Research, reports and other stuff

[doctorj]

7 very bold predictions.

Prediction 3: Oil will cease being priced exclusively in dollars.
DeGaulle once decried the dollar’s "exorbitant privilege" of exclusivity in the pricing of the world’s commodities. At some point, quite possibly before the close of 2009, this monopoly will end. Russia is as likely as any resource economy to end it.

 

[doctorj]

Chart de jour.

 

[doctorj]

S&P report Australia faces a 'mild' recession.

 

[doctorj]

UBS claim the EE banking crisis is all over blown and we should all be buying as much Erste (et al) as we can...

 

[doctorj]

Apologies for not posting anything of late - it's largely a reflection of the absence of new developments. Banks are still losing money, property prices are still falling and AIG is still a train wreck. Nothing to see here, move along.

Not quite. The RBA bucked the trend and didn't cut interest rates. Great for the Australian dollar. What might it mean for the wider economy though? The upshot clearly is the bank gets to 'keep some of its powder dry' while it waits to see the impact of the stimulus package. In this, Australia was well placed relative to the likes of US/UK in that rates entered this crisis - supposedly giving us more ammunition to begin with. The downside is that it really does pin hopes on the stimulus package. What if the $900 does nothing but create a one-off jump in the savings rate (through everyone paying it off their credit card). With the stimulus package to commence disbursement in the next month or so, how long will the reserve bank wait to see the impact? There is a real danger of it's wait and see approach resulting in Australia having rates that are too high for too long.

A very high stakes game indeed given so much of the GDP is reliant on USD exports of commodities that have already plummeted in price. The recession we have to have or the one we couldn't avoid?

In reality, probably a little of both. Despite all the raw data, computing power and quant geeks we have these days, we still can't master the economic cycle.

And with that, here's today's reading. A paper from the Bank for International Settlements, a very timely discussion of liquidity and financial cycles.

 

[doctorj]

JP Morgan have taken a look at how deep the recession will be and what deleveraging may mean for the global economy. Decent brief presentation.

 

[Porper]

JP Morgan have taken a look at how deep the recession will be and what deleveraging may mean for the global economy. Decent brief presentation.

So soon is the time to buy up big with our ears pinned back ?

This recession isn't that bad, don't know what all the fuss has been about then,

 

[prawn_86]

This recession isn't that bad, don't know what all the fuss has been about then,

Tyr being a grad looking for a job with 1000's of other out of work that already have experience...

 

[Agentm]

thank you for your very insightful reports doctorj

much appreciated

 

[doctorj]

More than happy to continue sharing these things as I come across them - things are a little slow at the moment as most of the stuff I'm seeing is very UK and Eastern Europe-centric. Probably not that interesting for most on here. Feel free to discuss/debate the points raised on here, reading into a lot of these it becomes quickly apparent that the people writing these things aren't a great deal more sophisticated than journalists. Their single advantage is they tend to be on the curve or maybe a little ahead of it.

Trivia of the day:-
Take a guess how many series 7 BMWs were sold in total in the US last month.

a) 0-10
b) 11-100
c) 101-1,000
d) 1,001-10,000
e) More than 10,000

Answer here: http://www.marketwatch.com/news/sto...45374-F5FD-4042-9C91-9C37A9BFC3FA}&dist=msr_3

 

[doctorj]

This recession isn't that bad, don't know what all the fuss has been about then,

Economic downturns will effect those countries, people and businesses least equiped to deal with it first. Unskilled workers, new entrants (as Prawn pointed out) and those with highly specialised skills for highly cyclical industries are the first out.

On a country level, you could look at Ukraine. Unstable government, a weak currency without the reserve backing of its neighbours (RUB, KZT), highly cyclical major industries (Steel, agriculture) and a poor indigenous banking system.

These types of examples were the economic bellwether of a wider economic crisis.

As the recession deapens and lengthens, its influence will spread to those in the economy more well off.

Lets also not forget that there is plenty of research to support the idea the stockmarket leads the real economy (this is a reasonably intuitive conclusion) by several months. If so, the real economy has a way to go yet.

It's always darkest before the dawn.

 

[doctorj]

Barclays Capital have taken a long, hard look at the tea leaves and are calling for a "massive upside" breakout in copper.

 

[Bushman]

Citi does the A-REITs; lol. It's like watching Princess Di dance with Lord Mountbatten.

View attachment Citi real estate handbook.pdf

PS: best quote about the REITs, the banks etc 'even the pretty girls get hurt in a bus crash'.

 

[doctorj]

This is is from Doug Short (dshort.com) via the FT.

Markets are now falling faster than they did in 1929-1932.

 

[doctorj]

UBS asks 'is gold money?' and predicts an upside to gold of up to USD2,500/oz

 

[nizar]

Trivia of the day:-
Take a guess how many series 7 BMWs were sold in total in the US last month.

a) 0-10
b) 11-100
c) 101-1,000
d) 1,001-10,000
e) More than 10,000

Answer here: http://www.marketwatch.com/news/sto...45374-F5FD-4042-9C91-9C37A9BFC3FA}&dist=msr_3

LOL unbelievable.

 

[doctorj]

I've been rather quite for a while.

Today BarCap claimed we're already seeing the beginning of the end.




.... and if they keep doing so, I'm sure one day they'll be right.

 

[sinner]

hi doctorj,

Not a bad analysis I guess.

Very optimistic, but frankly, on some points I agree, various asset classes have been smashed since July last year and represent good long term buys.

Very weird to see they don't like consumer staples and healthcare in the "equities" section but like them in the "credit" section?

In the end they recommend Materials, Energy and Industrials.

If you look at the corresponding ASX 200 GICS indices we are looking at XMJ, XEJ and XNJ. I advise anyone reading the above analysis to check out the charts for these indices to see how our economy is responding compared to others.

My long term investment portfolio is still only really long gold miners (which counts as materials! and oil/gas. I was already heavy on energy plays from oil at $30 thanks to the huge USO MACD crossover I was watching on the weekly chart.

For materials I like MCR (nickel, no debt), and maybe MCC on coal or GCL if they don't get taken over.

All the industrials seem to be geared to the hilt and still running on boom-time principles, so I am not going there.

 

[doctorj]

The G20 edition of the FT is an absolute riot if you have the time.

 

[doctorj]

Apologies for the bulk update, but unfortunately ASF had some temporary issues on Friday.

Those with interest or exposure to investment banks (eg Macquarie or its vehicles) should find the Morgan Stanley report great, if a little lengthy at 80 odd pages.

The peak oil presentation was interesting also and worth a captain cook. And Deutsche Bank will tell you all you'd ever want to know about hedge funds (and more, much more).