Just dropped in
Not much happening here in Oz?
I find Chris' articles very informative and well thought out. The difficult thing to assess is the impact on Australia if the 3 E's create the perfect storm.
It seems to me that we have-
Low unemployment, but struggling manufacturing, agriculture, tourism and retail business
An over-reliance on China
A reactive and visionless govenrment and opposition.
What are your thoughts?
So, a few months since our last post…. Do you think Chris' prediction about an iminent major correction is on the cards down under?
I work at a port that exports iron ore and imports fuel, so I get a good right brain impression of things.
There is a lot of complacency amongst the workers. The holders of the purse stings are spending big on infrastructure on the understanding that present conditions will continue into the future.
Edit: The infrastructure splurge might be a way of getting rid of $US while they are still worth something.
However- We are shipping iron ore at lower than market rates. This creates a loyal customer. The Baltic Dry Index is bouncing along the bottom, indicating an excess of ships.
Other areas of the economy are not fairing as well. Motor car manufacturers design products for petrol sniffers, with the consequence that they are going head to head with everyone else on the planet, with no particular advantage other than hubris. Hence they are loosing jobs and skills.
However things are changing. There is a carbon fiber factory going in in Geelong, I believe.
The politicians continue to sell their grandmothers for a fist full of dollars.
Retailers are whinging about the lack of spending. Airline tickets are noticeably more expensive. Airline companies are inventing more and more ways of fleecing their customers, a sure sign of trouble.
The old facking scam is happening in South Australia.
At the moment the port is empty. This might just be noise or it could be something big. I will wait and see.
When the axe falls, it will do so suddenly. I have my bolt hole.
I don't know Andreww. It doesn't feel like it here in Perth that's for sure. Casual observers from afar of Australia's property market (even Mish) have called it as popped but I don't see that at all – not where I live. In one way I want it to because I am on the side lines waiting to buy. Prices are so high that a loan principle could never be paid off without later selling the property. They just don't seem to be falling but it is very difficult to get much detail on the true state of play here in Aus with respect to the 3 E's. My gut feeling having operated a local business for the last 10 years is that people are still better off and spend more than they did in say 2005. The boom times started for us in about 2007 and while the euphoria of that time is gone, the spending by the public is still increasing.
Many on this site have described how inter-connected the world finance system is and I guess the Aussie economy is at the mercy of larger forces elsewhere. It's like sitting on a sunny beautiful little island awaiting a tsunami.
It is interesting at the moment. The ASX200 always followed the DOW for many years, and this has changed considerably since QE, with the Aussie market still 30% off the pre-gfc peak. The Dow has hit new highs. I guess the key factor will be employment growth. While unemployment is 5%, the housing bubble might deflate with time rather than burst. Who knows. The deleveraging cycle is in full swing.