Banking on an Australian recession

[Uncle Festivus]

+1

Apart from a couple of extreme hot days last Summer in Vic and SA, demand just isn't there.

Most will have heard about the oversupply of electricity and that is indeed true most of the time. But LED lights and solar panels go nowhere near to explaining the drop in demand, especially the drop in the middle of the night. Dig a bit deeper and you find that most of the load that has disappeared is business consumption and much of that is manufacturing closures. Energy efficiency, solar etc has played a part certainly, but there's more to it than that.

There's more to come too. Holden etc are still running at the moment. I don't know how much energy they use, but once all the component suppliers etc are included then I'd expect it's quite a lot.

The closure of the alminium smelters took a huge chunk out of demand as well. Cheap LPG from the global glut competing with other energy forms. Now collapsing oil prices.

Where I am the region is already in recession with several coal mines and a 1GW coal fired power station closed and another 1.3GW power station running at 25% capacity. There are 2 coal mines left out of probably 6-7?

Multiply this around the country with resources AND manufactuing industry and I think we are already in recession.

 

[McLovin]

PB, I'm sorry to hear about your situation. Agree about the deception of successive governments in so misrepresenting the unemployment numbers. Don't you have to be employed for just one hour per week to be categorised as employed? Obviously, that's ridiculous.

The ABS uses the ILO definition when calculating the headline unemployment rate, it's not the government of the day that sets the definition. Underemployment is also reported.

The ABS uses internationally agreed standards in defining unemployment and the key indicators have been measured in a consistent way since 1966.
To be classified as unemployed a person needs to meet the following three criteria:
- not working more than one hour in the reference week;
- actively looking for work in previous four weeks; and
- be available to start work in the reference week.
The ABS produces a range of measures, in addition to the unemployment rate, to help users understand the extent of underutilised labour supply, such as underemployment.

http://www.abs.gov.au/ausstats/abs@.nsf/products/FBE517ECA9B07F63CA257D0E001AC7D4?OpenDocument

The seasonally adjusted underemployment rate was 8.6 per cent in November 2014, an increase of 0.3 percentage points from August 2014. Combined with the unemployment rate of 6.3 per cent, the latest seasonally adjusted estimate of total labour force underutilisation was 15.0 per cent in November 2014, an increase of 0.6 percentage points from August 2014.

http://www.abs.gov.au/ausstats\abs@...46DFE12FCDB783D9CA256B740082AA6C?Opendocument

 

[Julia]

Well, McLovin, I'm sure if any government felt it was in their interests to have unemployment and under-employment measured differently, they'd find a way of having that happen.

In my regional area youth unemployment is running at about 20%.

 

[rimtas]

Technically recessions looks like this. Green arow is the market position if the recession is inevitable.




On ASX chart it should be like this if one occurs




After studying all recessions (in US), I found that they occur close to the bottom of the downtrend, and this have a good point- declining market sentiment finally turns into real action which when given enough time, results into contracting economy.
In 2007 Market sentiment was so elevated, that a 17 month long crash was unable to turn the sentiment shift into real actions. Now the fear of a crash is always with us(due to 2009 example), and market was going nowhere for more that 15 months. Fear of a crash and declining sentimet for more than a year resulted in higher unemployment rates, contracting manufacturing industry and declining GDP(please correct if I am wrong on this).

Using a linear thinking one could expect that things get even worse and finally colapse, but market doesn't work like this, because when it is obvious to majority that something will happen, it usually won't.

And as this topic is about how to benefit from reccesion, I would say that if next numbers will come lower and recession "starts", this event by itself becomes a big and fat Buy signal on a stock market a few months later. Otherwise it would be too easy for everyone to make money on a short side.

Fundamental events on this scale usually are a contrarian signals of market reversal, and given the fact that (if)Resecion starts higher in the trend than 2009, it would be a confirmation of an ongoing bull market that is still in the early stages of advance.
Untill the market top of 6900 is not taken out, worries about the direction of the trend will stay with us, creating all kind of "bad news" and events.

Personally I see the Sidney siege and Cairns massaccare as the events that ocured closer to the bottom than to the top. The higher market goes, the better thinghs will become. So on this note I wish everyone more prosperity and better decision making in 2015.

 

[McLovin]

Well, McLovin, I'm sure if any government felt it was in their interests to have unemployment and under-employment measured differently, they'd find a way of having that happen.

Well the reality is that they haven't.

 

[Julia]

Well the reality is that they haven't.

Of course they haven't. Nothing to gain and much to lose in terms of public confidence if they did.

 

[banco]

If Governments want to hide unemployment they generally do it through loosening eligibility for welfare to get them off the rolls of the unemployed. The Labor Government did this in the nineties (the mature age allowance was basically a pension given to unemployable people over 60 years old who were too young for the age pension). If you have a look at the numbers on the disability pension they increase like a rocket about the time of the "recession we had to have".

I think Don Watson mentions in his bio of Keating that cynics said at the time that the expansion of higher education by Labor was done at least partly to bring down the headline youth unemployment rate.

 

[qldfrog]

thanks Rimtas
My view as well:
the basic strategy would be:
official start of recession, lowering of rates by RBA, and strong buy signal for ASX (maybe avoiding banks and rio/bhp-> so not much left
then repatriation of O/S invested money after benefiting from AUD lows to move back in Oz shares.
A scenario taking form, obviously based on my assumptions which are usually proven wrong!!

 

[piggybank]

PB, I'm sorry to hear about your situation. Agree about the deception of successive governments in so misrepresenting the unemployment numbers. Don't you have to be employed for just one hour per week to be categorised as employed? Obviously, that's ridiculous.

Have you been able to narrow down any of the factors which are contributing to your problem, eg being too young or too old, living in a regional area, etc? What previous work have you done? Have you been able to just make direct approaches to local businesses rather than waiting for jobs to be advertised etc, so as to emphasise your initiative? Is there something else you can perhaps do as an interim measure like lawn mowing etc?
(I get a message in the letterbox at least once a fortnight from people looking to do home handyman/gardening work and have used a couple of them.)

I don't mean to be intrusive. By all means just ignore the questions.

Hi Julia,

Firstly, I apologize for having taken a while to reply but I've been off catching up with family & friends the past few days - good for the soul.

Secondly, I don't think you are intrusive!! It nice to know that there are people out there who care and try and help those who are going through a rough patch

Regarding factors - I am 56 - I live in the inner suburbs of Melbourne with my wife and have our own house (paid off). The wife works in the education field and brings in enough money to prevent me from having any support of the government - even a health/concession card. However, I'm not whinging (even though I am a POM) as I know there are a lot of people far worse off than myself. Although I don't bring any money in, I do contribute by doing most of the household chores and jobs (plastering/painting/making meals/ironing/etc) around the house and garden - as the saying goes "a jack of most trades but a master of none". Funnily enough our gardener is coming around tomorrow who was a toolmaker (like me) until about 3 years ago, when he decided he had enough and now works for Jim's Mowing (sub contractor). Although he liked the job with regular hours/money/holidays/etc he wanted to be his own boss/working outdoors/meeting different people/have time off that suited him/etc. However, as with any job you are going to have good and bad bits but it is up to you which one gives you the most positives!! The longest I have ever been out of work previously was 3 weeks but I suppose I was always in the right place at the right time. But my luck has run out in the past couple of years and just wonder when (or if) when I will get my next job - I'm not a workaholic but I do enjoy having to get up out of bed and bring in a share of the household income... Btw, this situation has only endorsed what I already knew, that I married the best woman in the WORLD

Wishing you, Smurf 1976 & qldfrog a Happy New Year and all the best with your trading/investment dealings.

Regards
PB

 

[Julia]

Thanks, PB. I'm glad to know that you're at least not amongst the ranks of the single umemployed trying to live on $35 per day.

I wish you all the best and hope 2015 will bring you better outcomes.

 

[sptrawler]

Hi Julia,

Firstly, I apologize for having taken a while to reply but I've been off catching up with family & friends the past few days - good for the soul.

Secondly, I don't think you are intrusive!! It nice to know that there are people out there who care and try and help those who are going through a rough patch

Regarding factors - I am 56 - I live in the inner suburbs of Melbourne with my wife and have our own house (paid off). The wife works in the education field and brings in enough money to prevent me from having any support of the government - even a health/concession card. However, I'm not whinging (even though I am a POM) as I know there are a lot of people far worse off than myself. Although I don't bring any money in, I do contribute by doing most of the household chores and jobs (plastering/painting/making meals/ironing/etc) around the house and garden - as the saying goes "a jack of most trades but a master of none". Funnily enough our gardener is coming around tomorrow who was a toolmaker (like me) until about 3 years ago, when he decided he had enough and now works for Jim's Mowing (sub contractor). Although he liked the job with regular hours/money/holidays/etc he wanted to be his own boss/working outdoors/meeting different people/have time off that suited him/etc. However, as with any job you are going to have good and bad bits but it is up to you which one gives you the most positives!! The longest I have ever been out of work previously was 3 weeks but I suppose I was always in the right place at the right time. But my luck has run out in the past couple of years and just wonder when (or if) when I will get my next job - I'm not a workaholic but I do enjoy having to get up out of bed and bring in a share of the household income... Btw, this situation has only endorsed what I already knew, that I married the best woman in the WORLD

Wishing you, Smurf 1976 & qldfrog a Happy New Year and all the best with your trading/investment dealings.

Regards
PB

Hey piggybank, Bunnings, Masters etc are always looking out for older guys, with experience, if you want a job go online.

I'm in a similar situation, gave up a career at 56, now with replaced knees and hips finding it hard to get employment.

 

[piggybank]

Hey piggybank, Bunnings, Masters etc are always looking out for older guys, with experience, if you want a job go online.

I'm in a similar situation, gave up a career at 56, now with replaced knees and hips finding it hard to get employment.

Hi sptrawler,

Nice to hear that your replacements have got you up and running (pardon the pun). It must have been a long process?

I have been in the local Bunnings & Masters over the holiday period and business has been brisk - more so with Bunnings. Which is of concern given that I have been a WOW shareholder for 10 years and feel they are out of their depth against Bunnings. It's no good throwing good money away - the management will just have to bite their tongues and admit that it was a mistake (with the benefit of hindsight) and will stick to businesses they have an handle (experience) on.

Getting back in trying to get work at either Bunnings or Masters (or even both if you believe in miracles). I have tried numerous times in the past couple of years of getting on the internet and filling in all the paperwork but no luck (so far). I have even gone and seen the managers what chance have you got of getting a position (even if it is only for 10 hours, but you get the same reply of many hundreds of people are applying but like me are waiting in a queue. I even said that I knew a couple of guys who have got jobs with Bunnings but didn't have to apply as they had friends on the inside in management At least both companies do employ more "experienced" people so I will just have to wait until my number comes up maybe like yourself!!

I hope you have more success in getting a job, sooner rather than later.

Regards
PB

 

[qldfrog]

Piggybank:
just a note: i wanted to message you this morning but it seems your mailbox is full.
Sadly i have no work to offer you but best of luck in the new year.May 2015 bring you positive changes;

 

[Mrmagoo]

Things aren't as bad as happened in past recessions, most things, that are not housing related, are cheaper.
l

What a mean spirited thing to say. To people who are struggling your opinion that other recessions were better is of little value.

The fact is that people are struggling and their ability to consume is greatly diminished. This affects businesses. Perhaps not rich angry old men, but the men and women out on the street are certainly affected.

 

[boofhead]

Having enough cash available to make the most of panic sales of good assetts. I know I missed out of the panic of the GFC - ASX was down a lot. In some locations you may see it impact real estate or even businesses you can buy in to.

 

[Smurf1976]

What a mean spirited thing to say. To people who are struggling your opinion that other recessions were better is of little value.

Obviously if someone is out of work then that's a bad thing for them personally. No argument there.

But from a broader perspective I don't see anything wrong with comparing one period with another as a basis for analysis.

 

[rnr]

Piggybank:
just a note: i wanted to message you this morning but it seems your mailbox is full.
Sadly i have no work to offer you but best of luck in the new year.May 2015 bring you positive changes;

Ditto

 

[skc]

To Piggybank and qldfrog: thanks for being so open aout your circumstances and I wish you two all the best in 2015.

Back to the original question: while correctly picking a recession would certainly offer trading opportunities and financial rewards, achieving such is not straight forward even if you are right. So be careful.

 

[Pudnore]

To Piggybank and qldfrog: thanks for being so open aout your circumstances and I wish you two all the best in 2015.

Back to the original question: while correctly picking a recession would certainly offer trading opportunities and financial rewards, achieving such is not straight forward even if you are right. So be careful.

Hi PB,

Just wanted to tell you about my husbands and my personal situation in the hope that it may help you. We sold our own business 12 months ago after 25 years. We were both 49 and both worked in the business and my husband was a toolmaker too. He decided that the thing he has always loved is driving and approached some motorhome relocation companies. He was told to go and get his HR licence which he did but the jobs didn't eventuate. He then rang some bus companies and was offered 2 jobs almost immediately. Neither of the opportunities were advertised. He had to get a Drivers Certificate ( including a Police Check, a medical and A working with children check). He chose the one he liked the most and has been there for a few months on a casual basis (because that's what he wanted) but has already been asked to work full time. He loves it and the kids love him - probably because he is a big kid himself As an aside I am going to Tafe to study for a job in the health field so I hope I have more luck than you did with getting a job with enough hours.