Buy with open arms?

[professor_frink]

Because its true, a funnymentalist mate informs me. I don't know like you frink.

A long term chart indicates the xao could go either way.

Its in a trading range, and folk are buying without confirmation that it will break above resistance of 4600.

And then it will have to break above 5000, so it may either continue, fall or trade between 4600 and 5000 if the optimists are correct.

Personally I think, frink, it will tank and you will all be rooned, as its still technically in a downtrend.

Very brave in September

gg

Hi Garpal,

I don't doubt that it's true, I'm just not entirely convinced of the usefulness of it. It's why I was asking agent why he keeps mentioning it, he may have access to more info than me here.

I've only seen data on flows going back to 2007, so it seems to be a bit of stretch to make any kind of assumptions about it when there only appears to be a small amount of data on it

 

[professor_frink]

its really amazing how good it is out there, with the US in a double dip and the ECRI again below -10.. which of the piigs will fly first? is seems they are stress free..lol

Agent,

just on the ECRI,

If you are interested, have a look at this commentary on it from cxoadvisory. Might be of some use.

http://www.cxoadvisory.com/economic-indicators/ecris-weekly-leading-index-and-the-stock-market/

To test whether WLI exhibits any cumulative and exploitable predictive power for stocks, we relate weekly change in WLI (as revised) to the change in the S&P 500 Index from initial release to four weeks later, from initial release to 13 weeks later and from initial release to 26 weeks later. The Pearson correlations for these three relationships are 0.05, 0.09 and 0.08, respectively. These relationships are all small but positive, possibly indicative of some momentum. In contrast, the correlation between the weekly change in WLI and the change in the S&P 500 Index during the four weeks prior to WLI release is 0.37, again suggesting that WLI lags rather than leads the stock market.

Might there be some non-linearity in the WLI-stocks relationship that yields useful prediction of stock returns?

The final chart summarizes average weekly S&P 500 Index returns by quintile of change in WLI after both preliminary and final release weeks (assuming revisions in WLI are not material). Lack of any patterns across the range of smallest (most negative) to largest (most positive) changes in WLI again suggest no useful predictive power for stock returns.

In summary, evidence from simple tests suggest that ECRI WLI movements coincide with or slightly trail stock market behavior, offering little or no short-term trading intelligence.

 

[noirua]

You're feeling tentative, feeling afraid, unable to open your arms. Like so many, you will open them as soon as you see all the others do the same. Still plenty of stocks looking extremely cheap on almost any basis, but but but you've started to miss a few!

 

[Agentm]

Agent,

just on the ECRI,

If you are interested, have a look at this commentary on it from cxoadvisory. Might be of some use.

http://www.cxoadvisory.com/economic-indicators/ecris-weekly-leading-index-and-the-stock-market/

About ECRI
Overview

In market-oriented economies, cycles in economic growth, employment and inflation are inherently cyclical. Over decades of continuous research covering dozens of economies, ECRI researchers have uncovered reliable sequences of events that occur in the vicinity of turning points in these cycles. Monitoring these durable sequences affords us unique insights into the evolution of each cycle, helping us to predict cyclical turning points



today it indicates a double dip as it still sits below -10

but despite that the SP500 has demonstrated some remarkable leaps and bounds, clearly demonstrating equities are not following the health of the underlying economy, they are on their own manipulated path...

the equity markets dont give you any indication of the health of the economy..

this is what albert edwards said so eloquently recently



"The notion that the equity market predicts anything has always struck me as ludicrous. In the 25 years I have been following the markets it seems clear to me that the equity market reacts to events rather than pre-empting them. We know from the Japanese Ice Age and indeed from the US 1930's experience, that in a post-bubble world the equity market merely follows the economic cycle. So to steal a march on the market, one should follow the leading indicators closely. These are variously pointing either to a hard landing or, at best, a decisive slowdown. In my view we are poised to slide back into another global recession: the data is slowing sharply but, just like Japan in its Ice Age, most still touchingly believe we are soft-landing. But before driving off a cliff to a hard (crash?) landing we might feel reassured when we pass a sign that reads Soft Landing and we can kid ourselves all is well."


"Equity Investors Are In A Vulcan Death Grip And Are About To Fall Unconscious"


the erci indicator has demonstrated a recession in all cases in the past, so its considered a very accurate guide.. double dip is the news its spreading..

interestingly we are now at week 18 of straight equity outflows, this last week in sept saw 7.5 billion in outflows.. despite all the brilliant news lol!!







the equity values are quite manipulated on the SP500 imho, and certainly not following traditional paths..

back to edwards




"August's rebound in the US manufacturing ISM was an even bigger surprise. This is a truly nonsensical piece of datum as it was totally at variance with the regional ISMs that come out in the weeks before. The ISM is made up of leading, coincident and lagging indicators. The leading indicators - new orders, unfilled orders and vendor deliveries - all fell and point to further severe weakness in the headline measure ahead (see chart above). It was the coincident and lagging indicators such as production, inventories and employment that drove up the headline number. Some of the regional subcomponents (eg Philadelphia Fed workweek) are SCREAMING that recession is imminent (see left hand chart below)."





i am keeping my self in cash, i have an eye on a few select stocks i think show some very short term potential.. but it would be disingenuous for me to say i support the notion "to buy with open arms" atm..

but it would be great to hear how long the supporters of the notion feel they can go on buying with open arms and where they see the future..

 

[Mr Z]

The future is Asia... STOP this morbid obsession with the US, their problems are not ours for now!

This is also about massive inflation of the money supply.... cash is trash! They are trashing it! You don't want to be holding anything that they are producing globally with gay abandon.

Between the 'new world' & monetary inflation, commodities will rise & that will drive our market... it is that simple.

Watch Dr Copper.... if copper dies look out, if not, get long Australia.

 

[Mr Z]

'The cult of equity is dead'

Long live equities....

 

[noirua]

The future is Asia... STOP this morbid obsession with the US, their problems are not ours for now!

This is also about massive inflation of the money supply.... cash is trash! They are trashing it! You don't want to be holding anything that they are producing globally with gay abandon.

Between the 'new world' & monetary inflation, commodities will rise & that will drive our market... it is that simple.

Watch Dr Copper.... if copper dies look out, if not, get long Australia.

Yes indeed! All looks go for the Tiger economy of Australia. There are other similar economies such as Canada in the mining sector and the conference on miners of Africa points the direction for many. Take care as Griffin Coal, WA shareholders will tell you, but anyway, mining is a high risk sector.
Money is coming back after the recent political debacles.

Like the whale, filter well, and you will grab yourself a lot of minnows. Buy with open mouth maybe. Seriously though folks time is not on your side on this one.

 

[robusta]

Yes indeed! All looks go for the Tiger economy of Australia. There are other similar economies such as Canada in the mining sector and the conference on miners of Africa points the direction for many. Take care as Griffin Coal, WA shareholders will tell you, but anyway, mining is a high risk sector.
Money is coming back after the recent political debacles.

Like the whale, filter well, and you will grab yourself a lot of minnows. Buy with open mouth maybe. Seriously though folks time is not on your side on this one.

Everyone aboard!!! Look for value and quality companies, buy up on the dips.

 

[noirua]

Everyone aboard!!! Look for value and quality companies, buy up on the dips.

I get that horrible feeling that 'you lot' are not piling in with open arms and mopping up all these cheapy stocks in Australia - watch out for those that are not of course: "Which ones you ask? Do your own research as we can't molly-coddle you all your life 'DO YOUR OWN RESEARCH!'," the wise man shouted to all those transfixed with arms pinned to their sides.

 

[yonnie]

good on ya noirua..........tell them suckers

 

[noirua]

'Up up and away with TWA now ASX200 and all ASX indexes without exception' - all i say is, "Have you bought with open arms as time is running out - stocks heading for the strats and that includes bombed out mining minnows."

 

[noirua]

Today may well still prove cheap and you need only scour the charts of the small and minnow mining stocks, too late in some cases to buy maybe. Kept those arms closed did yee, tut tut.

 

[So_Cynical]

Today may well still prove cheap and you need only scour the charts of the small and minnow mining stocks, too late in some cases to buy maybe. Kept those arms closed did yee, tut tut.

Alot of financial's are still cheap....and some property stocks...and some infrastructure, alot of stocks still set to yield over 8.5% gross.

 

[robusta]

The only problem I have with the buy with open arms idea is you may as well buy a ETF if you subscribe to this theory. There are over 2000 companies on the ASX why dont you pick the best of the best and try to get them at the cheapest price you can?

 

[noirua]

Boom time rats from now as we who bought with open arms, leave our arms open, yes indeed, just to soak up the applause.

 

[Logique]

On you Noirua,
you have fought it out well for the bulls. I watched Inside Business on Sun morning, the Aussie analyst at the end was so bullish I was just about gobsmacked, and chased up the transcript this morning.

(My bolding).
http://www.abc.net.au/insidebusiness/content/2010/s3022164.htm

Clifford Bennett, the chief economist at Herston Economics, joins Inside Business to discuss the surging Australian dollar, the gold price, and the expectation that the Reserve Bank will soon increase interest rates again.

ALAN KOHLER, PRESENTER: The big themes on financial markets this week have been the surging Australian dollar, the gold price and sudden expectation that the Reserve Bank will move up interest rates again, sooner rather than later.

To discuss all this I talked to Clifford Bennett from Herston Economics.

He's a super bull who picked the bottom of the market in March last year and has been on the money in forecasting the rise of the Aussie dollar and gold.

Well Clifford, do you think the Australian dollar will go to parity with the US dollar?

CLIFFORD BENNETT, CHIEF ECONOMIST, HERSTON ECONOMICS: Yeah, you know the Australian dollar is certainly going to be going to parity.

But the real issue and something people have to come to grips with is that it's going to move way beyond parity to a range of 1.03 to perhaps as high as 1.08, 1.12 in 2012.

That's our target at Herston.

And we're looking at a long term multi-decade shift, if you like, in the valuation of the Australian dollar vis a vis the US dollar. And Australian firms need to be prepared for that shift.

ALAN KOHLER: Why is that happening?

CLIFFORD BENNETT: You know it's two pronged.

It's one, Australia is perhaps the next Saudi Arabia. We're going to be an incredibly wealthy country moving forward as global demand for our commodities continues to grow.

And at the same time the United States is the western world's most mature economy where profit margins are squeezed more than anywhere else, interest rates near zero.

It's going to have high unemployment for a while which is going to keep rates low for an extended period - for perhaps another two or three years.

So the US dollar is going to continue to weaken and that is a good thing for the world and for Australia, even, because it means that several of the global imbalances will be worked through in that way, and also it's really the rest of the world doing well that's going to rescue the US economy.

And their global revenue streams for US corporations will be terrific given a weaker US dollar.

ALAN KOHLER: What about gold? It's been surging in the past couple of weeks, closing in on 1300 dollars an ounce. Do you think that it's going to go higher?

CLIFFORD BENNETT: Yes, we're looking for gold you know over the next 12 to 18 months to move up towards 1,450 US dollars to 1,650 US dollars.

We're bullish gold though for positive reasons, Alan, we're not bullish gold for the fear factors of double dip recessions, or inflation or any of those sorts of things.

We're very bullish gold because the two cultures in the world that value gold most highly are India and China and they happen to be the most populous nations on earth, and they happen to be the fastest growing nations on earth.

ALAN KOHLER: So what's the best way for investors to take advantage of all that you're talking about here - the rising dollar and the rising gold price?

CLIFFORD BENNETT: You know people who are trading the US dollar gold price, they're going to have the effect of the Australian dollar being higher depreciating some of their profits if you like.

You know, we've got to remember - for a gold mining company, as the gold price moves higher, it's just really icing on the cake. You know these companies are already highly profitable at these levels.

Some of these gold companies were making money when gold was at 270 or 350 dollars an ounce.

I think the overall thrust will be higher for gold and on that basis some of the mining companies in Australia, the gold stocks particularly, are still under-valued.

ALAN KOHLER: And what about the Australian Reserve Bank?

Do you think that they'll react to what's happing - the rising Australian dollar, the very strong Australian economy, the wealth that's being created here - by increasing interest rates?

CLIFFORD BENNETT: You know, the Reserve Bank's situation at the moment is they said in their last statement that they were aware that inflation could move above 3 per cent and that would be a temporary affect.

And all of a sudden we have this strong rhetoric about growth is quite sound and firm and people are expecting that because growth is going to be strong or above trend that the Reserve Bank should immediately start aggressively hiking again.

Ah, I don't agree with that point of view at all. I think we can have tremendous strong growth in Australia.

In fact, Herston's forecast for 2013 for Australian GDP, in light of my bullish view as I’ve just outlined, is for the GDP to be in 6.5 per cent.

But at that same time we expect inflation to still be around 3 to 3 and a half per cent.

We have to realise that you can have strong growth and low inflation. That's a new concept, but I think the Reserve Bank is aware of that possibility.

So I’m actually a little bit faithful that the reserve bank will look past the current euphoria on various economic pieces and see that it has been their stability - over the last four meetings at least - their stability in monetary policy that is allowed the domestic sector in Australia to again firm up and be less patchy if you like than it was just a few months ago.

It's that stability in interest rates that Australia still needs - particularly on the domestic front - for at least another six months so I’m hoping they'll stay on hold.

ALAN KOHLER: Are you bullish Australian equities even if Wall Street goes down?

CLIFFORD BENNETT: I think you know if Wall Street declines... I’m actually bullish Wall Street. I see both the Dow Jones and the Australian markets doubling in the next 3 years.

But even- You know at some point we will detach from that US-centric view.

Our economy is driven primarily by Asia, and our markets should be driven primarily by Asia as well, because that's where the fresh investment flows to this country will increasingly come from.

For the moment, you know the psychology is still to watch the Dow Jones closely, but I think with time we will see that separation of the Australian market from the US market, as will be the case for most Asian equity markets.

So I’m very bullish the Australian market with or without the Dow Jones, but a bullish Dow Jones will certainly be helpful.

ALAN KOHLER: Thanks Clifford.

CLIFFORD BENNETT: Thank you Alan.

 

[TabJockey]

Clifford Bennet, death or glory. Australia the next Saudi? Pretty intensely bullish stuff coming from a chief economist.

 

[noirua]

Clifford Bennet, death or glory. Australia the next Saudi? Pretty intensely bullish stuff coming from a chief economist.

All serious stuff this, and I would like to slam into touch any accusations that the 'Buy with open arms?' thread put something in his coffee before the interview, it just ain't true.

 

[TabJockey]

All serious stuff this, and I would like to slam into touch any accusations that the 'Buy with open arms?' thread put something in his coffee before the interview, it just ain't true.

I dont know what your saying, are you saying he speaks the truth? or are you saying its far fetched?

Personally I am bullish on the ASX and the Australian economy in general over the next 10 years, anyone who knows what the term "business cycle" means should be relatively optimistic but I think Clifford projections are aimed a little too high.

The first reason is that he is an economist and works for an economics firm. Not to discredit economists in any way, but they dont work in the guts of the real financial world and are renoun for well meant but bogus predictions. Whats that old joke, Economists have predicted 10 of the last 3 recessions? They always seem to be very bullish or very bearish.

Secondly I dont see allot of good reasons for his conjecture, hes mainly just throwing his oppinion out there, im not sure what hes basing some of those predictions on but if it was 3 years of rock solid research I think he would have said so.

Now saying those things I actually agree with his predictions on interest rates, gold and the dollar. But I dont think those levels that they will hit will hold, especially gold and AUD parity.

 

[noirua]

I dont know what your saying, are you saying he speaks the truth? or are you saying its far fetched?

Not a thread of lies cometh from that great man TabJockey, nay not indeed. I do feel he seeks to steal the thunder of the mighty ASF 'Buy with open arms?' thread - he just needs cutting down to size, that's all.