Australian Bear Raid

http://www.news.com.au/realestate/in...-1226477993222

First time home buyers distress paper.

I have been viewing other Journals this week and last and I notice myself getting lost because I am reading the most recent post with not knowing fully what is being discussed from the 'first couple post. I have come up with a way for those interested in Australia on everything from Stocks/Bonds/Interest Rates/ Currency/ News to not be confused no matter which page you start with. Below is the new format on how I will structure the thread. It is for me but it is also for those who want more information on what is going on witout having to refer back to some other previous post for complete information. Starting Tomorrow Sydney Open this will be the structure on the thread here on out.


Sydney Trading 10a-4p (Sydney Time) 5p-11pm (PST my time)

The Thread will cover everything related to AUD.

Monday Throughout the day posting’s of Tweets, news post, AUD S/R levels (once or twice only)
Tentative- Econ releases basic numbers and a couple sentences
11pm- Sydney market Close; Equity earning or stocks of note. Day's AU news of note


Tuesday throughout the day postings of Tweets, news post, AUD S/R levels (once or twice only)
Tentative- Econ releases basic numbers and a couple sentences
11pm- Sydney market Close; Equity earning or stocks of note. Day's AU news of note

Wednesday throughout the day postings of Tweets, news post, AUD S/R levels (once or twice only)
Tentative- Econ releases basic numbers and a couple sentences
11pm- Sydney market Close; Equity earning or stocks of note. Day's AU news of note

Thursday Throughout the day posting’s of Tweets, news post, AUD S/R levels (once or twice only)
Tentative- Econ releases basic numbers and a couple sentences
11pm- Sydney market Close; Equity earning or stocks of note. Day's AU news of note

Friday- 2pm Market close week in review; personal trading statement for the week
5pm Australian Excel sheets of Econ reports for the week (updated), COT positioning Graph (updated)

Saturday- Lessons, Ideas, or Free write.

Sunday- 12pm bullet points of previous week from news, markets, and upcoming week events

Last Updated PnL before the new structure comes into place.

I cut most of the shorts only because I suspect there will be more consolidation as noted in AUD/USD into October minutes. I will cut if we break the upper triangle range and will add if vol/headline risk starts to pick up.
Otherwise I am not worried about the divergence too much on this range for the current shorts and position sizing.

Paul Bloxham, CE at HSBC (very outlandish and bullish in the past)
said this:

This mining boom is different....

Australia has a long history of mining booms. These have often been followed by busts. But this one should be different. Why? Simply put, any irrational exuberance in mining has not spilled over into the broader economy this time around, as it had previously. The floating AUD has been the key part of this story. Rising commodity prices were matched by a large AUD rise, rather than rampant inflation as happened before. The AUD has held back other sectors of the economy and contained inflation. When the mining story fades, which is not yet, there will be room for other sectors to pick up and growth to rebalance.

Of course, some risks remain.
China presents the main risk. Our central case holds that China’s growth cycle is currently bottoming out, with growth forecast to pick up to 8.4% next year. This is expected to support demand for commodities and prevent prices from falling too much further.



SOURCE: scribd.com Outlook paper release 09/25/12
120925 Australian Economics Comment - This Mining Boom is Different

What mining boom? Commodity prices have bee dropping steadily over the past year. BHP Billiton has underperformed the AORD Index over the past year for the first time in its history since it's merge in 2001

Historically the AUD has correlated pretty closely to commodity prices for obvious reasons but this time Commodity prices are dropping yet the Aussie DOllar is breaking away from the drop and staying strong.

Well market manipulation and central bank intervention is showing a server side effect in this move. Something smells really dodgey about this. The Aussie Dollar strength has nothing to do with demand for Aussie dollars imo but the shere supply of USD as a result of attempts to save the Eurozone and hence the world economy over however long now we've been bailing water.

What do you think?

there could be other reasons why strong aud.

like northern hemisphere war coming. looks more and more possible.

Usually when I trade I look for 3 main drivers to ‘Position trade.
1st- Fibonacci analysis both retracements and Extensions (ABC)
2nd- Correlation from both a Inverse standpoint and a direct standpoint. Inverse has to be strong and vise versa.
3rd. Headline risk or increase vol risk.
So far 2/3 of my entry criteria for a ‘position’ trade has been activated. .






1st Fibonacci on AUD/USD has been testing various key 61.8% 78.6% points for days and now it’s starting to take shape to the downside only one more 61.8% close below would cement the Fib side. Below is the chart of current AUD/USD the Yellow (61.8%) is from Last Year Hi/Lo of 1.1079/0.9386. The Red 78.6% is from the 6/1 bottom to the Last hi set 9/14 we have also trade below and close below this 78.6% The Last hurdle on the Fib side to overcome is the BLUE 61.8%. This blue 61.8% is YTD HI/LO 1.0855/0.9581 the moment we close below maybe even trade through is when I will pile in on shorts for what is now looking like an ABC. On ABC extensions if this is a true one 78.6/88.6/1272 come in at 1.0272/1.0230/1.0056






2nd. Correlation I have stated before I watch dollar index constantly for better signal on AUD/USD or /6A entry and ES (S&P) to show a confirmed move. Dollar Index was trading in this range of 78.6%/88.6% or (78.81/79.43) TYD Hi/Lo since the sell off and on daily it broke out above 78.6% on 9/20. Since 9/20 dollar index never closed below 79.431 and it has acted as new support. We could trade to 61.8% on dollar which is 80.46 but of course 80 needs to be test first. On S&P we finally saw a fill of Ben’s QE3 spike set 9/13 so this could see some more pressure unless this is just purging for a few days before a move higher.





3rd. Headline Risk/Volatility Implied vol’s on AU options has picked up these last two weeks and it looks more primed for an October cut. However I am not in the October cut camp looking at November myself but if we do get a cut in October this will send AUD/USD to 1.0165 very quickly possibly within a 24hr period from where we are trading at the day of. Spain is going to request a formal bailout but we need them to act crazy and act as if they don’t need it before they come out. Headline risk is going to pick up and it.
will be focused on Spain/ RBA minutes

Hello Cindy,

Australia's terms of trade since 2004 has increase at a whopping rate Y/Y this is part of the main reasons we saw real income growth and housing growth pick up so quickly. I agree with you that since February main commodities that track exports on Australia have been hammered and previous interest rate drops have not worked on taking the rate lower but if we should see Iron/coal/pa/pl under pressure with increase project delays the rate drops will see $A come down at a much faster rate than prior.

Check this Chart on Terms of Trade if we come back down to average either through a China/Japan slowdown than the domino effect of project delays by corps>cost cutting>layoffs>less tax receipts to Government projects>real incomes dont increase or even come down> already heavily indebted housing market will collapse> rates further eased> stimulus can very well happen... Provided Commodity prices don't take off again like 2011

Terms of trade (posted earlier but its still a great chart to see a snapshot)

Swaps market pricing in a 67% probability of a 25bp rate cut by RBA next meeting

I am not expecting a cut in October more looking for Nov/Dec but if we get it than AUD will get hammered to 1.0166 quickly at the level on decision day.

If the cut does not come covering is going to be brutal on swap side which will force shorts out on AUD/USD quickly the rise could be very powerful

Just added to existing shorts at the top of this hour looking for NY tomorrow to follow through on the headline risk.

2012 Article IV Consultation with Australia Preliminary Concluding Statement IMF REPORT



Now Although I agree with IMF on so many previous papers on other economies they are saying Australia can essentially withstand a 35% collapse in housing prices without a major collapse in other interest rate sensitive sectors this I disagree with. They mention that mining is going to be bigger in the years to come and the risk of rising/following commodity prices will face a greater risk to overall performance. They briefly mentioned and stated almost emphatically that the appropriate action will be taken if Cyclical trouble comes to head...Hearing this makes me remember one memo that crossed my desk some years ago and that is:



' We can control the prices for a few days but the trend will always prevail. We can develop these models to measure and quantify risk so that all of you can understand what our goals here are and what is expected but let me state here I am worried. I am worried that we are unable and will never be able to control and measure one variable that has plagued models for decades and that is the human element. We can measure a group of people because it's easier to understand the mentality and choices that they might take but we will never be able to do this for a single individual because the numbers will never fit. I hope herd mentality takes hold again so we can quantify it but it seems more and more we are in a new realm where the group is acting far beyond our models'. Late 2007


I mentioned the above because we no longer live in a simple cause/effect model but we are now more than the GFC are living in a model of Cause/Infinite complex variables/effect= outcome


So for the IMF to state that if monetary authorities adjust (hopefully sooner than later) than consumer behavior will adjust around it and a crash will be avoided is not the common theme anymore. We could see a bigger decline than what is forecast or we could see a small retrace, either way I will always bet against those who go off of simple models.

Full IMF PAPER: http://www.imf.org/external/np/ms/2012/092012.htm

per the new structure I am giving the news release a bit early tonight instead of 11pm PST as I have other engagements. Here is some news of note since the open and overnight.

 

1. Ramsay Health: +1.98%
2. Resmed: +1.69%
3. CSL: +1.1%
4. Sonic Healthcare: +1%
5. Ansell: +0.84%

· One from the small biz desk. Falling profits across the small business sector have resulted in companies struggling to pay their bills and many to keep trading while insolvent, according to a major debt collection agency


· BHP was down 61 cents, or 1.83 per cent, at $32.64 despite the London Metal Exchange index finishing higher in overnight trade.

 

1. CBA is 0.25% higher to $55.45
2. ANZ is 0.2% lower to $24.51
3. NAB is 0.08% higher to $25.60
4. Westpac is 0.37% lower to $24.45

·



· Chinese Foreign Minister Yang Jiechi stressed his country's claim to disputed islands with his Japanese counterpart, Koichiro Gemba, in New York on the sidelines of the UN General Assembly, Xinhua news agency reports today.

· Xinhua's brief report said Yang reiterated China's "solemn position on the issue of Diaoyu Islands, which have been China's sacred territory since ancient times

 

1. BHP is 1.35% lower to $32.80
2. Rio is 2.32% lower to $52.72
3. Fortescue is 1.28% lower to $3.47

 

1. Sundance: +6%
2. Intrepid Mines: +4.12%
3. Saracen Mining: +3.49%
4. FKP Property: +3.49%
5. James Hardie: +1.88%
6. CSL: +1.28%.

· WA targets public sector to offset fall commodity prices
The West Australian government will freeze public sector staff levels, cap leave liabilities and cut procurement costs as it tries to ward off a multimillion-dollar budget deficit due to falling commodity prices. (S: AFR.com)

· Retailers need a rate cut to survive says premier Investments today Chairman
http://www.australianbusinessjournal...ajor-investor/


o Prime Minister Julia Gillard In NY speaking on AU economy

http://www.skynews.com.au/finance/ar...aspx?id=799094
· Anglo American to cut coking coal output amid high costs, weak prices (Third largest Coal producer worldwide) http://www.theaustralian.com.au/busi...-1226481783607



· BOND SIDE Holcim (Swiss Cement Maker) Treasurers look to diversify funding base and are looking at AUD bonds again
http://www.theaustralian.com.au/busi...-1226481056794

The number of job vacancies in Australia has risen by 4.2 per cent, official statistics show.
The total number of vacancies in August 2012 was 179,300, in seasonally-adjusted terms, compared with 172,100 in May, according to the latest Australian Bureau of Statistics (ABS) quarterly survey released on Thursday.
There were 165,900 private sector job vacancies in August, up 5.9 per cent on May's 156,700.
But the number of public sector vacancies in August, at 13,500, was down 12.9 per cent on August.

Defending off SubPrime Lending fraud by the hearld NAB comes back with this
NAB says subprime lending not going on

http://news.smh.com.au/breaking-news...926-26la5.html

A bit late but here is some news points out of AU overnight and this last trading session


· House Prices Surge in September
· For the First time in 2 months AUD 10-yr fell below 3%
· BHP Request extension to Olympic Dam Agreement but how to fund not sure
· Australians ready to buy homes still
· Retail Sector NEEDS a cut desperately. David Jones (Department store) profits fell
· Standard & Poor’s Downgrades South Australia (Credit rating now at A from AA+)
· West Australia cuts Costs on deficit Fears
· Anglo American (3rd Largest Coal producer) cuts coking coal output
· China shuts down another Steel Mill on losing operations call in AU
· Reasons for a Rate Cut -Yes argument
· Reasons for a Rate Cut-No argument
· Australia-Malaysia FTA (free trade agreement) takes effect next year

·

The gold miners sub-index led the charge, adding 1.3 per cent. Both materials and health jumped 1.1 per cent, financials finish up 0.5 per cent and energy rose 0.3 per cent. Consumer discretionary and consumer staples bucked the trend, falling 0.3 and 0.2 per cent respectively.



The market has closed higher, snapping a three day losing streak. The benchmark S&P/ASX200 rose 22.6 points, or 0.5 per cent, to 4384.2, while the broader All Ords jumped 20.3 points, or 0.5 per cent, to 4402.8.

Shares have recovered early losses as news China's central bank would inject 180 billion yuan into the money market bolstered investor sentiment shaken by Europe's apparent inability to manage its debt crisis.

China saves the DAY!!!

Talk is 1 october will it just be some other talk or whe gonna see for real china stimulus allwel i think that 1 if it comes it has huge positive effect on the markets.

Here a link i wanna share you might like by the way en joy your journal and your acadamic papers thanks nice stuff.

Ok cheers!