The ASX 200 encountered resistance at the descending trendline — around 4450. A sharp rise in 21-day Twiggs Money Flow indicates short-term buying pressure. Breakout would indicate a primary advance to 4750*. Retreat below 4400 is less likely but would suggest a decline to 4250.
* Target calculation: 4550 + ( 4550 – 4350 ) = 4750
The Market Monetarist writes how a combination of luck and good policy saved Australia from recession.
Milton Friedman once said never to underestimate the importance of luck of nations. I believe that is very true and I think the same goes for central banks. Some nations came through the shock in 2008-9 much better than other nations and obviously better policy and particularly better monetary policy played a key role. However, luck certainly also played a role…..
via The “Export Price Norm” saved Australia from the Great Recession « The Market Monetarist.
Interesting article by Leith van Onselen on Australian housing affordability.
Today it takes “380 weeks on the average wage (just over seven year’s income) to buy a typical house. This is down from around 430 weeks average wages (just over eight year’s income) required to buy a home in 2008 and 2010.”
Good news. But compare that to less than 250 weeks in 1995 — and less than 200 weeks in 1987.
In 1960, it took homebuyers just 7500 hours [188 weeks on the average wage] to pay off the average mortgage.
via Housing affordability improves but still poor | | MacroBusiness.
US health care costs are high relative to other OECD countries but average US life expectancy (78.7 years) in 2010 is below the OECD average of 79.8 years. These two OECD charts sum up the problem:
Germany (DEU) is lowest for most procedures — in many cases less than half — and the quality of the treatment is excellent.
via Health Costs: How the U.S. Compares With Other Countries | PBS NewsHour.
The Euro reversed direction in response to the weakening dollar, breaking resistance at $1.28 to indicate another test of $1.31/$1.32. Respect of the new support level would confirm.
The Aussie Dollar likewise displays evidence of buying pressure, with long tails below resistance at $1.04. Breakout would offer a target of $1.06*. Reversal of of 63-day Twiggs Momentum below zero, however, would warn of a primary down-trend.
* Target calculation: 1.04 + ( 1.04 – 1.02 ) = 1.06
By Houses and Holes on November 22, 2012
London-based Kyran Curry, the long-time primary credit analyst for Australia at S&P, is back and the news is getting worse. From the AFR:
“The banks are highly indebted, they’re highly leveraged, they are the main vehicle Australia uses to fund its current account deficit…Australia has, as we see it, got some credit metrics that are right off the scale when it comes to assessing Australia’s external position….It’s got high levels of liabilities, it’s got very weak external liquidity and that basically means the banks are highly indebted compared to their peers….They’re benefiting from a safe haven at the moment – nonetheless investor sentiment can turn very quickly…We just worry that at some point, the people who are funding the Australian banks may decide that enough is enough and may begin to lose confidence in the bank’s ability to roll over their debt….That would come through a weakening in Australia’s major trading partners flowing through to a dramatic weakening in Australia’s fiscal position.”
Curry said this could be a two or three year scenario. But he added:
“Anything that weighs on the ability of Australia to bring forward new energy projects and that weighs on its export growth potential, that’s something that would put pressure on the rating. Australia is looking increasingly like a one-trick pony.”
Regular readers will note that S&P has pretty much captured my entire ‘peak Australia’ thesis. It is simultaneously ripping aside the veil of invisopower that regulators have dispersed around the banks and seeing for it is the singularly backward macroeconomic strategy of embracing Dutch disease. My two great fears.
The last line is the worst. I am of the view that LNG will rationalise – the current set of projects that is – not the fictitious pipeline. That means there is a risk that this is not a two or three scenario at all. Which does offer an answer to the question: why is S&P ramping its warnings now?
Canberra must immediately dispatch to Beijing a high level delegation to demand further stimulus. Perhaps a high-speed rail link from Beijing to the Bush Capital? That way, when they’re ready, the Chinese can relax in comfort on the way down to buy our banks.
Reproduced with thanks to Houses and Holes at Macrobusiness.com.au
The Euro respected resistance at $1.28 and another test of medium-term support at $1.265 is likely. Breach of support would indicate a correction to $1.23.
The Aussie Dollar likewise respected resistance, at $1.04. Follow-through below $1.03 would test primary support at $1.02/$1.015. Recovery above $1.04 is unlikely but would test $1.06*. Reversal of of 63-day Twiggs Momentum below zero would suggest a primary down-trend.
* Target calculation: 1.04 + ( 1.04 – 1.02 ) = 1.06
The annualised growth rate of the Westpac–Melbourne Institute Leading Index jumped from –0.4% in April to 4.1% in September this year — above its long-term average of 2.8%. According to Westpac, main contributors to the growth improvement were:
Negative influences were:
The ASX 200 found short-term support at 4350. Expect a rally to test the declining trendline at 4450 but this does not indicate the end of the correction. The 21-day Twiggs Money Flow peak below zero reflects medium-term selling pressure. Respect of resistance at 4450 would signal another decline.
* Target calculation: 4450 + ( 4450 – 4000 ) = 4900
Dow Jones Shanghai Index broke its September low of 249 but rallied strongly towards the close. Bullish divergence on 21-day Twiggs Money Flow indicates medium-term buying pressure. Follow-through above 250 would indicate a rally to the October high of 266.
Houses & Holes writes:
The Westpac Red Book for October is out and paints a picture of housing market sentiment turning strongly upwards: One of the highlights in last month’s survey was a big 9.6% jump in the sub-index tracking views on ‘time to buy a dwelling’ to the highest level since Sep 2009…….
I am as skeptical as he is of the conclusion that the housing market is about to recover: “Unemployment is not done with us yet.” If you took a survey of the major banks I would be surprised to find, with lending margins squeezed and the end of the mining investment boom approaching, that any of them are planning to aggressively expand mortgage lending in the current climate.
via Red book paints housing sentiment breakout | MacroBusiness.
