it. The Chinese do and being a sovereign State they make their decision based on self interest.

  
  

  The AUS government through the RBA could have put a cap on the $A when it went too high. that would have been acting like a sovereign State and not like vassal to the US.

  
  

  @ Roguetrader

  
  

  Past recession? I have lived through a few.

  
  

  They came and went. A capitalist economy reality.

  
  

  It is simply that the economy is not in equilibrium.

  
  

  It is man made like the present one after the GFC. Some take two years or three. The present one seems to take longer because the stuff up was greater.

  
  

  Nothing in life just goes up. sometimes things go down.

  
  

  life is a roller coaster ride.

  
  

  
  

  Commenter
  flower power
  
  Location
  
  sydney
  
  Date and time
  
  June 06, 2013, 11:43AM

  
  
  • 
    

    
    

    Blame Ross Garnaut and the Labour govt for floating the dollar. Idealistic simpletons living in cloud cuckoo land. An A$ pegged at $0.75 would have seen us with a corporation tax windfall that would also saved our tourism and manufacturing

    
    

    
    

    Commenter
    Advocate for Smart Policy
    
    Location

    
    

    Date and time
    
    June 06, 2013, 12:26PM
    

  
  
  • 
    

    
    

    to make a point Mr Flower power I said ‘Depression’ not Recession .. by my observations no one is eating cabbage soup and selling all their possession’s in the street .. the pubs are still full and the Roads still jammed with 4×4′s full of gasoline .. unemployment is not at catastrophic levels in Australia or the US or most of Asia so to say the world is in a Depression is somewhat sensationalist! .. you really believe the GFC was a Depression! .. wake up please!

    
    

    
    

    Commenter
    Roguetrader
    
    Location

    
    

    Date and time
    
    June 06, 2013, 12:35PM
    

  
  


• 
  

  
  

  Ed. Any news on why the Nikkeii is in positive territory. Is it possible that Abe’s arrow actually found a mark? My reading was that he put forward long term fixes.

  
  

  
  

  Commenter
  Bearly Gruntled
  
  Location
  
  the 88 cent dollar ….. sooner
  
  Date and time
  
  June 06, 2013, 11:37AM

  
  


• 
  

  
  

  Its this type of hysterical henny penny comment that flags its time to buy equities, as Warren Buffet says: ” be greedy when their fearful, and fearful when their greedy”
  We are loading up on banks, what a dividend!!!!!

  
  

  
  

  Commenter
  Mulgoan
  
  Location
  
  Mulgoa
  
  Date and time
  
  June 06, 2013, 11:32AM

  
  
  • 
    

    
    

    Mid term you may get hurt…

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 12:17PM
    

  
  


• 
  

  
  

  I love logging on every morning to read the business news. Gives me something to worry about

  
  

  
  

  Commenter
  Sammie
  
  Location
  
  Melbourne
  
  Date and time
  
  June 06, 2013, 11:28AM

  
  


• 
  

  
  

  Its your day lib

  
  

  
  

  Commenter
  guddoo
  
  Location
  
  CBD
  
  Date and time
  
  June 06, 2013, 11:17AM

  
  
  • 
    

    
    

    Actually market started much lower than what it is now, hence shorting would not have worked. Perhaps a CFD on Buy at the open might have been a good thing

    
    

    
    

    Commenter
    C’est La Vie
    
    Location

    
    

    Date and time
    
    June 06, 2013, 12:19PM
    

  
  
  • 
    

    
    

    Hey gud – no trades today. The market moved too much last night when I was asleep and going long or short after open today was a guess for anyone. A short at this 4810 range might see a drop down at the close for a handy 15 points…

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 1:35PM
    

  
  
  • 
    

    
    

    Just went short 4808 – I see some downside on the ASX leading in to close and a further 15 point drop after close. If I can hold this with a stop until the USofA comes on trading tonight… might be a good solid short if they take another dive through the night!. Let us hope there is not a late afternoon rally by the wounded bulls!!!

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 1:41PM
    

  
  
  • 
    

    
    

    “Lets hope that there is not a late rally”

    
    

    That sounds like gambling.

    
    

    
    

    Commenter
    tango8
    
    Location

    
    

    Date and time
    
    June 06, 2013, 2:49PM
    

  
  


• 
  

  
  

  Thoughts on AMM? Great track record of earnings growth but will this year finally buck the trend? I would think that the fact that they sell a lot of imported goods that the falling dollar and thus increased sale price of their goods would sort of counter-act perhaps lower sales growth? Although perhaps the director offloading stock at $2 was a sign of things to come. Still trading at a premium.

  
  

  
  

  Commenter
  willo
  
  Location
  
  syd
  
  Date and time
  
  June 06, 2013, 11:12AM

  
  


• 
  

  
  

  Why is it the downturn such a surprise?

  
  

  Our politicians and the media are happy to extol the virtues of the economy as it suits their needs but the underlying reality is plain to see. Since the GFC private debt has simply been made public. It never went away. Any recovery is artificial.

  
  

  What I really wonder about is why the media, and the public who place their trust in the journalistic integrity of the media, are so quick to believe recovery stories when the facts say otherwise.

  
  

  How have conditions really improved since the market low of 3,300 odd? If anything haven’t they only worsened?

  
  

  
  

  Commenter
  Andy
  
  Location
  
  regional NSW
  
  Date and time
  
  June 06, 2013, 11:09AM

  
  


• 
  

  
  

  Easiest money to be ever made in short short short to AORD 3000 as the global financial apocalpyse has arrived in 2013!!

  
  

  
  

  Commenter
  assad
  
  Location

  
  

  Date and time
  
  June 06, 2013, 11:05AM

  
  
  • 
    

    
    

    Why 3000?

    
    

    
    

    Commenter
    kepler-22b
    
    Location

    
    

    Date and time
    
    June 06, 2013, 12:02PM
    

  
  
  • 
    

    
    

    Shorters paradise to AORD 3000 mirrors the previous low of 3090 in March 2009 during GFC1. It’s only 1700 more points to plunge as GFC2 beckons!

    
    

    
    

    Commenter
    assad
    
    Location

    
    

    Date and time
    
    June 06, 2013, 1:32PM
    

  
  
  • 
    

    
    

    3000 is feasible given our mining boom is shot. Last time we still had money in the bank for a raining day. Now we have a combined Fed/State Gov debt of $500B+ and a Private Sector debt of $2T+. This time – a shock to the system will spell the big busts we have been waiting for.

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 2:47PM
    

  
  


• 
  

  
  

  If we cant find support today with the US finally having corrected back to key levels then we are STUFFED! It must be a long day! I say this but at the moment it doesnt look good – wait and see past 11:30

  
  

  
  

  Commenter
  Dave
  
  Location
  
  melbourne
  
  Date and time
  
  June 06, 2013, 11:04AM

  
  


• 
  

  
  

  Market rose at 10:11am. Typical.

  
  

  
  

  Commenter
  Noddy
  
  Location

  
  

  Date and time
  
  June 06, 2013, 11:01AM

  
  


• 
  

  
  

  A 1-2% fall in a major stock index over a trading day does not a disaster make, particularly given the historic run the various indexes have had this financial year. Hysterics should only kick in at 5%+.

  
  

  
  

  Commenter
  Relentless
  
  Location

  
  

  Date and time
  
  June 06, 2013, 11:00AM

  
  


• 
  
  • 
    

    
    

    But it’s down close to 10 % over the past few weeks.

    
    

    
    

    Commenter
    The Oracle
    
    Location
    
    Oberon
    
    Date and time
    
    June 06, 2013, 11:53AM
    

  
  
  • 
    

    
    

    That’s a relatively orderly correction. If you think 10% over a few weeks is panic stations, you must have missed some of the more colourful moments of the last few decades.

    
    

    
    

    Commenter
    Relentless
    
    Location

    
    

    Date and time
    
    June 06, 2013, 1:29PM
    

  
  


• 
  

  
  

  The funny idea is floating around that people are waiting for election to be over then everything will be fine. Nothing is going to change .We will not have a Houdini with a magic wand to fix everthing. There will be more job cuts and that will further add to the unemployment New govt. will have a luxury of blaming the previous govt. for the mess and that will take time to fix. Visa rort (457) is a big stuff up which is making difficult for locals to get the jobs. It was supposed to fill skill gap but companies have been using it to kick out locals and replace it with slaves. This visa regime was created to reduce the wages. Australia needs to created industry where proper jobs can be created. This cannot be done by housing market where prices are being kept to obscene levels where people from outside can only participate. How long we can survive by selling assets to foreigners. We are just pushing the red line a bit further.

  
  

  
  

  Commenter
  xyz
  
  Location

  
  

  Date and time
  
  June 06, 2013, 11:00AM

  
  
  • 
    

    
    

    This is simple stuff – we have to sacrifice one part of our standard of living (eg I have to pay more for a car) for another part called worthwhile jobs that pay a decent wage to the proles. As we cannot hope to compete with serfdoms like china, we should put up trade barriers – particularly if they won’t float their currency to allow the market to equalise costs.

    
    

    
    

    Commenter
    kepler-22b
    
    Location

    
    

    Date and time
    
    June 06, 2013, 12:04PM
    

  
  


• 
  

  
  

  We’ll all be roond, roond I say. Just to correct some things. World markets are at near record highs. Australia’s private debt while still high is decreasing. That is the main reason there is so little cash in circulation (and the banks are virtually – for them at least – giving cash away). Nobody knows what a satisfactory level of debt is, because it has been increasing for 75 years. Debt is the entropy of the financial world

  
  

  
  

  Commenter
  colin
  
  Location
  
  melbourne
  
  Date and time
  
  June 06, 2013, 10:44AM

  
  
  • 
    

    
    

    But you ignore our ever decreasing terms of trade, future decent CPI matched pay rises which are all but non existent now for the majority for the forseeable future, a desperate State and Federal Govt and private sector that are gouging what little money people have in their pockets with increasing taxes and price increases. ??

    
    

    How can you ignore these in your sarcastic “we’ll all be roond” analogy ?

    
    

    
    

    Commenter
    The Oracle
    
    Location
    
    Oberon
    
    Date and time
    
    June 06, 2013, 11:18AM
    

  
  
  • 
    

    
    

    Mate you obviously haven’t applied for finance lately. The banks are making it harder to obtain cash than ever before.

    
    

    
    

    Commenter
    Andy
    
    Location
    
    regional NSW
    
    Date and time
    
    June 06, 2013, 11:32AM
    

  
  


• 
  

  
  

  Calling all bears ..Calling all bears… Great tourist opportunity to match the Running of the Bulls in Spain. With our rapidly devalueing dollar however maybe other attractions as well are needed. I’d say that many of the recenr yield hunters are bearing the brunt of the bearish sentiment, maybe hoping for a dead cat or two to bloominwell bounce.

  
  

  
  

  Commenter
  Bearly Gruntled
  
  Location
  
  the 88 cent dollar ….. soon
  
  Date and time
  
  June 06, 2013, 10:43AM

  
  
  • 
    

    
    

    Our rapidly devaluing dollar? Just four years ago – in 2009, during the GFC – it dropped 10% in one night (from about 67 cents to 61 or maybe even 60 cents). Strikes me our dollar is still way overvalued . . . but then, we do have about the highest interest rates in the world . . .

    
    

    
    

    Commenter
    Susan_66
    
    Location
    
    Melbourne
    
    Date and time
    
    June 06, 2013, 1:44PM
    

  
  


• 
  

  
  

  Oh my. Imagine being a real stock holder – carnage is coming.

  
  

  
  

  Commenter
  Liberator
  
  Location
  
  SEQLD
  
  Date and time
  
  June 06, 2013, 10:28AM

  
  


• 
  

  
  

  There’s a flog called “good to be thick” who thinks house prices are set for another boom.

  
  

  ROFLMAO!

  
  

  
  

  Commenter
  Allan
  
  Location
  
  Prahran
  
  Date and time
  
  June 06, 2013, 10:22AM

  
  
  • 
    

    
    

    For which head is it good to be thick?

    
    

    
    

    Commenter
    Gordon Gekko
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:48AM
    

  
  
  • 
    

    
    

    I wish you luck in your crusade to reduce house prices. A sad observation, for you, is that if the bear stampede keeps on going then a lot of their money will go, eventually … into real estate. If you add to this the imminent increases in FHG , give it a year or two, then the stampede may be into R/E. One big retarding factor,though will be the extent that Jumpin Joe plans to crash our economy. He sounds like he has no ideas other than to apply a geek, woops GREEK solution to an economy which is far from doomed. However, I am counting on it being a buying opportunity. The final outcome will be a balance of these, (and other), competing forces.

    
    

    
    

    Commenter
    Bearly Gruntled
    
    Location
    
    the 88 cent dollar ….. sooner
    
    Date and time
    
    June 06, 2013, 11:00AM
    

  
  
  • 
    

    
    

    Bear – I doubt that occurring this time round. If stock markets hit the non-insto investors a 2nd time hard (which we are dredging in to now) then there will not be PHYSICAL CASH left to actually prop the housing market up via investment. It will stagnate AT BEST or continue the decline. I expect the 2013 year to see net housing values drop 6% for the year (as suggested in Jan).

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 11:29AM
    

  
  
  • 
    

    
    

    And I wish you luck in your crusade to keep the bubble inflated. Unfortunately for you all bubbles burst.

    
    

    Here’s a picture of the current bubble:

    
    

    http://static3.businessinsider.com/image/4bfff45c7f8b9ac749710200/chart-of-the-day-long-term-real-house-price-indices-1880-2010.gif

    
    

    
    

    Commenter
    Allan
    
    Location
    
    Prahran
    
    Date and time
    
    June 06, 2013, 11:41AM
    

  
  


• 
  
  • 
    

    
    

    Allan of Prahran, your graph is old, US prices are already up again. What you seem to be missing is, it’s money which is worthless, not assets!!!
    Are you a realestate agent with some kind of contrarian theory.

    
    

    
    

    Commenter
    bg
    
    Location

    
    

    Date and time
    
    June 06, 2013, 12:19PM
    

  
  
  • 
    

    
    

    US prices are still 25% below the peak. Nice try at spin though.

    
    

    
    

    Commenter
    Allan
    
    Location
    
    Prahran
    
    Date and time
    
    June 06, 2013, 12:43PM
    

  
  
  • 
    

    
    

    Usefull graph. It looks similar to a lot of other current graphs, eg recent share prices, CO2 growth etc.
    i am expecting confusion in the R/E market for quite some time. Hence prices will fall. Thats why state governments will be throwing FHG to all and sundry for who knows how long. Magic puddin Joe is signalling his intent to milk this downturn for as long as possible, to me, purely for political reasons. IE to win many future elections. This time there are a lot of crosswinds. But what does an investor do when they lose confidence in the market? Where do they park their dosh? Check the graphs of R/E booms. From memory there is a time lag of about 2 years after a market downturn before investors pile in.

    
    

    
    

    Commenter
    Bearly Gruntled
    
    Location
    
    the 88 cent dollar ….. soon
    
    Date and time
    
    June 06, 2013, 1:02PM
    

  
  
  • 
    

    
    

    Allan of Prahran, I think you are the spin doctor, directing people to a graph which is several years out of date. You should explain why the price of a finite resource should go down while demand is always increasing.

    
    

    
    

    Commenter
    bg
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:40PM
    

  
  


• 
  

  
  

  Today we will finish up. I understand the sentiment of Les’ comment however he is missing the fundamental point. Central banks have pumped so much money into the capital systems that the money simply has to find a home. Its inflation. Frankly I’m surprised the markets aren’t at least 50% higher.

  
  

  
  

  Commenter
  Simon
  
  Location
  
  Box Hill
  
  Date and time
  
  June 06, 2013, 10:20AM

  
  


• 
  

  
  

  Ding dong 4800.

  
  

  Short AUD and banks looks pretty good now huh?

  
  

  Oh and not to forget airlines and retail.

  
  

  Oh and resources.

  
  

  Enjoy!

  
  

  
  

  Commenter
  Allan
  
  Location
  
  Prahran
  
  Date and time
  
  June 06, 2013, 10:20AM

  
  
  • 
    

    
    

    I wake up smiling with this news lately. I have actually found day shorts the last 3 days been a little harder to predict. It is the night time short – BIG downs and we love it!

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 11:46AM
    

  
  
  • 
    

    
    

    If only we had a Capital City Housing index to short!!! I would be all over it.

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 1:51PM
    

  
  


• 
  

  
  

  Casino is based on Ben’s printing. Addicts want unlimited Cocaine to keep it in green, otherwise it is in red. Forget about any news, any data, any results.

  
  

  
  

  Commenter
  RD
  
  Location

  
  

  Date and time
  
  June 06, 2013, 10:15AM

  
  


• 
  

  
  

  D-Day today. Lest we forget. Remember it? Normandy? No, not the mining company De Crespigny had, the battle across the English Channel. Same thing happening right now with Newcrest. NCM. Below 14 bucks. Watchout. It’s targetted to 12 bucks say UBS. See: http://www.theaustralian.com.au/business/mining-energy/a-hit-for-gold-leaves-newcrest-sporting-a-20bn-shiner/story-e6frg9df-1226658125978

  
  

  
  

  Commenter
  Gordon Gekko
  
  Location

  
  

  Date and time
  
  June 06, 2013, 10:12AM

  
  


• 
  

  
  

  This is how I presently see the future. Australia have no competitive advantages on the world market. With the Chinese economy continue to weaken, we will see continuous lower prices paid for iron ore and coal. This will contribute to Australia getting closer to a recession. The dollar will take care of itself and will fall in direct correlation to the price of iron ore. Even with a low dollar say at $0.7, Australian companies will find themselves uncompetitive on the world market. There is a clear lack of strategic leadership, innovation and international awareness. There is a massive workload ahead of us to get Australia back in shape.

  
  

  
  

  Commenter
  Viking
  
  Location
  
  Sydney
  
  Date and time
  
  June 06, 2013, 10:09AM

  
  
  • 
    

    
    

    She’ll be right mate! Don’t just sit there, do nothing.

    
    

    
    

    Commenter
    cobber
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:42AM
    

  
  
  • 
    

    
    

    I have just come back from Europe and have to say you are spot on with your assessment. Australia pretty much doesn’t feature in any discussions or the media unless it relates to some freak accident with a dangerous animal.

    
    

    While I initially thought the NBN was going be a giant waste of money I now believe it is going to be an important corner stone in securing our future beyond resources.

    
    

    Policies need to be put in place to foster innovation for the next 10 years and beyond.

    
    

    At the moment though I don’t have that neither of the major parties really has a clue.

    
    

    
    

    Commenter
    steve
    
    Location
    
    sydney
    
    Date and time
    
    June 06, 2013, 10:47AM
    

  
  
  • 
    

    
    

    Perhaps we should get on our boats and start sailing to China. Will they accept Australian economic migrants there? You be our leader Viking, will be just like in ancient times Thor !

    
    

    
    

    Commenter
    HappyBabyBoomer
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:49AM
    

  
  
  • 
    

    
    

    Belt the hourly rate to a buck an hour, and watch world trade come to Oz. Even Ford will be back in a flash. It’ll happen as we move into recession, if not depression.

    
    

    
    

    Commenter
    Gordon Gekko
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:51AM
    

  
  


• 
  

  
  

  Hello Helicopter Ben
  Please keep printing and pumping to keep the Casino in green otherwise you will see red only

  
  

  
  

  Commenter
  RD
  
  Location

  
  

  Date and time
  
  June 06, 2013, 9:59AM

  
  


• 
  

  
  

  A great article from Detlev Schlichter:
  Are the Central Bankers Losing Control???

  
  

  http://detlevschlichter.com/2013/06/are-central-bankers-losing-control/

  
  

  Any guesses on highs/lows of Nikkei today?

  
  

  
  

  Commenter
  Bye Bye Fiat Money
  
  Location

  
  

  Date and time
  
  June 06, 2013, 9:58AM

  
  
  • 
    

    
    

    all these articles assume with bias the doomsday scenario of Hyperinflation and a currency collapse .. the same old story continually pedaled and put forward by GOLD bulls and stock market bears.. as i suggested yesterday Many gold bulls have been waiting for the inflation spike that has not come. It has not come because prices throughout the global economy are already inflated by a record mountain of debt, and capital is generally so mal-invested that it can’t earn a decent cash-flow return, a factor behind private cash hoarding. So with all the increase in the Fed’s balance sheet, money velocity has contracted, leaving little inflation. ie. The money is not really moving into productive goods and services, but simply into speculation in asset markets to try to make something better than zero percent.

    
    

    Noone really knows which way the world will go, but the fever needs to come out of financial markets. Quite possibly we could see a big deflation in asset prices, and gold will contune to fall also. I am not a strong believer that gold will protect against a large fiat money contraction – in fact that makes fiat money more valuable due to increased scarcity as everybody tries to reduce leverage and get their hands on cash.

    
    

    
    

    Commenter
    Roguetrader
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:17AM
    

  
  
  • 
    

    
    

    Rogue – you have not read his book. Hyperinflation is not the only end-game for a paper-money collapse, but good try.

    
    

    
    

    Commenter
    Bye Bye Fiat Money
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:56AM
    

  
  
  • 
    

    
    

    agree entirely that Hyperinflation is not the only end game ! .. another possible end-game to all the ever-accelerating stimulus programs, and given enough time might be one where the private market develops alternative currencies that could gradually phase out the fiat (nation-based) system. But the whole doomsday scenario of people wheeling barrows of cash around to light fires is far fetched and just complete non-sense!

    
    

    
    

    Commenter
    Roguetrader
    
    Location

    
    

    Date and time
    
    June 06, 2013, 11:56AM
    

  
  


• 
  

  
  

  Looks like we will be in for a bumpy ride today. Hold on tight, and keep your arms inside the cage.

  
  

  
  

  Commenter
  Peter
  
  Location
  
  Sydney
  
  Date and time
  
  June 06, 2013, 9:55AM

  
  


• 
  

  
  

  Fairfax paywall – it had to happen sometime.

  
  

  I can only hope that the Markets Live blog is not included in the 30 free articles. It is the single best way of linking to other Fairfax articles. Context is given.

  
  

  Understandably, the Business section should be a higher earner than the general news section.

  
  

  However, including the Markets Live blog itself in the paywall will decrease the traffic through the rest of the Business section.

  
  

  
  

  Commenter
  igroki
  
  Location
  
  @igroki
  
  Date and time
  
  June 06, 2013, 9:51AM

  
  


• 
  

  
  

  You know it’s going to be bad when Umbrella Man makes his appearance.

  
  

  Hang onto your hats ladies and gentlemen.

  
  

  
  

  Commenter
  The Oracle
  
  Location
  
  Oberon
  
  Date and time
  
  June 06, 2013, 9:51AM

  
  


• 
  

  
  

  Having been in the market for 30 odd years, I can say that very few of the people in this ‘forum’ know what a bear market looks like. The only result that can happen when debt is at such extreme levels is a global depression. Nothing else can occur.

  
  

  If the idea that pumping liquidity into markets did anything worthwhile then markets would be at record levels many times over. Yet they are not and all that is happening is more debt is being created…

  
  

  Never in the history of the world has excess debt led to growth…it always ends with an economic downturn and given how big the debt level is – the downturn is going to be huge.

  
  

  Good luck to all, even though experience tells me the majority will hold onto their shares until they are broke…

  
  

  
  

  Commenter
  Les
  
  Location

  
  

  Date and time
  
  June 06, 2013, 9:35AM

  
  
  • 
    

    
    

    Long Cash/BEAR/Au/Ag?

    
    

    I wonder whether it’ll be a world-wide crack-up boom???
    P.S. Turbo Timmeh says “debt’s don’t matter”

    
    

    
    

    Commenter
    Bye Bye Fiat Money
    
    Location

    
    

    Date and time
    
    June 06, 2013, 9:49AM
    

  
  
  • 
    

    
    

    Brilliant comment, Les. The herd can continue to buy the dips and keep the rose tinted spectacles on, but when it hits, those who have their hands in front of the steamroller picking up coins could be feeling very sorry.

    
    

    
    

    Commenter
    Coin Laundry
    
    Location

    
    

    Date and time
    
    June 06, 2013, 9:55AM
    

  
  
  • 
    

    
    

    Government debt is unlike any other kind of debt. Currency can be easily devalued, interest rates can be artificially lowered.

    
    

    Though I agree with the general sentiment of your post.

    
    

    
    

    Commenter
    igroki
    
    Location
    
    @igroki
    
    Date and time
    
    June 06, 2013, 9:55AM
    

  
  
  • 
    

    
    

    Experience cannot be fast tracked and is so undervalued and ignored by those who think they have it – but don’t. Good call Les, so many WILL go broke and still be wondering why.

    
    

    
    

    Commenter
    fearless
    
    Location

    
    

    Date and time
    
    June 06, 2013, 9:58AM
    

  
  
  • 
    

    
    

    Sobering thoughts Les. I agree. It will happen in housing also, negative equity will be quite normal. Who knows where this will all end. The disgrace is there is no one in authority doing anything but perpetuating the ridiculous status quo. Add that we continue to sell producing assets, our wages a multiple of our overseas competitors, we have the highest personal debt on the planet, we continue populating a broke country; we’re in a lot of trouble.

    
    

    
    

    Commenter
    JohnB
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:06AM
    

  
  
  • 
    

    
    

    One can still make lots in a bear market if lucky enough to pick the entry and exit points like Jesse Livermore did in the early 1930s …..

    
    

    
    

    Commenter
    ab
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:09AM
    

  
  


• 
  
  • 
    

    
    

    Les…….respectfully, that is THE VERY IDEA. They are purposely trying to crash the Global Economic System. Recall how the New World Order does things Les….they creat a problem, then let it play out, then offer their “solution”. For us Sheeple, it will be the utter destruction of ALL currencies, and the NWO will then bring in the much cherished Global One World Currency. Only one nation, China, stands in their way, and that is why they are importing upwards of 220 tons of gold every month. They will look to offer a Reserve Currency backed by gold. The US has only a Reserve Currency backed by MEGA DEBT and world encirclement of military bases. May the Chinese be triumphant.

    
    

    
    

    Commenter
    The Seer
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:10AM
    

  
  
  • 
    

    
    

    Hi Les can you remind me in the last 30 years which global depression you experienced since I personally don’t recall one?

    
    

    
    

    Commenter
    Roguetrader
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:20AM
    

  
  
  • 
    

    
    

    Well said Les, I can only say……..

    
    

    BUY PHYSICAL GOLD and SILVER!

    
    

    LOTS!

    
    

    
    

    Commenter
    Old Codger
    
    Location
    
    Tarneit, Vic
    
    Date and time
    
    June 06, 2013, 10:23AM
    

  
  
  • 
    

    
    

    How about every country print enough money to pay off all their debts on June 30 and everyone start again. That is at least away to rid the world of debt and stop gambling on stock markets with my money.

    
    

    
    

    Commenter
    DHT
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:37AM
    

  
  
  • 
    

    
    

    This post motivated by self interest and greed perchance ?

    
    

    
    

    Commenter
    HappyBabyBoomer
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:41AM
    

  
  
  • 
    

    
    

    The Seer, you are right! The only food will be baked beans, the supply of which will be controlled by aliens!

    
    

    
    

    Commenter
    james
    
    Location

    
    

    Date and time
    
    June 06, 2013, 10:50AM
    

  
  
  • 
    

    
    

    Didn’t work out so well for Livermore in the end. Taking your own life doesn’t seem ‘lucky’ to me.

    
    

    As for our new Chinese gold hoarding overlords, I shudder to think @ the way they would want to ‘rule’ the world.

    
    

    Shit sandwiches everywhere.

    
    

    
    

    Commenter
    Monkeyboy
    
    Location
    
    Hellbourne
    
    Date and time
    
    June 06, 2013, 10:52AM
    

  
  
  • 
    

    
    

    and their over priced euro car which is plummeting in value faster than world markets. but wait until they realise their $1.5 million inner city dog kennel which is mortgaged to the hilt is actually worth about $500K and still with the obligatory dog which costs $2K a year just to keep up appearances. The word dolt springs to mind. The world will be my little thrift shop. he he he. 3 yo large luxury ultra low km awd car – I will give you $15K – take it our go without food. the big one people are forgetting – watch for crime to spiral out of control USA style.

    
    

    
    

    Commenter
    smilingjack
    
    Location

    
    

    Date and time
    
    June 06, 2013, 11:02AM
    

  
  
  • 
    

    
    

    You are overlooking the effect that going into debt and printing money had on bringing the Great Depression to an end. Failure to spend by public and private sectors is what contributed to the severe depth and duration of the Depression in the first place. The process that the world is going through now is very similar and probably has as long to run as the Depression, ie 10 years. We are only halfway through. Debt is only a problem if the money is spent on keeping things running. If the debt is spent on capital works that create employment and increase the level of economic activity then the debt can be paid off from the increase in taxes and GDP. Otherwise taxes drop and expenses on welfare go up (unless you victimise the newly unemployed) and the hole is dug deeper and deeper as in Greece.

    
    

    
    

    Commenter
    mitch of ACT
    
    Location

    
    

    Date and time
    
    June 06, 2013, 11:13AM
    

  
  
  • 
    

    
    

    Well said Les.

    
    

    The current system is set for failure.

    
    

    There is only 3 possible outcomes for a debt problem: 1. repaying 2. defaulting 3. eliminating the creditors.

    
    

    Which one do you think is more likely?

    
    

    One thing is for sure, these trillions of debt (growing exponentially BTW) will never be repaid.

    
    

    
    

    Commenter
    Sir Arthur Conan the Barbarian
    
    Location

    
    

    Date and time
    
    June 06, 2013, 11:32AM
    

  
  
  • 
    

    
    

    I disagree Mitch, WW2 ended the great Depression. I am on the same page with Les.

    
    

    
    

    Commenter
    Linux
    
    Location

    
    

    Date and time
    
    June 06, 2013, 11:44AM
    

  
  
  • 
    

    
    

    I fail to see how I would go broke holding onto my shares seeing as I did not borrow money to buy them. I could lose capital but that doesn’t mean I go broke.

    
    

    
    

    Commenter
    C
    
    Location

    
    

    Date and time
    
    June 06, 2013, 11:55AM
    

  
  
  • 
    

    
    

    Sir Arthur Conan the BarbarianLocationDate and timeJune 06, 2013, 11:32AM

    
    

    My monies on default (see Niall Ferguson). What does it mean for China with $2-3 trillion US bonds?

    
    

    
    

    Commenter
    kepler-22b
    
    Location

    
    

    Date and time
    
    June 06, 2013, 12:09PM
    

  
  
  • 
    

    
    

    Correct. Consume now, pay later never turns out that well…especially since the public bailouts mean that those that pay are not those that enjoyed the profits.
    Until the economy rewards wealth makers over wealth takers we will continue to decline.

    
    

    
    

    Commenter
    Andy
    
    Location
    
    Melb
    
    Date and time
    
    June 06, 2013, 12:48PM
    

  
  
  • 
    

    
    

    Thnaks Les, sage words indeed. I have been trying to tell this to my ‘young’ financial advisor who berates me every month for staying out of the market. Look at the money you lost (didnt make he means), well I havent lost anything and have a few extra dollars in 5% interest.

    
    

    Cash is king mate cash is king

    
    

    
    

    Commenter
    Bill
    
    Location
    
    Parramatta
    
    Date and time
    
    June 06, 2013, 1:08PM
    

  
  


• 
  
  • 
    

    
    

    Serve it right for countries wanting to keep their currency value artificially low instead of to float it. They can hold to bundles and bundles of worthless printed papers of the debtors now.

    
    

    
    

    Commenter
    t ho
    
    Location

    
    

    Date and time
    
    June 06, 2013, 1:47PM
    

  
  
  • 
    

    
    

    @bill – 5% ? whoopy do. the market rose 30% in the past year and the sensible ones have taken profits. no-one gets rich earning 5% !

    
    

    
    

    Commenter
    C
    
    Location

    
    

    Date and time
    
    June 06, 2013, 1:50PM
    

  
  
  • 
    

    
    

    Les,
    What debt are you talking about, public or private.
    Without that bit of information it is impossible to know how to answer you (agree or disagree).
    There is a big difference between private and public debt obligations.

    
    

    
    

    Commenter
    Econorat
    
    Location
    
    Sydney
    
    Date and time
    
    June 06, 2013, 2:23PM
    

  
  
  • 
    

    
    

    Andy
    Consume now pay later is bad? How did you buy your car or your house?
    Why would governments borrowing at 1% and seeing returns on their infrastructure investment of 2-3% be bad?
    You get ahead that way, not fall behind

    
    

    
    

    Commenter
    Econorat
    
    Location
    
    Sydney
    
    Date and time
    
    June 06, 2013, 2:34PM
    

  
  
  • 
    

    
    

    mitch of ACT
    You are correct

    
    

    
    

    Commenter
    Econorat
    
    Location
    
    Sydney
    
    Date and time
    
    June 06, 2013, 2:38PM
    

  
  
  • 
    

    
    

    C – banks rose 30% and a few select other companies. The other 3 or 4 thousand listed companies got flogged in to the stone age. Unless people traded the index or bank heavy stocks… likely they are sitting on a 3 year net loss.

    
    

    
    

    Commenter
    Liberator
    
    Location
    
    SEQLD
    
    Date and time
    
    June 06, 2013, 3:02PM
    

  
  
  • 
    

    
    

    What you write has a ring of truth. The QE should have been injected into grand scale civil infrastructure in the States. This is the only form of “trickle down” theory that has any credibility. People have work and spending power and society benefits from infrastructure. Providing cheap credit to the financial sector simply inflates or sustains bubbles. Neo-liberal economics of Reaganite/Thatcherite mold has benefited the chosen few to the detriment of many.

    
    

    
    

    Commenter
    Mug Punter
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:08PM
    

  
  
  • 
    

    
    

    Agree – anyone with even a smidgen of knowledge of economic history knows that the world markets are setting themselves up for a very painful ‘correction’ (surely the understatement of this century so far).

    
    

    
    

    Commenter
    Homo Politicanus
    
    Location

    
    

    Date and time
    
    June 06, 2013, 3:28PM
    

  
  



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