Welcome Guest [Log In] [Register]


Reply
  • Pages:
  • 1
  • 5
End of China boom is hurting, but not all is lost, Citi says
Topic Started: 19 Sep 2014, 03:49 PM (2,561 Views)
Mike
Default APF Avatar


Read more: http://www.smh.com.au/business/the-economy/end-of-china-boom-is-hurting-but-not-all-is-lost-citi-says-20140919-10j3tg.html#ixzz3DjXptAoa

Quote:
 
A slowing Chinese economy is dragging down Australia's national income, eroding key commodity prices, but all is not what it seems, according to Citi.

The investment bank's chief economist Paul Brennan is upbeat about Australia's long-term economic prospects, saying corporate cost cutting and a strengthening US will eventually benefit the country.

The prices of Australia's commodities have fallen about 12 per cent this year, with iron ore, our most lucrative export, leading the plunge with a 30 per cent decline to about $US83 a tonne.

Mr Brennan attributed the falls to a weakening Chinese economy, with the country's official purchasing managers index losing momentum in August for the first time in six months.

But Mr Brennan said Australia's economy was more closely tied to the US than China, despite the latter being our No. 1 trading partner.

And the US outlook is looking increasingly bright. Federal Reserve chair Janet Yellen said this week that the US economy was improving although she did not alter interest rate guidance, saying that the labour market was yet to fully recover.

"While the slowdown in China is lowering commodity prices, the impact of lower commodity prices on mining investment is only gradually impacting Australia's real GDP growth," Mr Brennan said.

"In the meantime, the common financial cycles between the US and Australia are driving a pick up in interest rate sensitive sectors. As a result Australia's economic growth has held up reasonably well at close to trend."

Mr Brennan said an increased focus on corporate cost cutting and a strong uplift in productivity growth had hindered job growth and investment spending.

But he expected that pain to be short-lived.

"Provided the productivity can be sustained, this provides the foundations for future growth in employment, which boosts income and consumer spending, and the stronger demand that businesses want to see before committing to investment."

The only problem is, Mr Brennan said he did not know how long that would take.

I agree with this article.

Bears or bearish people need to start factoring in what a strongly growing US economy will do for Australia and the wider world.

The US is still by far the largest economy in the world, its consumers help drive the Chinese export economy. The ripples will be felt far and wide.

This is part of the reason why I have long predicted Australia will see rising interest rates in 2014/15. Once the US moves rates it gives our RBA room to raise rates as the effects on the dollar should be reduced due to US tightening of monetary policy.
http://mike-globaleconomy.blogspot.com.au/
Profile "REPLY WITH QUOTE" Go to top
 
newjez
Member Avatar


Mike
19 Sep 2014, 03:49 PM
Read more: http://www.smh.com.au/business/the-economy/end-of-china-boom-is-hurting-but-not-all-is-lost-citi-says-20140919-10j3tg.html#ixzz3DjXptAoa




I agree with this article.

Bears or bearish people need to start factoring in what a strongly growing US economy will do for Australia and the wider world.

The US is still by far the largest economy in the world, its consumers help drive the Chinese export economy. The ripples will be felt far and wide.

This is part of the reason why I have long predicted Australia will see rising interest rates in 2014/15. Once the US moves rates it gives our RBA room to raise rates as the effects on the dollar should be reduced due to US tightening of monetary policy.

Do ya think she can take it Scotty?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
Profile "REPLY WITH QUOTE" Go to top
 
Jimbo
Member Avatar


Mike
19 Sep 2014, 03:49 PM
This is part of the reason why I have long predicted Australia will see rising interest rates in 2014/15. Once the US moves rates it gives our RBA room to raise rates as the effects on the dollar should be reduced due to US tightening of monetary policy.

QE1, tighten, fail, moar QE

QE2, tighten, fail, moar QE

QE3, tighten, ______,______ (fill in the blanks).
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
Profile "REPLY WITH QUOTE" Go to top
 
Mike
Default APF Avatar


Jimbo
19 Sep 2014, 04:59 PM
QE1, tighten, fail, moar QE

QE2, tighten, fail, moar QE

QE3, tighten, ______,______ (fill in the blanks).
What will be you're next story when the US soon ends QE, starts raising rates and low and behold the sun still shines.

Do you really think QE will go on forever until some dooms day collapse. Is that what you really think will happen.

Back in reality. QE will soon stop, interest rates will begin to rise in 2015 and strong US economic growth and job creation will continue if not accelerate in 2015 and beyond for at least the next few years.

While interest rate increases mean borrowers pay more for credit, it also signals to everyone that the economy is growing strongly and set to for a sustained period. This unlocks further confidence and investment as businesses increase spending to cater for the increased demand.

We don't have to wait to long to find out who is right, 2015 is the year.


newjez
19 Sep 2014, 04:10 PM
Do ya think she can take it Scotty?
The Dilithium chamber is slightly out of alignment, nothing she can't handle Mr Spock.
Edited by Mike, 19 Sep 2014, 06:13 PM.
http://mike-globaleconomy.blogspot.com.au/
Profile "REPLY WITH QUOTE" Go to top
 
Jimbo
Member Avatar


Mike
19 Sep 2014, 06:12 PM
What will be you're next story when the US soon ends QE, starts raising rates and low and behold the sun still shines.

Do you really think QE will go on forever until some dooms day collapse. Is that what you really think will happen.
They won't be ending QE next month. They might stop buying new "assets", but to end QE, you need to sell your balance sheet back to the market.

So far, each time the FED have stopped buying assets (QE1,QE2) the economy has gone backwards so they have come back with more QE but on a far greater scale.

Now they are contemplating ending asset purchases for a third time and jawboning away about raising rates.

So what is it? Is it going to be third time lucky for the FED or will they jump back in with more QE as soon as the markets start to tank or the USD gets too strong.

I know where my money is.
Edited by Jimbo, 19 Sep 2014, 07:56 PM.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
Profile "REPLY WITH QUOTE" Go to top
 
John Frum
Member Avatar


Jimbo
19 Sep 2014, 07:56 PM
They might stop buying new "assets", but to end QE, you need to sell your balance sheet back to the market.
A fact that most find too uncomfortable to address.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
Profile "REPLY WITH QUOTE" Go to top
 
miw
Member Avatar


Jimbo
19 Sep 2014, 07:56 PM
They won't be ending QE next month. They might stop buying new "assets", but to end QE, you need to sell your balance sheet back to the market.
Sigh. Another person who confuses a stock with a flow. The important thing about QE is the flow, not the stock.

The Fed has no plan to sell off the balance sheet assets. In fact at this week's FOMC they gave more detail about how they return to normal operations.

1. The last 5B/month of QE will end in October.

2. At some stage interest rates will rise. Between now and then, principal payouts on balance sheet assets will continue to be reinvested.

3. At some time *after* interest rates rise, payouts will stop being reinvested. This will continue until there are no mortgage-backed securities left, and until the treasury holdings are the amount consistent with proper operation of monetary policy. Obviously, this will take many years. While it is happening it will be a kind of reverse QE.

John Frum
19 Sep 2014, 08:12 PM
A fact that most find too uncomfortable to address.
Really?

http://www.federalreserve.gov/newsevents/press/monetary/20140917c.htm

let me know if you need me to explain this to you. It seems pretty clear to me.
Edited by miw, 19 Sep 2014, 08:20 PM.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
Profile "REPLY WITH QUOTE" Go to top
 
Jimbo
Member Avatar


miw
19 Sep 2014, 08:15 PM
Sigh. Another person who confuses a stock with a flow. The important thing about QE is the flow, not the stock.

I understand what the FED is saying it intends to do, but nonetheless, QE doesn't end until it has been fully unwound.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
Profile "REPLY WITH QUOTE" Go to top
 
miw
Member Avatar


Jimbo
19 Sep 2014, 08:32 PM
I understand what the FED is saying it intends to do, but nonetheless, QE doesn't end until it has been fully unwound.
OK. You go with your own definition.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
Profile "REPLY WITH QUOTE" Go to top
 
Jimbo
Member Avatar


miw
19 Sep 2014, 09:25 PM
OK. You go with your own definition.
It is not my definition.

QE is a temporary asset purchase program and it doesn't matter how it is dressed up, until the FED has normalised its balance sheet, QE has not ended.

Just like you need positive interest rates to be able to reduce interest rates in a future recession, the FED will need a reduced balance sheet in order to be able to conduct a similar QE program in the future.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply
  • Pages:
  • 1
  • 5



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy