This week we have seen the importance of confidence underlined as a
very important (but hard to achieve) part of economic policy.
In fact confidence is much easier to lose than to retain; you only have
to look at Japan, the US and UK and much of Europe to see the lack of
confidence markets and investors (and hundreds of millions of voters)
have in their governments' economic management.
In Australia, despite the phony campaigns on budget deficits and
government debt, confidence remains high among companies and consumers.
In fact both are at or near highs not seen for five to seven years.
This is reflecting the improvement in the economy, demand for goods and
services, rising share and house prices and falling unemployment.
Shock horror, China's consumer inflation is now running at 2.7% and
'house prices boom, bubble, boom and bust' yell the western analysts.
It was the 4th successive monthly increase in inflation, but followed eight months of falling prices.
But the government is worried about property price inflation: yesterday
they revealed home buyers will have to put up a 50% deposit when buying
land and banned the sale of land for villas.
People buying land at auction will have to put up a 20% deposit.
That was after residential and commercial real-estate prices in 70
cities climbed 10.7% in the year to February, up from the 9.5% rate in
January.
A thumbs down from the market for Myer Holdings' first interim profit as a listed company for near 25 years.
The company reported higher earnings (removing the distortions of the
costs of the sale and float by private equity late last year) but then
it warned sales could be flat in the next six months as shoppers no
longer have government cash handouts to spend.
But Myer maintained its earnings forecast for the full year.
Perhaps it was the 38% rise in underlying profit, or the 11.9% rise in
Earnings Before Interest and Tax (EBIT) that allowed it to remain
confident.
But after sending the shares 6c higher to $3.51, down they went as
investors crunched the numbers, savoured the outlook and said 'no'.
We have been warned, the current housing boom risks a lot of tears and
frustration if the Reserve Bank is forced to crunch it to save the rest
of the economy from overheating.
That's not a new warning from the central bank, but the time is
approaching when it will stop being 'nice' and bash the housing sector
with a brutal rate rise (or rises) that surprises the deliberately deaf
and ignorant in politics, business and the media.
The population is rising, the number of new homes being built is
falling. Less land is being released, the homes being built or extended
are getting larger, chewing up more resources and money.
Prices are rising, even though there's now a fall in new loans because the first home buyers' scheme has been turned off.
It is a treadmill that can't last without some dramatic move from the Reserve Bank.
The AMP's chief economist, Dr Shane Oliver says there is a distinct
cloud hanging over the return outlook for government bonds in many
advanced countries, but not Australia.
Government bonds were the star performer in 2008 when economic growth
collapsed, central banks slashed short term interest rates and
investors rushed into bonds as a safe haven, thereby pushing down their
yields and resulting in capital gains for investors.
Looking forward, their outlook is clouded by low starting point yields,
the prospect that short term interest rates will start to rise and the
risk that when private sector borrowing picks up the competition
between the public and private sectors for funds will result in rising
bond yields.
While a US double dip back into recession may help sovereign bonds, it
can be just as easily argued a looming fiscal crisis at some point down
the track is a much bigger threat if investors lose patience with the
pace of improvement in budget deficits.
Low yields
Sovereign bond yields were pushed sharply lower through the dark times of the global financial crisis.
The market is up 7. The SFE Futures were up 9 this morning.
Wall Street finished the session strongly overnight and closed on its high - up 44. The Dow was up 45 at best and down 60 at worst. The Dow closed up for the third consecutive day. S&P 500 hits a 17 month high. The NASDAQ closed at its highest level since August 28, 2008.
Metals were mixed, Gold price was unchanged at $1108 and the Oil price put on 68c to $82.56.
A bit quiet on the news front today…
* Cape Lambert Resources (CFE) sold their Lady Annie copper mine in QLD to China Sci-Tech Holdings for $135m. The deal is subject to FIRB approval and if given the green light, is expected to be completed by May 31. Patersons have a Buy recommendation. CFE up 11% to 49.5c.
* CBH Resources(CBH) – Trading Halt– after receiving a second takeover offer from Nystar, the Belgian zinc smelting and refining company. In saying that though, CBH and Ironbark Zinc (IBG) both went into a trading halt at the same time. CBH entered into a $67m JV with their major Japanese shareholder Toho Zinc. CBH last traded at 14c.
Sadly, this week the papers have been dominated by the Lara Bingle and Michael
Clark fiasco. However, other things have been happening.
After much digging around, and getting past pictures and celebrity hanger's on
quotes, I've dug up some much needed to know financial information for you this
week.
Centrebet, an online gambling service in Australia, will now be offering the
chance to 'bet' on where the ASX 200 ends the month. So just in case you can't get
enough of betting on boxing, the dogs, the horses, elections or even interest rate decisions, you can now take a punt on the
stock market.
But, it appears that the Eurozone countries don't like the idea of gambling on
the markets. And want to take matters into their own hands.
The European Commission are seeking to establish something similar to the
International Monetary Fund, potentially becoming the European Monetary Fund (EMF). Details are still being
developed, however the idea is the EMF will co-ordinate with the European
Central Bank on fiscal policy for Eurozone countries.
Perhaps
even if you still don't agree with our arguments about minimum wages and pay
equalisation, maybe you can agree that artificial interference in the market by
governments only tends to create another problem while claiming to solve one
problem.
We'll bang on about it for one last time today. If you've had enough already
then I suggest you give today's Money
Morning a miss. Join Shae again tomorrow for Money Weekend, or we'll
see you again on Monday where we'll bang on about something else.
To our way of thinking, there's no difference between pay equalisation and
minimum wage legislation. Both create artificial wage markets which aren't
sustainable over time.
So today we'll take another bash at the ultimate job killer, the minimum wage.
The argument always put forward is that without a minimum wage, wages would be
pushed to zero and workers would work in slave-like conditions.
This argument is false and is made without any evidence. Because there is no
evidence.
Trident Press Wealth Creation updates are "Written by Lance Spicer - Editor of the World's No. 1 Stock Market Investment Newsletter - the Trident Confidential.
Asxnewbie has the privilege of offering to our readers this exclusive offer from Trident Press. To my knowledge this offer is available nowhere else.To qualify for this special deal you must write "ASXNEWBIE" in the comment section on your order for the Ultimate Library on CD and the Trident Confidential subscription. This will entitle you to a free book - Lance Spicer's new book The Stock Finding Solution. Click Here to take advantage of this exclusive offer.
Dear
Reader,
The Bull
Market alive and well - to many investors it just doesn't feel like it. The
Australian market is still down for the year and the US markets are up
slightly. Of course, the "tech" heavy NASDAQ in the US is going great
guns, as people are just starting to realise that the number one place to be in
2010 and 2011 is technology stocks. I wonder where you've heard that before?
At Trident Confidential we have been focusing on tech stocks since mid last
year and it helped give us a 113% return in 2009. I suspect the tech stocks we
are now buying will produce fabulous results in 2010 too. You see I don't care
what the broader market is doing or for how long this bull market will last -
that's irrelevant. I'm only concerned with the stocks we are buying and their prospects
for 2010 and beyond.
The projections I have for earnings and revenues on some of these companies
tells me we are looking at Price Appreciation Potential of 60%, 70% and 80%
over the next year. The broader market? Maybe 10%, 15% at a stretch.
This informative article was contributed with the kind permission of Louise Bedford who is one of Australia's most recognised private traders. Louise is also the best-selling author of The Secret of Writing Options, The Secret of Candlestick Charting, Trading Secrets and Charting Secrets.
I highly recommend them to you as they are invaluable in locating those profitable stocks. You will find this article plus a host of other invaluable information by clicking on this link or why not subscribe to their free newsletter. Click Here.
The newsletter other trading professionals demand
Hi,
I received an email last week
that kind of shook me. Here's what it said:
"Louise, I'm a fan, but
I have a piece of advice for you that I do hope you'll follow. You're telling
people too much. As an example, I know that you openly tell people how it took
you 3 years to break even on the share market. You need to be aware that people
don't want to hear this if they're going to follow your strategies. They need
to feel they can put their faith in the things that you do, so they'll be able
to trade well."
Ahhh... isn't this an
interesting topic?
Is it wise to be so open and
share so much personal stuff? (Answer: wise - no. Honest - yes.)
Are people more likely to
follow someone without a few bullet holes and scars? (Answer: Personally, I'm
not so crazy about listening to those with the Midas touch. They're not all
that interesting, relatable, or knowledgeable about the strategies you get to
create when your back is to the wall. Also, when the bullets do start flying
about, I'll bet that they'll be running for cover, crying "Mummy,
Mummy...")
