Australian (ASX) Stock Market Forum

The Bull shall Return

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So the Fed has finally paused, after 17 straight raises they have paused, the mkts rallied at first, before players chose to focus on the qu of why did the fed pause?

A slowing US economy? Obviously so, but is this such a bad thing for commodities? As I have asserted before, a slowing US economy won't effect commodities as much as most think, I firmly believe any demand shortfalls left open by the US will be met by the 'Chindiapan' trio and even Brazil and Russia and other parts of Europe to, just think, has any noticed how Brazil and Russia are begining to industriliase themselves, sure they are both commodity ich (Brazil in Metals & Russia in Energy particularly Gas) but the more they consume locally the less there is for export.

Wayne I would appreciate your view on this, I know your not the most bullish on commodities, but do you acknowledge that 20 years worth of underinvestment in the Resource Sector cannot be rectified by 2-3years of a boom mkt, Supply is still lagging with many so called new production mines being significantly delayed and running way over budget, there's no doubt that there's still plenty of Resources out there, its just the prices have to stabalise high enough to justify the investment


A note of concern, the Dow has failed to break and close above 11263, 3x (maybe 4x) now, I really thought Fed Pause would be just what the doctor ordered

So Mr Roach, I mean Wayne ( :p: ) your thoughts?
 
should we be worried about this?? i had to read some of it twice to make sure! :eek:

Fed Probably Will Skip Rate Increase Next Month: John M. Berry

Aug. 9 (Bloomberg) -- Now it's wait and see.

Federal Reserve officials yesterday left their target for the overnight lending rate unchanged at 5.25 percent, hoping that it is already high enough eventually to bring core inflation back to an acceptable level.

Fed Chairman Ben S. Bernanke and his colleagues will watch the tug of war between slowing economic growth and still sizeable inflationary pressures to see whether they may need to raise the target again after this pause.

For now, the best guess is probably that there won't be a rate increase next month.

Yesterday marked the first time since May 2004 that the Federal Open Market Committee met without raising the target.

``The committee judges that some inflation risks remain,'' the FOMC statement issued after the meeting said. ``The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.''

In other words, the Fed isn't necessarily done.

Still, it was pretty clear from other parts of the statement that a majority of the committee thinks slower growth and the lagged effect of previous rate increases will do the job. One member, Jeffrey M. Lacker, president of the Richmond Federal Reserve Bank, dissented in favor of another 25 basis-point increase in the target.

``Inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand,'' the statement said.

Lower Growth Forecast

Shortly before the FOMC announcement, Macroeconomic Advisers LLC, whose forecasts are closely watched by most Fed officials, reduced its estimate for third-quarter growth to a 2.4 percent annual rate, just a notch below the 2.5 percent second- quarter rate, which was lower than many economists had expected.

Meanwhile, an expanding group of well-known economists is voicing concerns that not just slower growth -- which the Fed has welcomed -- but an economic slump may lie ahead.

Economist Nouriel Roubini of the Stern School of Business at New York University said the ``recent flow of dismal U.S. economic indicators'' has convinced him ``that the odds of a U.S. recession by year-end have increased from my previous 50 percent to 70 percent now.''

His comments were posted yesterday on the Web site of Roubini Global Economics.

``The housing slump is becoming a real bust; oil is headed higher and higher and could be soon well above $80; and inflation -- both core and headline -- is rising further, forcing policy makers across the world to increase interest rates. Housing alone is now enough to cause a severe U.S. recession,'' Roubini said.

Recession or Worse?

And J. Bradford DeLong, an economist at the University of California at Berkeley, said recently on his Web site, ``With interest rates and oil prices rising and consumers spending beyond their means, we may be headed for recession -- and worse.''

Roubini argues that a slump in the U.S. will quickly cause growth to slow in other parts of the world.

Well, Fed officials recognize there are substantial risks ahead, particularly given the pressure of high energy prices on both inflation and consumer spending. None of them is expressing concern that a recession is likely.

Consumer spending rose at a 2.5 percent annual rate in the second quarter, well below the average in recent years and it may be even weaker in coming months. Personal income gains from wages and salaries may taper off as the number of payroll jobs created each month eases, along with the number of aggregate hours worked.

Financial Distress

Meanwhile, home equity borrowing is no longer increasing as interest rates have gone up and housing prices have begun to turn down. Some analysts have also pointed to a sudden spurt in revolving consumer credit -- essentially credit-card balances -- at an annual rate of 11 percent in May and 9.8 percent in June, as evidence of some financial distress among households.

Nevertheless, Fed officials are generally sticking by their collective forecasts of slower, but still solid, growth in the second half of the year, though they have to be somewhat troubled by the unexpected dip in business investment in new equipment and software in the second quarter.

On the inflation front, they can't be very happy either with yesterday's report from the Labor Department that unit labor costs rose at a 4.2 percent annual rate in the second quarter at non-farm businesses. That meant they were up 3.2 percent over the 12 months ended in June.

What Will It Take?

Officials probably will discount that unit labor-cost figure because it was based on an increase in compensation per hour at a 5.4 percent rate, well above the increase shown by the employment cost index, which was about 2 percentage points less for the quarter.

At this point, Fed officials appear to be much less worried about inflationary pressure arising from labor costs than some private-sector analysts are.

So what would it take to cause officials to resume raising the overnight lending rate when the FOMC next meets in late September?

Signs of a sharp rebound in economic growth combined with added inflationary pressures probably would do it, though such a rebound appears unlikely at the moment.

A large increase in inflation expectations might also push the Fed in that direction, depending on what seemed to be the reason for such an increase.
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Just as the XAO edges up towards the 5100 level, whack and down we go, the fundamentals are there, the super profits are there, but so are the bears and the selling, this is taking way too long to recover to be called a correction :confused:


Will have to seriously re-think my views and outlook to make sure I'm not holding on to blind faith
 
I'm only buying gold, uranium and oil atm YT. And short term trading. Concerned for other growth stocks.
 
YOUNG_TRADER said:
Just as the XAO edges up towards the 5100 level, whack and down we go, the fundamentals are there, the super profits are there, but so are the bears and the selling, this is taking way too long to recover to be called a correction :confused:


Will have to seriously re-think my views and outlook to make sure I'm not holding on to blind faith
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I think the Bulls are just being a bit more selective and not holding as long as they used to, unless the stocks fundamentally sound.

As for Kennas's comment, the two oil stocks I'm holding are behaving like pigs the last few days.
 
I just can't convince myself of this being a bear market despite the whole world declaring the sky as fallen.

Taking a step back and looking at the XAO and the first thing that still hits me in the face for the last 2 months is a series of higher lows with a few surges and pullbacks when the market gets a bit ahead of itself, not a series of lower lows.

Seems to me as if there's not all that much money being thrown around, and what little money there is heads for the exit all at the same time at the first hint of trouble, hence the slow climb up and then the dizzy descent to...not quite as low.

But what do I know?
 
Freeballinginawetsuit said:
I think the Bulls are just being a bit more selective and not holding as long as they used to, unless the stocks fundamentally sound.

As for Kennas's comment, the two oil stocks I'm holding are behaving like pigs the last few days.
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I've 4 oil stocks atm: OSH, HDR, BPT and BHP (I class that as oil too)

I've held these for over 2 years so they're still going OK except for that flee carrier, HDR. Think I'll be writing that off soon.

In regard to being Bullish or Bearish, I'm being cautious atm. Waiting for some positive direction and a clearer outlook for the US. If that's possible. I think I'm on the fence, leaning just over into the bear cage.
 
Well at least DJIA is above and has held above its previous 11270 resistance level, this is now acting as support/consolidation, problem the same level for Aus XAO would be 5100 (I made a mistake in the past, I was concentrating on the XJO breaking 5100, not the XAO) I agree with others comments, the XAO must break above and hold 5100 for us to see a resumption,

One bit of good news is that a few coporate advisors I have been speaking to are saying that the US funds and such are finally starting to trickle back into to ASX after their May exit, a few are also hinting that due to the uncertanties in the North American region combined with the fact that all Aus miners trade on much lower P/E's has shown alot of new interest from US funds etc,

So will be interesting to watch,

Still can't get over BHP's fall of last 2 days, record profit = a 7%+ drop, profit taking maybe but I think thats a little extreme,
 
DJIA is well above previous resistance of 11,270 (Currently @ 11470)

XAO appears to have finally opened above 5100

and XJO is appears to be heading towards 5200 level,

So is the Bull back? Probably not yet,

When will he be back? Soon I hope!

How long will he stay for? Not long as October is around the corner a few weeks at best

Thoughts?
 
YOUNG_TRADER said:
DJIA is well above previous resistance of 11,270 (Currently @ 11470)

XAO appears to have finally opened above 5100

and XJO is appears to be heading towards 5200 level,

So is the Bull back? Probably not yet,

When will he be back? Soon I hope!

How long will he stay for? Not long as October is around the corner a few weeks at best

Thoughts?
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U know i was thinking about "red" october and maybe it wont happen at all; at least not to our markets; and if it happens it wont be as harsh as last time unless we run very hard the next few weeks.

DOW and FTSE are near their May highs but XJO and XAO quite far

Alot of money is already on the sidelines (since may-june) so any selling would be limited IMO

And so many people expect it; so it may just be self-fulfilling; but something this eagerly anticipated just may not happen because so many people are expecting it; last year it wasnt expected and it happened. The masses are hardly ever right in terms of predicting market direction

I will open an account with CMC so if the market does fall; i can short XJO and DOW and others if i see an opportunity
 
Seems a lot of volatility has gone out of the market in the last two weeks. Hopefully thats a sign of things to come.

billhill
 
nizar said:
DOW and FTSE are near their May highs but XJO and XAO quite far
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Someone want to tell the aussie market the following info?

$INDU Last: 11,613.19 Change: +72.28 +0.63% Volume: 226,387,852

That means the Dow is 1 or at most 2 good days off its May Highs!!!!!!!!!
 
i agree yt

we follow the dow jones when its a red day, just yesterday dow down by around 14 so aust market took it down 50 something points.

now us stocks rocketing aust still thinks the world is crashing, aust market sentiment is ridiculous.

its all that negative attitude from lateline business, they are calling the resources boom a bubble now and stating that the run is over. to much negativity from media, im a fa of the stronger for longer theory BUT with this attitude we wil force ourselves into a bear market when the DOW will be at alltime highs
 
now our market is down.

at these prices many stocks should be excellent buying but it seems the bears are in control.

uranium supply is running out
zinc supply is running out
nickel supply is running out
copper supply has only just met demand

world metal demand will remain robust during industrialisation of china and india


i dont understand the market sometimes, what will the rap be on lateline business tonight -

following very strong leads from overseas markets with metals prices rebounding from a fall from world growth concerns, the aust all ords plunges amongst fear and confusion that the sky is falling. despite the fact that the dow is near highs made in may the aust all ords is still floundering around the 5000 point mark.

sorry to sound sarcastic guys but can someone give me a reason why our market hasnt seemed to recover from the may correction but the us market has.
 
dj_420 said:
i agree yt

we follow the dow jones when its a red day, just yesterday dow down by around 14 so aust market took it down 50 something points.

now us stocks rocketing aust still thinks the world is crashing, aust market sentiment is ridiculous.

its all that negative attitude from lateline business, they are calling the resources boom a bubble now and stating that the run is over. to much negativity from media, im a fa of the stronger for longer theory BUT with this attitude we wil force ourselves into a bear market when the DOW will be at alltime highs
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dj_420, YT,

By that logic, we shouldn't have had much of a bull run over the past few years.

It looks like the very same thing that drove our market higher over the last few years is the thing holding us back presently. And it aint the Dow!

During the last big bear for the U.S(66-82) it actually managed to make all time highs in 73(although very briefly) before the bear really kicked in. Not saying that's going to happen this time, but it's something to think about.

In regards to the "stronger for longer" theory,

Look at the last commodities bull in the 70's- it wasn't a 10 year run straight up, there was an almighty big correction in the middle of it, before we began the run up that ended in 1980. Just another thing to think about.
 
dj_420 said:
now our market is down.

at these prices many stocks should be excellent buying but it seems the bears are in control.

uranium supply is running out
zinc supply is running out
nickel supply is running out
copper supply has only just met demand

world metal demand will remain robust during industrialisation of china and india

i dont understand the market sometimes, what will the rap be on lateline business tonight -

following very strong leads from overseas markets with metals prices rebounding from a fall from world growth concerns, the aust all ords plunges amongst fear and confusion that the sky is falling. despite the fact that the dow is near highs made in may the aust all ords is still floundering around the 5000 point mark.

sorry to sound sarcastic guys but can someone give me a reason why our market hasnt seemed to recover from the may correction but the us market has.
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DJ, It's still off it's lows and just tracking sideways for a bit. Be patient. I've noticed money switching from commodities to healthcare and staples over the past few weeks which is interesting. I think they'll switch back once the Chindia story is confirmed to have more legs and 'supercycle' still apparant.
 
ill try kennas

its just very frustrating to watch dow performing very well and our market doesnt take notice.

some good points prof frink, hopefully we arent in the position for a huge correction, seems to me that we have already corrected a few times and cant seem to break 5000 and keep support above that level

oh well, im still not going to switch into defensive stocks, i think we have a while to run yet, especially for u and zinc
 
The bull may return, or a bull may return, but may well be a different type of bull, that looks at different sectors to visit than those before.

Oil stocks may well see oil trading in the US$50 to US$60 range from here and may well be suffering from higher production costs or lowered estimates on development of the newer oil finds. Many stocks are probably worth selling as the shake-out may not yet be complete.

Coal and iron ore is a more dodgy territory than before, note Macarthur Coals surprise withdrawal of its powerstation development, they may well see tighter times ahead for iron ore and pig iron prices with costs rising. The sector has been heavily dumped of late and some stocks may be good buys, beware however.

There are fears in the US that the bond market ( junk or trailer trash bonds ) is badly over stretched and a correction is due. Previous dumping in this market has seen much pain in the past. Worth reading recent articles on likely outcomes.

The uranium sector may still have more running to do, though views are that most small stocks will come to nothing and will have eventual funding problems should markets slide in the sector.

If inflation turns downward it may be best to ignore the main ASX indexes, ASX 200 for instance, and look more at individual stocks, not involved in oil, coal and other mining activities or supplying the property sector.
 
dj_420 said:
i dont understand the market sometimes, what will the rap be on lateline business tonight -

following very strong leads from overseas markets with metals prices rebounding from a fall from world growth concerns, the aust all ords plunges amongst fear and confusion that the sky is falling. despite the fact that the dow is near highs made in may the aust all ords is still floundering around the 5000 point mark.

sorry to sound sarcastic guys but can someone give me a reason why our market hasnt seemed to recover from the may correction but the us market has.
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Is it just me or were you watching a different lateline last night?
There was a whole segment dedicated to an interview with Bruce Teele, who stated quite clearly that comoditiy stocks such as BHP had been oversold.
So to suggest that lateline business was being bias is plain wrong IMO, otherwise thay wouldnt have ran the interview full stop...
Here is a link to that interview if anyone is interested:
http://www.abc.net.au/reslib/200609/r107760_333673.asx (windows media)
here is the link to the plain text Transcript http://www.abc.net.au/lateline/business/items/200609/s1745802.htm

Also, I consider myself new to the market compared to some on here but, correct me if Im wrong, the US markets are much more diverse then the ASX. In other words we rely on the commodities more so then the US. Looking at the commodities list today (a sea of red) its not hard to see why were reacting.

cheers
 
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