Start of August? Time for a Bounce Back?

[YOUNG_TRADER]

Lower growth is bullish?

LOL well during May/June/July Higher growth was bearish


I'd replace the words 'lower growth' with 'easing sustainable consoldating growth'

As far as I'm concerned, if the US economies growth eases it will take the premium out of the Oil Price and an easing of base metal prices,

however for the base metals story strong underlying fundamental demand from the 'Chindiapan' trio (China India Japan, borrowed this pun form another forum psoter) combined with moderately easing growth consumption demand from the US and EU will keep a floor under the prices supporting the notion of a super cycle theory or a shift in the new long term avg,

I understand the a slowing US consumption will hurt Chinese export goods but its econmy has been growing at break neck pace, so a slowdown to 5-7% growth levels would be good, also China has a multi trillion dollar trade surplus which it can quite easily use to finance its continued industrilisation (ie demand for commodities)

When you look at the big picture, decades of under investment in the resources industry comibined with the sheer inability to bring new projects on stream will ensure that stock levels of most base metals will remain very tight, the key is to steer clear of anything China is a net exporter of and jump on anything china imports, take a look at JML its going to take another year to bring its Copper/Zinc project online, then take a look at ZFX/BHP/WPL and any other major who has been trying to bring a large new project online, the key theme is delays, lack of equipment, lack of people and above all cost blowouts,

There is no way supply for commdities like Nickel/Zinc/Copper/Oil and especially URANIUM are going to be able to come online as quickly as has been predicted, these supply restrictions which have and will continue to result in tight production levels combined with strong demand for commodities will ensure that the Commodities Bull has many years left to run, the only way to de-rail it would be a global recession brought on by some sort of catastrophic event, Bird Flu, Nuclear War etc and if this was to occur, falling investment values would be the least of our concerns!

All in all, I see a long term prices
Zinc around $1.25-$1.75 per lb
Copper $2.50 - $3.50 per lb
Nickel, I can't say
Oil $60-$70 a barrel
Uranium $50-$100 per lb

My preferred Resource investment exposure is Uranium, then Oil, then Zinc then Iron Ore and finally Gold, however one cannot ignore Nickel and Coppers presence,

Until next time, stronger for longer!

 

[nizar]

Lower growth is bullish?

Yeh coz the way i look at things; dow/s&p500 go down and the reason seems to be due to FED raising rates; but since all those consecutive rate rises have now had a negative effect on the economy; the FED will stop rising rates; which means that growth will not be hampered any further and equity markets jump back up...

Probably the above is confusing but if u read the article ull know what i mean

My understanding initially was that; last year the FED raise rates 12 times and no1 trading asx200 seemed to care; but now all of the sudden; the whole world worries; now i understand that every1 is worrying (and this is seen through the volatility of the stockmarkets) because we are at a stage where more rate rises will slow the US economy (still by far the worlds biggest) - and this has been obvious through the slowdown in the housing sector; so if there are no more rate rises; then the bull is back ??

But of course u are more knowledgable than me, Wayne; would u care to elaborate or enlighten us with your thoughts and the way u seen things ?

Thanks

 

[Nick Radge]

I am led to believe that at the terminal point of every Fed tightening cycle since 1920, the market actually trades lower over the following 12-months. Go figure. Here is the quote:

Since the Fed’s inception in 1913, the average historical DJIA return after the Fed’s terminal interest rate hike is negative (i.e., the DJIA goes down, not up), 4, 6, 8, 10 and 12 months thereafter. It’s fascinating to see how a consensus forms around what many seem to think is a logical outcome, a market rally following cessation of Fed rate hikes. These bullish analysts and investors however, are fighting the historical odds, as well as numerous other indicators that point to a continued market decline, which we discuss every month in our newsletters.

 

[Smurf1976]

People have a tendency to categorise things in terms of the decade in which they occur. For example, the boom of the 1980's and 90's, stagflation in the 70's or even the great depression of the 1930's. And before that the "roaring 20's" boom.

So far, this decade has seen the US stock market (as measured by the Dow) go absolutely nowhere. Look at the S&P500 and it's down in nominal terms and down even harder in real terms (inflation adjusted). It would be hard to describe the Nasdaq as anything other than a crash in 2000 from which it has made only a modest, partial recovery. This is despite incredibly low interest rates and reasonable economic growth.

So far, this decade is shaping up as one where the US stock market went nowhere (heavy losses in real terms) and residential property prices have risen to an incredibly high level where yield is a joke.

Given that the Fed has a history of raising interest rates until something goes wrong, the question becomes one of WHAt goes wrong and WHEN. IMO either we'll see an end to the stock market being flat (ie it heads down) or the housing bubble bursts. The latter seems to be looking rather likely IMO once all those recent boom-era adjustable rate mortgages in the US reset at higher rates - something that ought to also reduce consumer spending with all that entails.

And then there's all the strife with terrorists, in the Middle East and so on.

Bullish? I sure am. But not on broad stock market indices or residential property. Picking the opportunities rather than just throwing money at the market 1990's-style has been the winner in recent years and I see no reason for that to change yet.

Markets swing from under valued to over valued as measured by p/e (or yield in the case of property). We've seen the over valued part but are nowhere near the under valued part of the cycle (yet). That day will come IMO.

All in my opinion of course. Do your own research before investing.

 

[profithunter]

Mark the 6th of August in your calendar, this is when I expect to see a key reversal in the market, from this point the xao should have a strong bull run for the rest of the month.