300
6th April 2008, 12:33 PM
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Finally a weekend with no so much on! A quick wrap up on what has been going on in the US and a forecast, then some slightly good news on the homefront.
The US is now reporting in it's statistics that it is in a recession. Employment has now reported in lower for 3 months in a row, manufacturing has also reported as being down for 3 months, and inventories have been lower for the past 6 months. The US Federal Reserve has had to take some drastic action in more ways than one during the course of the past quarter which is a small indication as to the severity of the US Financial system. The current actions of the US (without too much detail but can be provided if needed) go along the lines of giving the banks more time to cover their current losses before having to pay up. Obviously this reads (and is) like it isn't a level playing field for all. The US Government has been faced with a do or die scenario and the current tactic is seen as the only way out. If they didn't go down this path the US Financial system was in a very real chance of falling over and that is not what the world needs at this time. So, the bleeding is being slowed, but the wound will take a long time to heal.
The future for the US economy and business sector isn't looking so well. The reports suggest that 2009 will see the US economy start to get back on the rails after being down and out for 18 months. The next problem will be that with a year of losses quarter-on-quarter, it will take another period of time for profits to come back to the reporting paper and for the steam train to reach it's momentum again. Typically once this happens, R&D will start to increase - and this is the kicker folks. During this time of trouble, R&D budgets have been squashed. Nothing new is being developed by the US and as companies strive to convince shareholders that they are profitable again and sustaining their profits. Until that point is reached, the competitive advantage is slipping away (quite probably a very very good thing for us guys! and maybe the reason why Australian's are being seen more and more on the world stage - not that the US is the only game player to be compared to, Japan is in a world of pain also but the Australian economy is at the top of it's game at the moment). So the US looks like a long drawn out recovery. As a result of the current losses and the US companies having to pay back their debts over a longer period of time, the US dollar should continue to stay low. Thinking of travelling to the US? do it next year :-)
Back home, the recent week saw our interest rates put on hold, rather than being raised. As a person that keeps a keen eye on interest rates, this was a nice week compared to the previous months. This is a good sign. It shows that our economy is just off it's peak. The next two interest rates will show us how well we are doing, and I suspect that we will see another interest rate rise in the next two meetings of the RBA - depending on how much petrol rises. As a completely side note, my share portfolio has risen 20% in the past month - another good sign that things are on the up, but again, I will start looking for continued rises only at the end of this year.
The RA portfolio is sitting tight with all proceeds in the bank - still. We are playing the waiting game. After taking our 15% losses a few months back, the stocks we were in now sit at IMI - 41% down and PRE - 54% down. As mentioned before the disciplined approach to our RA investing has saved us more than half our money! We will get back on the band wagon as soon as it looks like the ride will be smoother - however, it was a good lesson to start out with. Good news on the home front, the ASX 200 index is rising, which means that the top 200 Australian stocks in general have risen from lows of 5400 to almost cracking 5700 points. In November last year, people were speculating that we might crack 7000 points by the end of the year so it shows how far we have fallen.
OK - work for me is still crazy and with reported trips to Alice and Sydney on the horizon, the updates will still be fractured for a few weeks yet, however, I might see if (at worst) a regular weekly brief will do. I will see what I can do.
Just my 2 cents.
Finally a weekend with no so much on! A quick wrap up on what has been going on in the US and a forecast, then some slightly good news on the homefront.
The US is now reporting in it's statistics that it is in a recession. Employment has now reported in lower for 3 months in a row, manufacturing has also reported as being down for 3 months, and inventories have been lower for the past 6 months. The US Federal Reserve has had to take some drastic action in more ways than one during the course of the past quarter which is a small indication as to the severity of the US Financial system. The current actions of the US (without too much detail but can be provided if needed) go along the lines of giving the banks more time to cover their current losses before having to pay up. Obviously this reads (and is) like it isn't a level playing field for all. The US Government has been faced with a do or die scenario and the current tactic is seen as the only way out. If they didn't go down this path the US Financial system was in a very real chance of falling over and that is not what the world needs at this time. So, the bleeding is being slowed, but the wound will take a long time to heal.
The future for the US economy and business sector isn't looking so well. The reports suggest that 2009 will see the US economy start to get back on the rails after being down and out for 18 months. The next problem will be that with a year of losses quarter-on-quarter, it will take another period of time for profits to come back to the reporting paper and for the steam train to reach it's momentum again. Typically once this happens, R&D will start to increase - and this is the kicker folks. During this time of trouble, R&D budgets have been squashed. Nothing new is being developed by the US and as companies strive to convince shareholders that they are profitable again and sustaining their profits. Until that point is reached, the competitive advantage is slipping away (quite probably a very very good thing for us guys! and maybe the reason why Australian's are being seen more and more on the world stage - not that the US is the only game player to be compared to, Japan is in a world of pain also but the Australian economy is at the top of it's game at the moment). So the US looks like a long drawn out recovery. As a result of the current losses and the US companies having to pay back their debts over a longer period of time, the US dollar should continue to stay low. Thinking of travelling to the US? do it next year :-)
Back home, the recent week saw our interest rates put on hold, rather than being raised. As a person that keeps a keen eye on interest rates, this was a nice week compared to the previous months. This is a good sign. It shows that our economy is just off it's peak. The next two interest rates will show us how well we are doing, and I suspect that we will see another interest rate rise in the next two meetings of the RBA - depending on how much petrol rises. As a completely side note, my share portfolio has risen 20% in the past month - another good sign that things are on the up, but again, I will start looking for continued rises only at the end of this year.
The RA portfolio is sitting tight with all proceeds in the bank - still. We are playing the waiting game. After taking our 15% losses a few months back, the stocks we were in now sit at IMI - 41% down and PRE - 54% down. As mentioned before the disciplined approach to our RA investing has saved us more than half our money! We will get back on the band wagon as soon as it looks like the ride will be smoother - however, it was a good lesson to start out with. Good news on the home front, the ASX 200 index is rising, which means that the top 200 Australian stocks in general have risen from lows of 5400 to almost cracking 5700 points. In November last year, people were speculating that we might crack 7000 points by the end of the year so it shows how far we have fallen.
OK - work for me is still crazy and with reported trips to Alice and Sydney on the horizon, the updates will still be fractured for a few weeks yet, however, I might see if (at worst) a regular weekly brief will do. I will see what I can do.
Just my 2 cents.