The ASX 200 is retracing today to test short-term support at 4900 but medium-term buying pressure — as indicated by 21-day Twiggs Money Flow troughs above zero — suggests a test of 5000.
Rising 63-day Twiggs Momentum suggests continuation of the primary up-trend. Breakout above 5000 would offer a long-term target of 6000*.
* Target calculation: 5000 + ( 5000 – 4000 ) = 6000
The ASX 200 is headed for a test of resistance at 5000, supported by rising 63-day Twiggs Momentum and 13-week Twiggs Money Flow (shown below) signaling buying pressure. Breakout would signal an advance to 6000. S&P 500 breakout above its 2007 high would enhance buying pressure, while failure would suggest a re-test of medium-term ASX 200 support at 4500.
* Target calculation: 5000 + ( 5000 – 4000 ) = 6000
Staying with long-term, monthly charts we can see the Aussie Dollar consolidating in a narrow range below resistance at $1.06. Oscillation of 63-day Twiggs Momentum close to zero also indicates a ranging market. Upward breakout is more likely and would signal an advance to $1.10*, while reversal below $1.02 would re-test primary support at $0.96.
* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10
On the daily chart, the Aussie is testing support at $1.05. Failure would signal another correction to test $1.02, while respect would suggest breakout above $1.06 — and a long-term advance to $1.10.
The Euro is advancing against the weakening dollar. Target for the advance is the long-term declining trendline on the monthly chart — around $1.40. A primary up-trend is signaled by 63-day Twiggs Momentum recovery above zero.
The Aussie Dollar is testing long-term resistance at $1.06 on the weekly chart. Breakout is likely and would signal an advance to $1.10*. Oscillation of 63-day Twiggs Momentum above zero suggests a primary up-trend.
* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10
A quick recap of the quarterly chart overview from December 2012:
The S&P 500 is headed for a test of its 2000/2007 high at 1550. Declining 63-day Twiggs Momentum and a lackluster economy suggest that resistance is unlikely to be broken. Breach of the rising trendline would indicate a test of support at 1100.
Canada’s TSX Composite Index is gaining momentum. Follow-through above 13000 would indicate another test of 15000.
Germany’s DAX threatens a breakout above 8000. Follow-through above 8200 would confirm a strong primary advance.
The FTSE 100 broke resistance at 6000, suggesting an advance to 7000.
India’s Sensex is testing resistance at 21000. Rising momentum indicates breakout is likely, heralding a fresh primary advance.
Singapore’s Straits Times Index lags behind, but breakout above 3300 is likely and would indicate an advance to 3900.
The Shanghai Composite is headed for a re-test of long-term support at 1800/1750. Rising momentum suggests that a bottom will form at this level. Recovery above 2500 and/or the declining trendline would strengthen the signal.
The ASX 200 is headed for a test of resistance at 5000, supported by rising 63-day Twiggs Momentum. Breakout would signal an advance to 6000, but weakness in China or the US may delay this for some time.
Quarterly charts for the last two decades give a good idea of where stocks will be headed in 2013.
The S&P 500 is headed for a test of its 2000/2007 high at 1550. Declining 63-day Twiggs Momentum indicates that resistance is unlikely to be broken. While this does not mean another fall to 750, it does suggest a strong correction.
Apple Inc. [AAPL] is no longer leading the advance but testing primary support at 500. Failure of support would confirm the primary down-trend indicated by a 63-day Twiggs Momentum peak below zero.
Germany’s DAX is also headed for a test of its 2000/2007 high, at 8200, but rising momentum indicates that breakout above resistance is likely.
The FTSE 100 is also advancing but is some way off its earlier high of 7000 and breakout appears unlikely.
India’s Sensex is more bullish and likely to break resistance at 21000.
The Shanghai Composite is headed in the opposite direction and likely to re-test long-term support at 1800/1750. Rising 63-day Twiggs Momentum (below zero) suggests that a bottom will form at this level.
The ASX 200 is headed for a test of resistance at 5000, supported by rising 63-day Twiggs Momentum. Breakout would signal an advance to 6000, but weakness in China and the US may delay this for some time.
Cameron Kusher extends the following argument in favor of negative gearing:
Many in favour of removing negative gearing from property say that it should occur due to the fact that housing is an unproductive asset class. My argument is that given that housing provides shelter, if investors don’t purchase these assets, it would then be the responsibility of the Government to provide this shelter. Ultimately, that would mean that anyone that pays taxes would be funding housing for those who can’t afford it themselves.
What happened to individuals being responsible for their own housing? A large part of rental demand is due to poor housing affordability. If we made housing more affordable, the rental market would shrink.
Kusher highlights that in September 1985 the government quarantined negative gearing interest expenses on new transactions.
The reason why negative gearing was reinstated in September 1987 was that it was proclaimed that rents rose sharply on the back of a fall in housing market investment.
The following chart shows that rental growth accelerated between September 1985 and September 1987:
But no explanation is given for the earlier peak in rental growth rates — 13% in 1982 — prior to restrictions on negative gearing.
And what is not mentioned is that interest rates were rising. Standard variable bank mortgage rates peaked at 15.5% in 1986/1987. That would account for any decline in new housing investment, even though this is not evident from investor finance commitments.
via Negative gearing and its impact on the housing market | RP Data Research Blog.
We are frequently bombarded with labor productivity statistics such as output per hour worked and unit labor costs — normally accompanied by political hand-wringing exhorting us to improve productivity — but how accurate are these statistics and what do they mean?
First let’s look at GDP per capita. This should tell us how well we are doing compared to our neighbors. Norway and Singapore lead the pack, ahead of the US, while Australia is comfortably in the middle.
Measuring in Purchasing Power Parity (PPP) adjusts for comparative price levels in different countries. Australia and Norway are most expensive, with relative price indices (PPP/exchange rate) of 1.61 and 1.58 respectively; while Singapore (0.83), Czech Republic (0.80) and South Korea (0.74) are cheapest.
Demographics such as an aging population or high birth rates, however, may distort per capita figures.
Norway also leads when it comes to GDP per hour worked — which should alert us that productivity of resource-rich economies such as Norway and Australia may be inflated by profits earned from extraction (mining, oil and gas). Ireland surprisingly beats the US, while Singapore slips to near bottom of the table when measured by hours worked.
Workers in Singapore and South Korea work far longer hours than most other OECD countries, while those in powerhouse Germany work even less than their counterparts in France.
But hours worked can also give a distorted view of employee welfare. Compare the 3 or 4 hours that workers in Sydney, London or New York may spend commuting to and from work each day to a Korean assembly worker who lives in a housing estate adjacent to the assembly plant. If we compare GDP (adjusted for PPP) to employed persons, rather than hours worked, we get a slightly different picture. The real surprise is again Ireland, ranking third behind Norway and the US — and well ahead of Australia, Germany and the UK.
What do we learn from this? It pays to live in a resource-rich country such as Norway (or Australia). It also pays to work clever — high-tech manufacturing like Germany and Ireland — rather than hard. Combine this with a low-tax jurisdiction — such as Singapore or Ireland — and you can become a world-beater.
Read more at BLS: International Comparisons of GDP per Capita and per Hour
Labor productivity
Labor productivity is measured as Output / Input
Where Output is the total of goods and services produced, normally measured by GDP.
And Input is the time, effort and skills of the workforce, measured either as:
- total hours worked by the workforce; or
- total number of employees.
Glenn Stevens, governor of the Reserve Bank of Australia, in an address to the Bank of Thailand today commented on the dangers facing central bank monetary policy:
For the major countries a further dimension to what is happening is the blurring of the distinction between monetary and fiscal policy. Granted, central banks are not directly purchasing government debt at issue. But the size of secondary market purchases, and the share of the debt stock held by some central banks, are sufficiently large that it can only be concluded that central bank purchases are materially alleviating the market constraint on government borrowing. At the very least this is lowering debt service costs, and it may also condition how quickly fiscal deficits need to be reduced. There is nothing necessarily wrong with that in circumstances of deficient private demand with low inflation or the threat of deflation. In fact it could be argued that fiscal and monetary policies might actually be jointly more effective in raising both short and long-term growth in those countries if central bank funding could be made to lead directly to actual public final spending – say directed towards infrastructure with a positive and long-lasting social return – as opposed to relying on indirect effects on private spending.
The problem will be the exit from these policies, and the restoration of the distinction between fiscal and monetary policy with the appropriate disciplines. The problem isn’t a technical one: the central banks will be able to design appropriate technical modalities for reversing quantitative easing when needed. The real issue is more likely to be that ending a lengthy period of guaranteed cheap funding for governments may prove politically difficult. There is history to suggest so. It is no surprise that some worry that we are heading some way back towards the world of the 1920s to 1960s where central banks were ‘captured’ by the Government of the day.
via RBA: Speech-Challenges for Central Banking.
Hat tip to Walter Kurtz at Business Insider.
