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Markets Live: Shares reverse early losses

Australian shares have reversed early losses as top miners were bolstered by gains in the price of iron ore and the broader market attracted light demand.

4.51pm: That's all from us here at Markets Live, thank you for reading and commenting, we'll see you tomorrow from 9.30am.

Click here for a full wrap of today's session.

4.45pm: Billabong was one of the top gainers today, clawing back some lost ground. Let's look at the other top performers as well as the worst.

4.31pm: Here's a look at how blue chip stocks performed today:

  • BHP: +0.2%
  • Rio: +0.4%
  • ANZ: -0.9%
  • CBA: +0.4%
  • NAB: +0.4%
  • Westpac: flat
  • Fortescue: -2.4%
  • Woolworths: +0.5%
  • Wesfarmers: -0.1%
  • Telstra: +1%

4.16pm: Among the sectors, gold miners suffered, falling 2.5 per cent, while materials lost 0.4 per cent. Telecommunications added 1 per cent, health rose 0.6 per cent and financials were up 0.2 per cent.

4.12pm: The market has finished marginally higher. The benchmark S&P/ASX200 added 4.7 points, or 0.1 per cent, to finish at 4510.5, while the broader All Ords inched up 2.9 points to 4533.5.

3.49pm: Political uncertainty is to blame for big business’ failure to find a way to fund a cut to the corporate tax rate, ANZ chief executive Mike Smith says.

The federal government’s business tax working group has been unable to find a revenue-neutral way to fund a cut in the 30 per cent corporate tax rate.

Mr Smith said there were a lot of vested interests involved in the program to find a way to cut the corporate tax rate.

‘‘If you think about the election cycle and the phase that we are presently in, it is very difficult to see how you would get some sort of agreement,’’ he told reporters on Thursday.

3.39pm: Australian Pharmaceutical Industries (API) returned to profitability in fiscal 2012 as its Priceline chain defied the retail gloom to expand sales.

The strong performance at Priceline helped API post net profit of $30.3 million for the 12 months to August 31, a turnaround from a loss of $23.3 million in the prior corresponding period.

Revenue fell 6.1 per cent to $3.2 billion, API said, as the health, beauty and pharmacy products company absorbed drug maker Pfizer’s decision to distribute directly to pharmacists and changes to the federal government’s Pharmaceutical Benefits Scheme (PBS).

3.27pm: Australia gave the green light to GDF Suez's Bonaparte floating liquefied natural gas (LNG) project off the coast of northern Australia today, making it the second such facility to be approved in Australia.

France's GDF Suez and its partner, Australia-based Santos plan to make a final investment decision on the 2 million tonne per annum (mpta) development in 2014.

3.18pm: Standard & Poor's Rating Services today revised its outlook on Western Australia to negative from stable. The outlook revision reflected our expectation that WA may experience weakened budgetary performance as a result of lower mining royalties and the time-lag before Australia's framework of horizontal fiscal equalisation between the Australian states and territories adjusts to reflect WA's lower fiscal capacity and the downside risk to revenues.

2.56pm: Australia’s renewable energy target (RET) has driven $18.5 billion of investment in clean power and eroded wholesale energy prices since it was introduced a decade ago, a new report suggests.

The Clean Energy Council analysis released on Thursday finds wholesale prices are as much as $10 per megawatt hour lower as a result of the RET being in place since 2001.

The target is meant to ensure 20 per cent of Australia’s electricity comes from renewable sources by 2020.

It’s currently being reviewed by the Climate Change Authority amid speculation that softer demand and the popularity of rooftop solar panels means the 20 per cent target may be exceeded.

2.40pm: China's industrial sector is still not on a stable recovery track, particularly in export markets, the Ministry of Industry and Information Technology said today.

"The stabilisation trend of China's industrial sector is not yet solid and we are still facing many challenges and difficulties to realise stable growth," the Ministry said in a statement released ahead of a scheduled news conference.

China's industrial output in September grew 9.2 per cent, picking up from a rise of 8.9 per cent in August, and along with other economic data from exports to retail sales, signals that recovery is taking hold in the world's second-largest economy.

2.31pm: A New South Wales piggery has become the first in Australia to turn its manure into carbon credits, earning it as much as $150,000 a year.

Blantyre Farms, near Young in the state's south-east, spent almost $1 million on a biogas generator that captures methane from the manure, turns it into electricity and exports it to the national grid.

It has turned the farm's monthly power bill of $15,000 into a $5000 credit.

Click here for the full story.

2.22pm: With Australian stocks up, here's a look at how the rest of the region is performing:

  • Nikkei(Japan): +0.6%
  • Shanghai: +0.1%
  • Taiwan: flat
  • South Korea: flat
  • Singapore: +0.3%
  • New Zealand: -0.3

2.07pm: Ratings agency Standard & Poor's has revised its outlook for NSW and its Treasury to negative.

“In our view, there are increasing pressures on the New South Wales government to increase its investment in infrastructure,” said credit analyst Claire Curtin.

“These capital expenditure pressures, combined with our view of the state’s moderate budgetary performance, lead to our opinion that NSW’s budgetary flexibility may become increasingly challenged. The negative outlook reflects our view that there is a one-in-three chance of a downgrade in the coming 24 months, based on our view that NSW’s budgetary performance could weaken and might not provide NSW with the capacity to undertake its infrastructure program while managing to contain its debt burden.” 

1.27pm: Investors were watching the US Fed closely last night. Tonight it's data on durable goods orders for September. Tonight’s data is interesting because the August reading fell off a cliff.

Durable goods are things which last a long time, like cars and television. In August, durable goods orders fell 13.2 per cent, the biggest month fall in more than three years and hinted at a worrying slowdown in the factory sector. The August number appeared to result in part from a fall in orders for commerical aircraft, but it hinted at a worrying slowdown in the factory sector.

Expectations are for a recovery in tonight’s number, however. A Bloomberg survey predicts a 20 point turnaround for September - from minus 13.2 per cent to plus 7.5 per cent. If the number comes in low, Wall Street may get the jitters. 

1.15pm: The ASX is now touching fresh highs for the day. Investors aren't exactly reaching for the sky, but overall the mood is positive. The All Ordinaries index is 10 points higher, or 0.2 per cent, to 4540.5, while the benchmark S&P/ASX200 is 11.9 points higher, or 0.3 per cent, to 4517.7.

1.09pm: Not a fan of negative gearing? Here's a segment from last night's episode of The Business on ABC TV about it. Here’s how reporter Neil Woolrich signs the segment off:

While Saul Eslake says negative gearing could be phased out for a number of years to minimise inequity and market distortions, political reality is another matter. With the business community still bristling over Wayne Swan’s changes to company tax, it might be some time before any Treasurer takes on the 1.7 million taxpayers who rely on negative gearing deductions.

12.56pm: Time for a quick wrap of commodities trade today:

  • Three-month copper on the London Metal Exchange has climbed 1.1% to $US7,899 per tonne after four sessions of losses in which it had dropped nearly 5%
  • Spot gold climbed as much as 0.4% to $US1,708 an ounce. The metal slumped to $US1,699 yesterday, dropping below $US1,700 for the first time since September 7
  • Crude oil has risen 8 US cents to $US85.81 a barrel, after settling down 94 US cents at $US 85.73 a barrel on Wednesday, the lowest settlement since July

12.47pm: BusinessDay's Clancy Yeates reports that the taxpayer-owned Future Fund has put its $219 million in tobacco investments under review, and will consider the case for ditching the controversial holdings.

The $80 billion fund amassed its stake in big tobacco at the same time Labor was introducing its plain packaging laws, sparking criticism from health advocates and some members of the government.

But the fund's managing director, Mark Burgess, today said the fund's governance committee was considering the investment in cigarette manufacturers after a request from the board. Full story.

12.35pm: Bell Direct equities analyst Julia Lee said property companies were outperforming the broader market, with gains among Westfield Retail Trust, Goodman Group and Dexus Property.

‘‘That’s helping the Australian market higher,’’ Ms Lee said.

‘‘Property is seen as one of those defensive areas because of its relatively high yield. It looks like the gains on the Australian share market are being driven by some of those defensive areas, which is a little bit unusual.’’

In property news today, Mirvac reaffirmed earnings guidance for 2012/13, with operating profit to be between $366 million and $370 million. Here's a short video breaking down the Mirvac numbers.

12.25pm: Here’s an interesting item from the small biz desk. As a technology revolution sweeps through the world of retail, the retailers which once led the digital products boom in both Australia and the US are looking hugely vulnerable, writes retail analyst Michael Baker.

12.15pm: Although Coles was able to grow like-for-like sales by 3.7 per cent in its fiscal first quarter, beating expectations of 3.4 per cent and beating Woolies which grew sales at 2.3 per cent, it hasn’t strongly outperformed its rival on the ASX today.

Shares in Wesfarmers, which owns Coles, are 0.58 per cent higher while shares in Woolies are 0.43 per cent.

12.09pm: Tiger Airways has been hit with a $110,000 fine for continuing to spam customers after they unsubscribed from marketing emails.

An investigation by the Australian Communications and Media Authority (ACMA) has found the airline failed to remove customers despite their repeated requests.The emails also continued despite several warnings from ACMA.

The authority’s deputy chairman Richard Bean said the action was another reminder to businesses about paying attention to what their customers were saying.

11.55am: Octa Phillip resources analyst Lawrence Grech has an interesting take on the battle between Whitehaven's board and Nathan Tinkler,  its largest shareholder.

Mr Grech said this week’s $18 million-plus settlement with Mirvac was extremely significant as it showed Mr Tinkler still had funds available. He would not comment on why Mr Tinkler would seek to vote against the board.

I can’t hope to understanding everything he says. I just want to follow what he does and then assess that. I just don’t understand why you would want to replace a performing management team with high credibility, strong and deep relationships with the customer base, and a demonstrated ability to develop mines cost-effectively and also make shareholders good returns.

Read the full story from BusinessDay's Paddy Manning. 

11.45am: Back to Brisbane again now for the Echo Entertainment AGM.

With James Packer’s casino operator, Crown, looming on the horizon as potential competition, Echo’s chairman, John O’Neill, was keen to preach the company’s strong position to investors today, writes BusinessDay's Colin Kruger.

‘‘In Sydney we are the only game in town for at least the next seven years and our licence extends until the year 2093,’’ he said at the meeting being held at Echo’s Gold Coast casino, Jupiters.

Barely hours after the NSW Government gave approval to James Packers $1 billion hotel casino complex at Barangaroo, Mr O’Neill said Echo believes an industry structure with one casino in each major city is the right one.

He said this creates a platform for truly ‘‘distinctive developments’’, safeguards responsible gambling and provides a growing stream of tax revenue to governments as well as adequate returns to investors.

And after a torrid year for Echo, Mr O'Neil promised shareholders there will be ‘‘no more slip-ups or stumbles’’.

11.30am: Rio Tinto is putting its Gove bauxite and alumina operation in the Northern Territory under review because of higher fuel oil costs and low alumina prices.

The review will examine options including suspending operations or using cheaper natural gas to power the refinery, Pacific Aluminum, a unit of London-based Rio, said.

‘‘Our focus remains on building on the improvements we have made and doing everything we can to make gove operations financially viable,’’ Sandeep Biswas, chief executive of Pacific Aluminum, said.

‘‘Given the current market and energy price conditions it is prudent that we consider all options.

11.27am: We can't keep away from AGM season for long so let's look at Newcrest Mining, whose shareholders are being promised better dividends in the years ahead at the gold producer's  meeting in Melbourne this morning.

The positive outlook for dividends has been a recurring theme of today's meeting, with Newcrest stressing that it's capital expenditure is set to recede in coming years, as the start of new projects increase its revenue streams.

Throw in expectations that the gold price is set to rise in the near future, and the outlook for increased shareholder returns appears strong.

11.19am: Now for a look at the big banks in the light of ANZ's annoucement this morning of a record profit. And they're a bit mixed.

  • CBA is 0.2% higher to $57.09
  • ANZ is 1.45% lower to $25.23
  • NAB is 0.31% higher to $25.98
  • Westpac is 0.08% lower to $25.35

11.16am: More AGMs, this time in Melbourne, where Amcor’s chief executive Ken MacKenzie says businesses in Australia are hurting.

Mr MacKenzie told shareholders he was confident the packaging company can deliver increased earnings this financial year, but painted a grim picture of  industry in this country.

Trading conditions in Australia are difficult We’ve got slowing economic conditions, we have the high Australian dollar, and we have inflationary cost pressures in areas like energy and labour.

Read more here

11.08am: Now a look at how the big miners are faring this morning:

  • BHP is 0.09% higher to $34.34
  • Rio is 0.07% higher to $57.30
  • Fortescue is 2.12% lower to $4.16

11.03am: Here’s a novel idea from South America, where Colombia’s congress is debating a bill that would see citizens who earn less than 3,350,000 pesos per month (about $A1800) exempted from paying income tax.

Finance Minister Mauricio Cardenas said the reform means that 96 per cent of Colombians won’t be taxed on their earnings.

There was no mention in the story as to how else Mr Cardenas would raise revenue.

10.59am: The markets seem to be lacking in direction - zigging up and zagging back down again.

Right now, after spending most of the first hour in positive territory, the All Ordinaries index is 0.9 points lower to 4529.7, while the benchmark S&P/ASX200 is 0.5 points lower to 4505.3.

The positive start on the local market came despite Wall Street closing lower amid some weak US corporate earnings results and soft commodities prices.

Bell Potter senior adviser Stuart Smith said the expiry of exchange traded equity options on the Australian Securities Exchange later on today had offered the market some support at the start of trade.

‘‘Options expiry day tends to steady the market,’’ Mr Smith said.

But it seems even that upward impetus has petered out.

10.54am: The AGMs keep on coming and today it's the turn of Echo Entertainment. The casino company - which has been in James Packer's sights as he tries to get his own Barangaroo project in Sydney greenlighted - has been holding its meeting in Brisbane this morning.

Chairman John O’Neill told shareholders that total gross revenue for the first 16 weeks of the financial year was 12.9 per cent higher than the same period a year ago.

Revenues at its flagship Sydney casino The Star rose by 27.5 per cent, with its international rebate business posting a 21.1 per cent rise on a normalised basis.

"All in all, we are pleased with the momentum for the group, especially at The Star, Mr O'Neill said.

10.47am: The utter turmoil at Whitehaven Coal continues this morning with the long-awaited planning approval of its crucial Maules Creek project announced amid unconfirmed reports the managing director Tony  Haggarty will be replaced, writes BusinessDay’s Paddy Manning.

Whitehaven is in a trading halt as the board faces threats from its largest shareholder Nathan Tinkler, who has a 19.4 per cent stake.

Whitehaven this morning announced the New South Wales Planning Assessment Commission had approved the Maules Creek Coal Project, subject to a series of stringent conditions, after a process lasting more than two years.

Maules Creek is key to Whitehaven’s expansion plans and delays in state government approval have weighed on the company’s share price.

Whitehaven shares - which were changing hands for more than $6 in Aopril - last traded at $3.20.

10.40am: Early sliders on the ASX so far include:

  • St Barbara: - 9.72%
  • Alacer Gold: -9.57%
  • LincEnergy: -4.13%
  • Oceangold: -4.08%
  • Fairfax Media: -3.17%

10.37am: The early risers on the ASX200 this morning include:

  • Coalspur Mines: +6.36%
  • Arrium: +4.35%
  • Ten Network: +3.57%
  • Billabong: + 3.49%
  • WorleyParsons: +2.77%

10.30am: Wesfarmers shares are down too, falling 0.4 per cent - 15 cents - to $34.45 in a pretty flat market after the coal-to-Coles conglomerate reported improved first-quarter sales.

10.28am: ANZ shares are down 1.4% or 35 cents to $25.25, despite the big bank this morning an almost $6 billion profit for the year.

ANZ's latest bumper result, helped by tighter cost control, kicks off the big bank reporting season with National Australia Bank and Westpac to follow in coming weeks, BusinessDay's Eric Johnston writes.

Commonwealth Bank, which operates on a different reporting cycle, posted an 11 per cent increase in profit to $7.1 billion in August.

Even in the face of a subdued banking environment, ANZ’s key numbers came in line or slightly ahead of market expectations, including the 4 per cent increase in final dividend to 79 cents a share. This takes the full year payout to $1.45 a share, also up 4 per cent.

10.23am: Sectors heading backwards include:

  • Materials: -0.17%
  • Consumer Staples: -0,13%

10.21am: Sectors moving forward today include:

  • Telecoms: +0.62%
  • Industrials: +0.39%
  • Utilities: +0.35%
  • Information Technology: +0.27%
  • Energy: +0.23%

10.15am: In early trade, the All Ordinaries index is 3.1 points higher, or 0.1 per cent, to 4533.7, while the benchmark S&P/ASX200 is 2.6 points higher, or 0.1 per cent, to 4508.4.

10.10am: The markets are pretty flat in the first few minutes.

9.57am: Miguel Audencial, sales trader at CMC Markets, says we’re in for a sluggish start to today’s session, and reckons the Australian energy sector ‘‘will face selling pressure today with the price of crude oil lower after inventories increased more than expected.’’

And one final note on why US markets turned a bright start into a day of losses. Mr Audencial says: 

The Fed described that the economy is growing ‘modestly’, which is below ‘moderately’ in Fed speak. Concerns are growing over the effectiveness of QE3. 

9.53am: Staying in the US for a moment, CBA analyst Martin McMahon says the December 12 meeting will be more interesting. In a note this morning, he wrote:

The next major decision for the FOMC is what to do when the current Operation Twist program runs it course. The duration extension program will be complete by the end of the year.

We continue to believe that the bar to additional monetary easing is low. In our view the unemployment rate is unlikely to fall rapidly from current levels given prospects of decent, but unexciting GDP growth. We are forecasting US GDP growth of around 2.6% for 2013. Recovery in the US is not yet broad based and there are “significant downside risks” to the economy.

9.48am: ANZ economists have offered a neat summary of the US Fed’s announcement overnight. They say there was no expectation of new policy announcements:

Members noted that growth remains moderate but that household spending had picked up slightly (in line with the improvement in retail sales and housing data) but business investment growth had slowed a little. We believe the slowing in investment is likely due to uncertainty surrounding the upcoming Presidential election and the slowing in European and Chinese growth momentum. Overall, the unemployment rate, while falling gradually, remains high and accommodative policy is likely to remain for some time. The Fed’s ‘Operation Twist’ policy finishes next month.

9.44am: Here are some analyst rating changes for today:

  • WorleyParsons raised to 'buy' from 'hold' at RBS 
  • Mirabel Nickel raised to 'market perform' at BMO
  • Dexus Property Group raised to 'overweight' at JPMorgan
  • Dexus Property Group raised to 'neutral' at Macquarie
  • St Barbara cut to 'hold' at Deutsche Bank
  • Charter Hall Retail REIT cut to 'hold' at Deutsche Bank

9.40am: Amcor has also updated the market, with chief executive Ken MacKenzie saying he is confident the packaging company can deliver increased earnings this financial year.

Mr MacKenzie said Amcor had made a solid start to the 2012/13 financial year, with volumes remaining resilient and benefits from recent acquisitions and cost cuts beginning to flow through.

"The key message this morning is that we are tracking in line with the expectations outlined at the time of the full-year result in August and there are no changes to the outlook comments," he said in a speech to be delivered to shareholders at Amcor's annual general meeting on Thursday. 

9.38am: Also this morning, Wesfarmers said like-for-like sales at its Coles supermarkets grew 3.7 per cent in its fiscal first quarter as it increased sales volumes and prices of fresh fruit and vegetables strengthened.

That beat average market forecasts for 3.4 per cent growth and compared with growth of 2.3 per cent at its rival Woolworths.

Total sales at Coles were up 4.2 per cent to $8.4 billion on the corresponding period last year, with food and liquor sales rising 4.9 per cent to $6.6 billion. 

9.35am: Kicking off a busy day for local companies news, ANZ has posted a record $5.66 billion full-year profit as it grew earnings from its domestic and international operations.

ANZ's net profit for the year to September 30 was up six per cent from $5.36 billion in the previous year, but slightly lower than analyst expectations. The bank's cash profit of $6.01 billion was also up six per cent from $5.65 billion in the previous year.

9.32am: Local stocks look like dipping at the open after US investors gace a thumbs downt to the US Fed's downbeat assessment of where the world's largest economy was headed. European shares were up in anticipation of hte Fed statement.

For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:

  • SPI futures are 9 points lower at 4483 
  • The $A is higher at $US1.0337 
  • In the US, the S&P500 lost 0.31% to 1408.75
     
  • In Europe, the FTSE100 added 0.12% to 5804.78
     
  • China iron ore added $US1.20 to $US118.70 a metric tonne
     
  • Gold lost $1.03 to $US1701.95 an ounce
     
  • WTI crude oil fell lost 91 US cents to $US85.41 a barrel
     
  • Reuters/Jefferies CRB index lost 0.73% at 297.69

9.30am: Hi everyone. Welcome to the Markets Live blog for Thursday.

This blog is not intended as investment advice

BusinessDay with agencies

21 comments

  • I can tell a stockmarket crash is imminent. Maybe that's what the Mayan prophecy regarding the world ending in 2012 was all about. The EU financial figures are going south, the US is approaching the fiscal cliff, and Australia is making its tiny contribution through Labor's asinine policies. My only question is whether the crash will occur before 12 November, the opening night of Skyfall.

    Commenter
    Julian_P
    Location
    Sydney
    Date and time
    October 25, 2012, 10:04AM
    • Being an Oracle, I concur with your sentiment. Also, consider that there are no more possible rabbits for the US, Europe and China to pull out of their hats and that really only leaves one option.

      Commenter
      The Oracle
      Location
      Oberon
      Date and time
      October 25, 2012, 10:36AM
    • The Mayan thing was the end of an Age (as defined under their calendar) not end of time... much like the similarly mistranslated biblical reference.

      I think you're imagining the indicators...

      The European economies are hopeless and look like remaining unresolved for a while... shockwaves will result in overreactions but a major crash seems unlikley...

      One thing to consider, a major move to resolve the crisis (ie countries leaving the Euro) is likely to lead to major stock market ralies (in Europe) which may lift consumer spending and the make a measurable impact on the economic decline faced by many markets. The debt would still be there of course, but we've ignored it before and will do so again if confidence is restored in Governments by the measures they undertake...

      US and UK are starting to show signs of life and new leadership in China spells another large stimulating bonanza of infrastructure spending...

      I agree the glass is only half full, however it is worth considering locally that resources / resources construction / related infrastructure spending is slowing which should allow further RBA cuts over the next 6-12 months... (lower economic growth / employment growth should lower the pressure on inflation etc)

      A lot of the reason for the high exchange rate is foreign capital flows attracted by our interest rates... as the economy slows and rates fall the AUD should slip back too...

      Commenter
      Seriously...
      Date and time
      October 25, 2012, 10:53AM
    • Uncertainty and worry destroys share markets.

      Every man and his dog know that the USA will hit the debt ceiling before the fiscal cliff triggering sequestration orders.

      Commenter
      Space Hippy
      Location
      70s
      Date and time
      October 25, 2012, 12:15PM
    • Which debt ceiling space hippy? It seems to change every time congress can't be bothered to make a real decision on buget cuts. Even S&P downgrading the US Govt didn't give Congress a wake up call...

      Agree completely with your comment on uncertainty...

      Commenter
      Seriously...
      Date and time
      October 25, 2012, 2:07PM
    • @ Seriously

      Comment acknowledged. Seriously, Seriously ... whoa ... ummmm, where would you make cuts in the US federal budget??? The most obvious one is military spending and current and future pensions of same.

      The federal government made cuts to age pensions and entitlements sometime ago. Brave people.

      Still, with a military presence in more than 150 countries, I’ll stop talking now.

      Commenter
      Space Hippy
      Location
      70s
      Date and time
      October 25, 2012, 4:02PM
  • Seriously, "US and UK are starting to show signs of life and new leadership in China spells another large stimulating bonanza of infrastructure spending..."

    US is running on 80 billion a month soon to revert to 40 billion a month when operation twist expires. As for the UK this quote from Mervyn King sums it up “I am not sure advanced economies in general will find it easy to get out of their current predicament without creditors acknowledging further likely losses, a significant writing down of asset values, and recapitalisation of their financial systems"
    No ones imagining any indicators, only a blind man couldn't see them. The present 'optimism' closely follows the 1930's after the Dow had dropped about 40% and was in it's bear market rally. All of a sudden it just fell over and the Dow dropped 89%. It took until 1953 to get back to where it was. So far Bernanke's latest effort has done nothing. Maybe things have changed, but my view is a market that needs 80billion a month to stay afloat is terminal. 'The Market' as we know it hasn't been a market since 2007 so any attempts to apply usual analysis is pointless. When the permabulls on CNBC start talking about the market multiple being to high you know the jig is up.

    Commenter
    wth
    Date and time
    October 25, 2012, 11:39AM
    • wth...
      -US I'm talking about signs of declining unemployment as recently reported.
      Perhaps you are focussed on the ridiculus govt buget mess while I'm looking at unemployment improvements?

      -UK a lot of the talk from economic analysts is that the UK will recover faster than mainland Europe with an economic recovery expected in 2014. Not sure Mervyn King was referring to his own economy with those comments you quoted...
      -increased growth in China is inevitable when stimulus kicks in again... obviously this is based on my belief that substantial stimulus is inevitable. Happy to disagree with other forecasters on this.

      Yep the US has unresolved buget issues but factoring in the worst case scenario and saying it will definately happen assumes most American politicians and govt senior economic staffers are idiots - as unimpressive as they are, I'm not ready to make that assumption.
      Will be interesting to see what happens with the presidential election though. If Obama losses the congressional republicans will have to do a buget deal with Romney. If Obama wins well you may well get the buget crisis you are hoping for...

      Also re Mervyn King's statements... never said that debt write downs wouldn't happen... frankly I would welcome defaults and debt write downs if they would result in greater certainty going forward for mainland Europe. The problem is uncertainty, it's an economic leach... people are still waiting for politicians in the US and Europe to deal decisively with the issues. When that happens who knows...

      Commenter
      Seriously...
      Date and time
      October 25, 2012, 1:29PM
    • @ Seriously

      Go look at John William's Shadow Stats for a more realistic version of US Employment.
      The U3 figure that is frequently touted is smoke and mirrors. It is just a perception management tool and means little.

      Obama or Romney is irrelevant. Whoever wins (my money is on Obama) will be up against it. Thinking that Romney will solve the problems in any way faster or better, or with a lot less pain, than Obama, is fallacy.

      Sovereign nations that are up to their eyeballs in debt have an unsolvable problem as the current methods being employed are displaying; the last four years are evidence. The markets around the world want to liquidate the imbalances in the economies, the central bankers and plunge protection teams are not allowing it because it will implode the financial system today as we know it. There are many many many other things that play into this (such as the BIS implementing Basal III, derivatives, etc.), so it looks the current methods of stay calm and carry on printing central banks, will continue, until they don't.

      Just be thankful we have politicians (as bad they behave and seem) and probably more correctly their advisers (e.g. public servants in treasury) that understand you cannot borrow to infinity, create massive distortions in the economy, and get away with it. So as much as our media in Australia reports the garbage our politicians put on display, relative to the rest of the world, we have it very good. That is not to say they can do better, much better - they can. Just hope the housing market doesn't tank. If that happens, we're in big big trouble.

      Commenter
      Bye Bye Fiat Money
      Date and time
      October 25, 2012, 2:22PM
    • Seriously, I'm afraid I lost faith when almost all the experts missed 2007/8. When you see some of the statements made by Bernanke at the time how could you. The problem is most economists fail to see debt as an issue. They see the debt on one side to be a credit on the other. Unfortunately in reality that's not always true when the money is used on speculation of property prices always rising.
      Using taxpayers money to prop up failed markets is just robbing from the future. Set the US banks mortgages at mark to market (as they should be) and see how many are solvent.
      Take a look at Shadow Stats to see the real US unemployment rate. www.shadowstats.com

      "The problem is uncertainty, it's an economic leach... people are still waiting for politicians in the US and Europe to deal decisively with the issues"
      The problem is DEBT! and they can't do anything about it, they don't have the money and if they write off the debt they write off the banks. Something the US federal reserve will never do as they are the banks. If all hell doesn't break loose, in 2015 Bernanke will still be setting interest rates at zero and running qe3 to infinity. It took a world war and about 20 years to unwind the last one and this time the debt is far worse.

      Commenter
      wth
      Date and time
      October 25, 2012, 2:54PM

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