tag:blogger.com,1999:blog-154742302024-03-12T19:49:30.144-07:00FOREX TradingThe forex is the most liquid market in the world. Increasingly investors and traders are adopting a forex trading strategy because of its 24 hour trading, leverage potential and recently the much better cross rates (spreads) offered by brokers.Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.comBlogger79125tag:blogger.com,1999:blog-15474230.post-82532318470903055562013-01-21T16:09:00.001-08:002013-01-21T16:09:44.679-08:00Japanese Yen weakness promises rosy future for ailing economy<div style="text-align: justify;">
In the last week there have been some positive signs from Japan. The Liberal Democratic Party (LDP) has been able to form a government, in the process resulting in Shinzo Abe being able to launch a new policy direction. His direction is very good, because it offers business some concessions, a loosening of monetary policy, to offer exporters a more competitive exchange rate, as well as funding for the rebuilding of the Tohoku area. The devil of course will be in the detail, however the signs look good.<br />
Understandably the exchange rate has weakened. This should be enormously stimulatory for the country, and I suspect it will be sustained by the strength of the Asian region. This might well be the lead the market needs in terms of dragging the globe out of this slump. Japan needs to rebuild real incomes, and that will come from exports to Asia as well as deregulation of the high-cost Japanese economy. Japan has no choice. The people are already killing themselves with work. They need a lower cost environment. The concessions so far have come from workers in the form of outsourcing, contracted labour agreements which mean many workers are easily fired. This is not to ignore the fact that Japan retains high cost 'life of employment' workers in the large companies. That culture will need to change. We can look forward to a dynamic Japanese economy. Historically transformations have been rapid. Remember that Japan is the compliant society; so expect people to fall into line. Few cultures have such acceptance of personal hardship; so much tolerance for austerity than Japan. It will happen again. I would be expecting to happen quickly, as it did in the Meiji and post-WWII era. One needs only look at the discipline of the Japanese homeless people.<br />
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The Yen has alread weakened somewhat; but as is apparent, this is a medium term exit point as Y90 is an important resistance point....as you can see from the chart. You might expect a resumption of Yen strength to Y84 in the coming weak, as traders take profits. The evidence still needs to fall on the table.<br />
<b>USD-JPY EXCHANGE RATE - as at 22nd Jan 2013.</b><br />
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<a href="http://4.bp.blogspot.com/-Uot6sb_OSk8/UP3YIn5VDgI/AAAAAAAACm0/uIaXph-Un1w/s1600/USD-JPY-20Jan13.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="194" src="http://4.bp.blogspot.com/-Uot6sb_OSk8/UP3YIn5VDgI/AAAAAAAACm0/uIaXph-Un1w/s320/USD-JPY-20Jan13.jpg" width="320" /></a></div>
We have long appreciated the virtues of living in Japan. Some years ago I prepared a book on buying foreclosed property in Japan. See the link below.<br />
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<b>Asian property markets outperforming</b> <a href="http://foreclosedjapan.sheldonthinks.com/">Japan Foreclosed Guide</a> <b><a href="http://sheldonthinks.ecrater.com/p/2660019/buying-philippines-property-2-volume-ebook">Philippines Property Guide</a></b><br />
<b>Profit from mining with</b> <a href="http://miningstocks.sheldonthinks.com/">Global Mining Investing eBook</a></div>
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<a href="http://foreclosedjapan.sheldonthinks.com/"></a><b>Author Andrew Sheldon</b>| <a href="http://www.sheldonthinks.com/">Applied Critical Thinking</a> | <b><a href="http://www.sheldonthinks.com/">www.SheldonThinks.com</a></b></div>
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Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com4tag:blogger.com,1999:blog-15474230.post-27342458293490809832012-05-22T15:15:00.003-07:002012-05-22T15:15:45.643-07:00AUD going upwards from here<div style="text-align: justify;">
This <a href="http://news.smh.com.au/breaking-news-business/a-to-fall-below-90-cents-economist-20120522-1z2ky.html">economist is forecasting a fall in the $A below 0.90c</a>. I cannot for the life of me see this happening in the context of the current market. I'm all for global cooling; but I don't see 'hell freezing over'. Basically the outlook for Australia is very good. Why?</div>
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1. The global economy is entering the 2nd stage of a super-cycle after debt levels ran up to historic highs.</div>
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2. The debt crisis will disappear and we will have a consumption spurge by these emerging markets, once confidence is restored. This will see debt levels balloon in those countries which have low debt levels. i.e. China, etc. So this will bring about a re-balancing</div>
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3. There will be drastic changes in the way Western business operates. They will be forced to move offshore, or drop their high-cost structures with head offices and outsource to households. High margin businesses and senior executives will stay in the office, others will go to cubicles in the suburbs, if not work from home. Why? Because there is a disparity in wage-productivity which will need to be closed, because the West will not be able to afford their welfare states. </div>
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What will see the AUD hold this 98c level is:</div>
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1. The very positive outlook for its commodities</div>
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2. The very favourable exposure to iron ore, coal and oil & gas</div>
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3. The resource rent - it will mean more money stays in Australia; less dividend outflow; but it will be wastefully spent by government. Better waste or opportunity cost than dividends you might argue....assuming Gillard did us no harm on the sovereign risk ratings. Truth be told, she made it better because she showed that the developing world was worse than the West, i.e. She allowed them to drop their ball by lowering the bar on sovereign risk. Yes, blame Gillard for the global rise in taxation/expropriation - she sanctioned it first. She changed the trend. </div>
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Andrew Sheldon <a href="http://www.sheldonthinks.com/">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com3tag:blogger.com,1999:blog-15474230.post-17648169281816169402011-06-30T16:45:00.000-07:002011-06-30T16:51:14.220-07:00New European currency bloc needed<div style="text-align: justify;">In March 2010 I penned a blog article suggesting that the <a href="http://forextraneous.blogspot.com/2010/03/euro-weakness-in-short-term.html">southern European countries</a> - Greece, Italy, Spain and even Portugal - which are struggling with high debts - should form their own currency bloc. Its gratifying to see Warren McGibbin, director of the Reserve Bank of Australia (RBA), draw the same conclusion. You can read his justification <a href="http://www.smh.com.au/business/global-train-wreck-coming-20110630-1gszi.html">here</a>. Might I suggest a name for this new currency - the drip - to acknowledge the 'slow leak'.</div>-------------------------------------------<div>Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com1tag:blogger.com,1999:blog-15474230.post-63616526107639350322011-04-20T20:08:00.000-07:002011-04-20T20:25:50.091-07:00The emperor has no money<div style="text-align: justify;">Have you heard the one about the 'emperor having no money'. It is a variant on the theme of 'the emperor with no clothes'. It highlights the moral relativism or 'monetary rationalism' that goes blistfully unawares in the largest economies in the world. Consider these facts:</div><div style="text-align: justify;">1. Most of the world's financial resources are denominated in USD, EUR or Yen</div><div style="text-align: justify;">2. Most of the world's wealthy people are located in those countries as well.</div><div style="text-align: justify;">Monetary authorities in these countries need not draw attention to their economic malaise if they all sabotage their economies in the same stride. i.e. The Japanese have a bloating public debt of 220% of GDP, Europe has the indulgent southern and northern states to support, whilst the US has its twin deficits. Now, these countries account for so much of the global wealth base, that if any large public or private holder of these cuurencies decided to do anything, what difference would it make? The 'rest of the world' is too small to account for significance. </div><div style="text-align: justify;">The implication is that currencies like the Australian, Canadian dollars, South African Rand, etc can become priced very high in USD terms, and these currencies will remain in-sync, and thus relatively attractive by virtue of the size of these economies. None of the monetary authorities will question the strength of these commodity currencies.</div><div style="text-align: justify;">So what is the next step? The problem is that these 'strong' currencies will be forced to sabotage their economies too so that their currencies weaken. After all they have to remain competitive against the major currencies....otherwise they will simply become miners of commodities, which employs only 3-5% of any labour force directly. Clearly they are not going to allow that. So expect commodity producers to sabotage their economies, i.e. Expect them to increase taxes and welfare, so that a greater piece of the cake goes into unproductive welfare. Expect them to keep interest rates artificially low to drive their currencies down. </div><div style="text-align: justify;">This is where perceptions become more important than facts. That is why the 'emperor has no clothes'. People care not about the reasons....so long as the illusion of comparative advantage or the illusion of wealth is preserved. In the meantime, the global wealth creating potential of the globe will be sabotaged. Collectivists around the world can rejoice....they are extending tyranny to the strongest nations in the world. The good will be forced to discard financial discipline. Morality or fiscal responsibility will become irresponsible or impractical by this standard of value. Welcome to the contemporary system of public administration. It was always there, you just didn't see where it was taking you. It gets worse...are you going to wait for worse?</div><div style="text-align: justify;">---------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-4803717768212142722011-04-07T20:43:00.000-07:002011-04-07T21:14:25.998-07:00The AUD will continue strength - $1.25 anyone?<div style="text-align: justify;">You might wonder for how long can the AUD exchange rate sustain its strong rise against the USD. I would suggest that it can do it for a while yet. We might think that the strong $A is going to jeopardise our international competitiveness. The reality however is that:</div><div style="text-align: justify;">1. <b>Until recently, the USD was being debased</b> more than the AUD was rising. This is evident against other currencies such as the Philippines peso, a strong Asian market, which is not a significant commodity exporter. It should be, but corrupt/failed state impacts its prospects.</div><div style="text-align: justify;">2. <b>The AUD is benefiting from stronger commodity prices</b>, but alas they have tends only to strengthen because of a weak USD, which most commodities are denominated in. </div><div style="text-align: justify;">3. <b>The Australian economy is such a commodities export machine</b> sitting on the door-step to Asia, so there is good reason to expect strong export income growth, as well as strong business investment. </div><div style="text-align: justify;">4. <b>Australia is a net oil exporter</b>. We must remember that whilst Australia produces little oil, i.e. about 60% of its needs if I recall correctly, it produces a hell of a lot of gas, and conventional and liquefied gas is priced based on an oil reference price, i.e. If there is a Middle East crisis, a lot more energy dollars is coming to Australia. Mind you some of it will be flowing out again as dividends to US, European and Chinese/Japanese/Korean equity partners. </div><div style="text-align: justify;">5. These strong exports is driving <b>more investment</b>, which leads to capital inflows, i.e. strong $A.</div><div style="text-align: justify;">6. <b>High local indebtedness:</b> The Australian private household is well-geared to property. The Reserve Bank is going to keep interest rates low so that people keep spending. i.e. It wants people spending as much as possible because the domestic economy will be a little weak...mind you unemployment is pretty good. But people will not be confident about the external world. But interest rate rises will probably depend on if housing turns into a bubble...so there will need to be some increases in prices coming...to cool that market.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It is true that tourism will be hit by a strong AUD, and the government is clamping down on immigration growth. We can also expect some weakness in the broader market thanks to weakness in property. A little weakness in the broader domestic market might actually help to curtail spending. Fears of inflation, problems in the Middle East and the US economy also help.</div><div style="text-align: justify;">For these reasons....I think the currency will stay strong.</div><div style="text-align: justify;">I just don't see anything negative on the horizon. I don't see China collapsing. High oil prices will hurt Asia more than Western markets, though its probably tensions in the Middle East will probably not impact oil production. </div><div style="text-align: justify;">------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com2tag:blogger.com,1999:blog-15474230.post-4526524412410384172011-04-03T17:56:00.000-07:002011-04-03T18:15:15.936-07:00Australian dollar lives up to expectations<div style="text-align: justify;">For a number of years I have been very bullish on the Australian dollar. The reasons are clear for a person with an understanding of currency markets and mining. I have both. So when you witness the activity going on, and you read <a href="http://www.smh.com.au/business/inflation-worries-over-mining-bonanzas-20110403-1ct53.html">headlines</a> like the following - one becomes sharply optimistic:</div><div><blockquote style="text-align: justify;">"HSBC estimates the total value of Australian mining and resource projects proposed or under construction at $777 billion, or about 60 per cent of gross domestic product".</blockquote></div><div style="text-align: justify;">The implication of this is that in a few years there is going to be mining operations contributing about $150 billion in wealth to the Australian economy, i.e. about 15% of GDP is going to be added to the Australian economy. We need to be careful here because:</div><div style="text-align: justify;">1. Not all these projects are committed</div><div style="text-align: justify;">2. These are capital costs - but we might expect conservatively a 4 year payback on these projects</div><div style="text-align: justify;">3. These projects will have variable mine lives, anywhere from 3 years (for smaller gold mines) to t0 20-30 years for a gasfield, to 50 years (for iron ore mining projects)</div><div style="text-align: justify;">4. Resources are still being discovered</div><div style="text-align: justify;">5. Mineral prices are still rising, and can be expected to keep rising so long as the global labour market place keeps liberalising.</div><div style="text-align: justify;">6. A mining project can take anywhere from 2-10 years to commission.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Based on this information, we might expect around half of this investment to be earning export dollars in the next 3 years (i.e. 25% of 30% of GDP) offering 7.5% growth in GDP. i.e. Mining is adding about 2.5% growth to GDP. But then we need to acknowledge that this is just part of the economy, and this ignores the capital inflows to fund this investment.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is why it is good to be Australia. Well actually there are a lot of reasons. In fact, I can only think of one bad one. We have a government - 2nd only to Mussolini in terms of is fascist foundation for governance. Australians are unwittingly vulnerable given they are just basking in jobs, high pay and excess sun. </div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is obviously a problem because people will start spending, raising foreign debt levels, people will stop working, reducing workforce participation, and thus economic efficiencies tend to creep in. That is when government starts importing labour...which brings you to Australia. The land of milk and honey..and bad government. A miners paradise. Clearly there is some vulnerability to global events; most particularly global metal prices. I actually think we can expect some vulnerability as a result of an oil price spike in the Middle East, as revolutions broaden in scope.</div><div style="text-align: justify;">-------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com2tag:blogger.com,1999:blog-15474230.post-45101539235542068132011-02-08T15:14:00.000-08:002011-02-08T15:18:23.410-08:00USD-JPY set to weaken<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_IEvPDYSlOTg/TVHPJG7nHeI/AAAAAAAACVc/giiVQ9YRfqQ/s1600/USD-JPY-9Feb11.jpg"><img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 368px; height: 317px;" src="http://3.bp.blogspot.com/_IEvPDYSlOTg/TVHPJG7nHeI/AAAAAAAACVc/giiVQ9YRfqQ/s400/USD-JPY-9Feb11.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5571461969420426722" /></a><div style="text-align: justify;">The current chart for the USD-JPY is strongly suggesting a fall in the USD back to 80yen. The USD has struggled to break out of the current trend, and we expect it to fall back to that support. This is the short term price action, though we do believe that the medium term outlook for the USD is stronger than for the JPY. The Democratic Party of Japan (DPJ) has allowed its fiscal reform opportunity to slip away with in-fighting over leadership. It is therefore expected that any sign of reform is at least a year away; perhaps under a new prime minister and some reinvention of the LDP.</div><div style="text-align: justify;">-------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="http://www.blogger.com/www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com3tag:blogger.com,1999:blog-15474230.post-78424087418785263362011-01-05T20:09:00.001-08:002011-01-05T20:13:28.086-08:00Australian dollar set to recover<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_IEvPDYSlOTg/TSVAwzi7AJI/AAAAAAAACUQ/kwDJuTrHoug/s1600/AUD-USD-6Jan11.jpg"><img style="text-align: justify;float: right; margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 10px; cursor: pointer; width: 320px; height: 275px; " src="http://2.bp.blogspot.com/_IEvPDYSlOTg/TSVAwzi7AJI/AAAAAAAACUQ/kwDJuTrHoug/s320/AUD-USD-6Jan11.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5558920522273325202" /></a><div style="text-align: justify;">The Australian dollar can be expected to recover in the next week, holding out above $1.00 parity with the USD. The principal reason I think will be a weaker USD based on the cross-rates. The USD has recovered against the Yen, but it will quickly wither, and test previous low. </div><div style="text-align: justify;">The Euro also looks set to strengthen against the USD, though I'd stick with the hard currencies, not the pretend (main) ones. </div><div style="text-align: justify;">-------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="http://www.blogger.com/www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-53424403175713040962010-11-25T14:24:00.000-08:002010-11-25T14:30:33.334-08:00ECB repudiated by British representative<div style="text-align: justify;">This is an interesting excerpt from the last meeting of the European Central Bank, where the British representative Nigel Farrage MEP gave a stinging rebuke to the ECB model. I am curious though....how exactly does he think the 'markets are going to deliver justice to these central bankers when the Japanese and Americans are only too pleased to debase their currency in the pursuit of moral relativism or moral scepticism, depending on your 'relativist' apathy. He is a politician....supposedly a 'moral agent', so where was he over the last 10 years when the ECB, Fed and Bank of England were enabling their governments to blow out their tax-payer funded hides. What a hypocrite!</div><div style="text-align: justify;"><br /><object width="640" height="390"><param name="movie" value="http://www.youtube.com/v/Fyq7WRr_GPg&hl=en_US&feature=player_embedded&version=3"><param name="allowFullScreen" value="true"><param name="allowScriptAccess" value="always"><embed src="http://www.youtube.com/v/Fyq7WRr_GPg&hl=en_US&feature=player_embedded&version=3" type="application/x-shockwave-flash" allowfullscreen="true" allowscriptaccess="always" width="640" height="390"></embed></object><br /></div><div style="text-align: justify;">-------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-52832303691988452992010-10-20T12:06:00.000-07:002010-10-20T12:27:03.110-07:00EUR and JPY weakness to outpace USD debasement<div style="text-align: justify;">I actually expect the debasement of the EUR and Japanese Yen to outpace the USD debasement, so we can expect a relatively strong USD. All these currencies will of course be weak against the commodity currencies and emerging markets. See my article about the <a href="http://market-action.blogspot.com/2010/10/fed-to-engage-in-monetary-easying.html">Fed and Asian property</a>.</div><div style="text-align: justify;">The interesting aspect is the impact on the commodity producing countries like Australia, Canada, South Africa, Chile, Brazil; as well as the emerging markets like China, Korea, Thailand, Indonesia and the Philippines. </div><div style="text-align: justify;">We can expect these countries to be strong. It is interesting of course because the Fed and EU are blaming the Chinese for the strong Yuan; but partially the reason for the strong Yuan is that the US and European Central Bank (ECB) are debasing their currencies. True, the Chinese are funding the US deficits, and that has artificially raised the USD, but that is with the support of the US government. </div><div style="text-align: justify;">We might well expect emerging markets to survive this currency crisis fine this time; largely I think because they can expect a lot of property investment by Western fund managers. Expect a property boom in Asia, particularly the Philippines, China, Vietnam and Thailand. Small Western players are better off in the <a href="www.foreclosured.blogspot.com">Philippines</a> because of favourable language (i.e. English), familiar legal system, generous visa rules, and good yields of 8% on high-end apartments.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">So what about the commodity producing countries? Australia, NZ, Canada, Brazil and Argentina rely greatly on commodity exports. The problem of course is that mineral commodities do not price at parity with agricultural commodities. This is has to result in these countries sabotaging their currencies with debasement, or more likely we can expect the stronger foodstuff prices to continue. This development makes investment in countries like the Philippines more attractive, or other countries which might have cheaper agricultural land. I know the Philippines does have marginal land as cheap as PHP10-20/m2 (USD0.20/metre2), however you could probably do better elsewhere. Certain higher value crops like coffee are better in the Philippines. Nestle certainly produces a lot. Some of the mountain provinces are also suitable to growing more temperature foodstuffs. e.g. Baguio City is a food basket for the <a href="http://www.foreclosured.blogspot.com">Philippines</a>. It is one of the few cities with malls in the cool mountains...aside from Tagaytay, south of Manila. Anyway, the <a href="http://www.foreclosured.blogspot.com">Philippines</a> is a distraction from the currency strength that is gripping these commodity and emerging markets. So expect stronger commodities as the central banks debase currencies with more 'quantitative easing'. </div><div style="text-align: justify;">--------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-743263651880744302010-10-10T02:27:00.000-07:002010-10-10T02:34:42.753-07:00The Yen set to fall against the Philippines peso<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_IEvPDYSlOTg/TLGHysUosPI/AAAAAAAACR8/0aWSItKjUHg/s1600/JPY-PHP-10Oct10.jpg"><img style="text-align: justify;float: right; margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 10px; cursor: pointer; width: 320px; height: 191px; " src="http://2.bp.blogspot.com/_IEvPDYSlOTg/TLGHysUosPI/AAAAAAAACR8/0aWSItKjUHg/s320/JPY-PHP-10Oct10.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5526347522721231090" /></a><div style="text-align: justify;">Whilst I am looking at exchange rate action, its noteworthy for Japanese people and Western expats living in Japan that they ought to consider buying property in the Philippines. Why? Well...the Yen is about to fall, so it would be a good idea to remit money before the currency collapses. Property yields in Japan are about 12-13% now, compared to 8% in the Philippines. The difference however is that Philippines population growth is 2% per annum, whilst Japan's is negative, and does little better than 1.5% in certain districts of the major cities. </div><div style="text-align: justify;">The Philippines is attracting a lot of investment from Taiwan, China and Korea in tourism, and also a lot of business from US, Australian and NZ call centres. Aside from that, it also has a healthy exposure to expat remittances and domestic commodity production. In recent years the Philippines has been growing at 7-8%, and there is no reason why that will not be sustained. </div><div style="text-align: justify;">-------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-31867524822658128192010-10-10T02:03:00.000-07:002010-10-10T02:22:58.990-07:00The AUD play with a Japanese property twist<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_IEvPDYSlOTg/TLGCD9durLI/AAAAAAAACR0/7zjVr7ez3Rg/s1600/AUD-JPY-10Oct10.jpg"><img style="text-align: justify;float: right; margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 10px; cursor: pointer; width: 320px; height: 188px; " src="http://1.bp.blogspot.com/_IEvPDYSlOTg/TLGCD9durLI/AAAAAAAACR0/7zjVr7ez3Rg/s320/AUD-JPY-10Oct10.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5526341222310784178" /></a><div style="text-align: justify;">The AUD-JPY is not a currency I have been giving much attention to of late because my focus has been on the commodities (AUD-USD) rather than property. Though since I have an interest in Japanese (foreclosed) property, I was interested to look at the implications for the property market....which is offering yields of 12-13%.</div><div style="text-align: justify;">We can see from the chart that the AUD might be strong against the USD, but against the Yen, the AUD has actually been a bit lacklustre. That is about to change. The Japanese yen is going to come under a bit of pressure as the govt there debases its currency. You can expect this to lead to a strong AUD against the yen. In fact I am expecting the AUD to rise to the previous high of Y107. This is a good long term currency trade, as you will never earn more spread interest than on this trade. With the unemployment rate 5.1% in Australia, there is actually scope for more rate increases as well. Stimulus in the Eurozone and Japan can only help Australian commodities demand. </div><div style="text-align: justify;">The implication is that there is a good opportunity to trade AUD-JPY and then use your profits to buy a holiday house in Japan. Don't forget to get your Japan Rail Pass! God, I should be selling the things...I'd told so many people about them. I love trains. :) I take GPS coordinates for every station I stop at. That's right...I don't have a life. Glad you could join me though.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><a href="http://nzproperty.sheldonthinks.com/">NZ Property Guide</a> <a href="http://philippinesrealestate.sheldonthinks.com/"><b>Philippine Real Estate Guide</b></a> <a href="http://foreclosedjapan.sheldonthinks.com/">Japan Foreclosed Guide</a></div><div style="text-align: justify;"><a href="http://foreclosedjapan.sheldonthinks.com/"></a><b>Author Andrew Sheldon</b>| <a href="http://www.sheldonthinks.com/">Applied Critical Thinking</a> | <a href="http://www.sheldonthinks.com/"><b>www.SheldonThinks.com</b></a></div><div><blockquote></blockquote></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-76984965735941025262010-10-10T01:47:00.000-07:002010-10-10T02:01:06.734-07:00Australian dollar going to $1.15<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_IEvPDYSlOTg/TLF_LOJz4QI/AAAAAAAACRs/j2Zq_STkSYQ/s1600/AUD-USD-10Oct10.jpg"><img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 320px; height: 190px;" src="http://3.bp.blogspot.com/_IEvPDYSlOTg/TLF_LOJz4QI/AAAAAAAACRs/j2Zq_STkSYQ/s320/AUD-USD-10Oct10.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5526338048514842882" /></a><div style="text-align: justify;">The AUD is just about to reach parity with the USD. Followers of the currency price action might have reflected on the trends in the other currency. In this era of currency realignment, you might be thinking that the prospects for a strong USD will mean a weak AUD. I would challenge this point of view. In the short term, I would not be surprised to see the AUD find resistance at parity, but I do believe that we are looking at a stronger AUD currency in the future as a result of currency (i.e. economic) relativism. Yep, economic relativism is about debasing your currency faster than the competition. Countries like Australia have relatively hard currencies in these periods, so we can expect a sustained strong currency. I don't expect significant weakness in China. It will happily keep prospering along for decades to come. So long as there is a high household debt in Australia, we can expect measured increases in interest rates, but also a great deal of sensitivity to those rises. We will not be able to afford interest rate increases...so expect a strong currency. That is alright....all other commodity based currencies will be strong as well, so expect stronger commodity prices across the board. </div><div style="text-align: justify;">I actually am expecting to see the AUD reach $1.15-1.20 in the next few years. </div>-------------------------------------------<div>Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-81642821299951468452010-10-10T01:27:00.000-07:002010-10-10T01:41:23.030-07:00Currency market realignment coming - JPY:USD<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_IEvPDYSlOTg/TLF65K5hihI/AAAAAAAACRk/dX9p4MD2YDI/s1600/USD-JPY-10Oct10.jpg"><img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 320px; height: 188px;" src="http://1.bp.blogspot.com/_IEvPDYSlOTg/TLF65K5hihI/AAAAAAAACRk/dX9p4MD2YDI/s320/USD-JPY-10Oct10.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5526333340357069330" /></a><div style="text-align: justify;">Just as we are going to see a turnaround in the EUR, we can also expect a turnaround in the USD against the Yen. Japan has been complaining of late about its reduced export competitiveness. Of course this is just justification for printing Yen to repay the debt which is denominated in Yen. i.e. The Japanese have to debase the currency in order to inflate asset prices, in order to stimulate some spending in the Japanese economy. They will want to expand the economy in order to increase taxes (i.e. GST increase), and they will want to pay off that debt. Reforms will be easier if there is stronger economic activity. </div><div style="text-align: justify;">The USD against the Yen is about to reach a yet level of 80yen. The yen has not reached this level for decades, so it will be an important achievement. For reasons already stated above, I am not expecting this support to be breached, as there is just too many reasons for the Japanese to weaken their currency. Its a case of who can be the biggest currency debaser. Unfortunately I have not got the history back to the 1970s on this chart...I just remember the forecast I made last year that it would reach this level....so its finally happened. </div><div style="text-align: justify;">-------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="http://www.blogger.com/www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-72248564212095297542010-10-10T01:20:00.001-07:002010-10-10T01:27:06.804-07:00Currency market realignment coming - EUR:USD<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_IEvPDYSlOTg/TLF4Y5D94GI/AAAAAAAACRc/92-ewv7TkTw/s1600/EUR-USD-10Oct10.jpg"><img style="text-align: justify;float: right; margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 10px; cursor: pointer; width: 320px; height: 190px; " src="http://4.bp.blogspot.com/_IEvPDYSlOTg/TLF4Y5D94GI/AAAAAAAACRc/92-ewv7TkTw/s320/EUR-USD-10Oct10.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5526330586789961826" /></a><div style="text-align: justify;">There are some important developments occurring in the currency market. We are about to see a change from a weak USD to a strong one. Not yet, but we are close. The justification is going to be:</div><div style="text-align: justify;">1. Stimulus measures in Japan which will weaken its currency</div><div style="text-align: justify;">2. Stimulus measures in the EU, which will refinance Greek/Spanish debts, but also expect some broader-based stimulus.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">A turnaround in the USD will of course reduce the appeal of the Dow, as competitiveness will shrink, but not considerably if the later countries are dolling out most of the stimulus. The target value is 1.45 USD for the EUR.</div><div style="text-align: justify;">-------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-6430984181201284362010-10-03T19:13:00.000-07:002010-10-03T19:26:34.431-07:00Nobel Prize winning economist states the bleeding obvious<div style="text-align: justify;">Joseph Stiglitz, the former chief economist of the World Bank and Nobel Prize winner, has come out and said that he thinks Germany ought to break off the Euro currency. I made more profound statements 5 years ago....When do I get my Nobel Prize? In my Global Market Commentary blog I suggested Spain, Italy and Portugal, given there different cultural values, ought to be on a different currency. I guess my Nobel Prize is in the mail :)</div><div style="text-align: justify;">This particular dumb-nut economist is suggesting that 'Keynesian stimulus' might be necessary. In the interests of global peace was he also one of the World Bank, govt-funded economists who supported the stimulus that made the 'extra stimulus' necessary in 2008, or did he back away from that stimulus. Maybe he didn't turn up for that office meeting. Read more in this <a href="http://www.smh.com.au/business/stiglitz-fears-cuts-sweeping-europe-20101003-162t7.html">NZ Herald article</a>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I am a bigger genius than I thought....I actually said the same thing 5 years ago...<a href="http://market-action.blogspot.com/2005/08/eurozone-breakup-on-cards.html">read here</a>. There you go!</div><div style="text-align: justify;">-------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="http://www.blogger.com/www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com2tag:blogger.com,1999:blog-15474230.post-86144290060773150852010-09-15T15:49:00.001-07:002010-09-15T16:19:49.176-07:00Outlook for Australia dollar (AUD)<div style="text-align: justify;">The Australia dollar is charging ahead in recent trading. The AUD was always destined to be a strong or 'hard' currency given its outlook. This outlook is inextricably tied to the success of China and India, which largely rests on the 'small government', 'selective government' and irrelevance of government. Basically, in China the government is incidental. Rule of law is inoperative, so market rules, albeit with little integrity. If you are expecting China to become a market paradise, think again. China is only going to develop coherent market values if the West does, and sadly ideas don't have much sway in the West either. We are in a scientific era to be sure, but science is the product of a small (2-3% minority), and under our democratic tradition, the idiots retain power. </div><div style="text-align: justify;">So let's get back to China. China has a huge population. This means that farmers will be flooding into the cities in order to get higher paying factory jobs. This is great news for Chinese productivity, wealth creation, and it keeps inflation in check around the world. They get cheap raw materials from Australia, Russia and Mongolia. Fears of a Chinese melt down or ci</div><div style="text-align: justify;">vil unrest are misplaced. In fact, China has a great deal of mineral resources in the outer provinces, so those areas are likely to become future centres of output....perhaps the food basket for China as we extort higher prices for agricultural products in the seaborne market place.</div><div style="text-align: justify;">China will be like this for at least another 20 years, which means that it will have an insatiable demand for food and minerals for the next 20 years. The implication is that Australia will be in a strong position to benefit from exports of ores. Both strong growth in export volumes and high prices are assured. Of course there will be competition at the margin from China and Russia. It remains to be seen whether India will play a significant role. This will depend I think on political reform in that country. Representative democracy is not the 'god-send' it is supposed to be. India can only flourish, like the West, when the recognise that, and identify consensus </div><div style="text-align: justify;">based democracy as a better mode of governance. It is the only way to end the tyranny of the majority, who are idiots. In India's case, uneducated idiots; and in Australia's case, morally skeptical idiots too accustomed to not paying the consequences for their actions, i.e. Not thinking. And I have yet to speak of the 'enablers', whether corporate CEOs, parents or politicians. </div><div style="text-align: justify;">Anyway, back to Australia. </div><div style="text-align: justify;">Australia really has no problem in future. More capital is going to flood into this coun</div><img src="http://3.bp.blogspot.com/_IEvPDYSlOTg/TJFRzT5G-AI/AAAAAAAACRE/-j8_s0IXeak/s320/AUD-USD-16Sept10.jpg" style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 320px; height: 188px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5517280960460552194" /><div style="text-align: justify;">try than you can imagine, funding mines and energy projects mostly. A huge wealth effect for what is a very small population. Of course we might expect two things:</div><div style="text-align: justify;">1. A materialistic splurge as people buy more houses, etc</div><div style="text-align: justify;">2. Governments staking more of this wealth threw resource rent taxes</div><div style="text-align: justify;">3. Decadence of all sorts resulting in greater crime, drugs and rock n roll. Yep, may</div><div style="text-align: justify;">be even a sexual revolution. Let's hope, I missed the last one :) I was born in 1968.</div><div style="text-align: justify;">Looking at the chart, its apparent that the AUD is just about to reach its 6mth high of 0.93 USD. We might expect a sell-off at this point, however its probably likely to continue to its 2-year high of 0.96, set back in July 2008. </div><div style="text-align: justify;">At such times the currency has a tendency to fall back because spending gets out of control. Is that going to happen this time? Hmmm...that will depend. I suggest 'No' for the following reasons: </div><div style="text-align: justify;">1. An overheating Australian economy is going to place pressure on the Reserve Bank to raise interest rates, so you will be able to spend less on consumerism, and you will be forced to pay more off your debt. You ought to already be doing this, or buying gold stocks.</div><div style="text-align: justify;">2. Australia household debt levels are high, so this monetary policy will be very effective</div><div style="text-align: justify;">3. The Australian govt will prefer to allow the AUD to rise rather than raising interest rates, because its constituency is the poor households rather than rich farmers and miners. You might expect the 'farmer-friendly' Independents to make a difference, but I doubt it, because I don't think they even know what monetary policy is. </div><div style="text-align: justify;">What does all this mean? It means strong AUD for a while now - either way. More likely there will be a balance of interest rate rises to temper a strong economy. We need to consider the 'flow on' of that trade balance. Will it translate into benefits for Australian households? Yep, in terms of lower interest rates than otherwise, and low price pressures from imports. </div><div style="text-align: justify;">4. We might expect a lot of Australians to be holidaying in the USA. We are not accustomed to being on par with Americans</div><div style="text-align: justify;">5. The big caveat is how the Labor govt behaves. They are inclined to sabotage the economy of late, and the Independents do not inspire confidence.</div><div style="text-align: justify;">---------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="http://www.blogger.com/www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-22392926897158991392010-08-22T15:48:00.001-07:002010-08-22T16:02:20.000-07:00USD set to strengthen against the Yen<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_IEvPDYSlOTg/THGpjdCHy7I/AAAAAAAACQc/WXnpZ3RLBYU/s1600/USD-JPY-23Aug10.JPG"><img style="text-align: justify;float: right; margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 10px; cursor: pointer; width: 320px; height: 282px; " src="http://4.bp.blogspot.com/_IEvPDYSlOTg/THGpjdCHy7I/AAAAAAAACQc/WXnpZ3RLBYU/s320/USD-JPY-23Aug10.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5508370245804870578" /></a><div style="text-align: justify;">These are indeed interesting times. We can see from the following chart that the USD is close to reaching its historic low of 81.86 against the Japanese Yen. It seems destined to reach this level in order to give traders some sense of upside. It is a fait compli that the USD is going to weaken. Why?</div><div style="text-align: justify;">Well the Japanese economy is not exactly in a strong position either. We can expect some stimulus in Japan to come in the form of mass-printing of Yen. This will of course stimulate some domestic demand, and probably even stronger property prices. It will not contribute to the real economy, however it will allow the government to balance its fiscal debt, which is of course owed to the Japanese people.</div><div style="text-align: justify;">At the moment the yen is at a support level of 84.94-85.00. I would expect this to be breached, and for the currency to plummet to the 81.86 level, if only for a day. The implication is that traders ought to be looking to take a trade position here. This also makes a great opportunity for Japanese people to buy a house in the USA foreclosed market given the weak USD. It is not a bad time to sell your property in Japan if you are repatriating USDs, but to what end when the yields are so much better in Japan. There is not going to be any huge recovery in USD in the short term, however there is sufficient upside to consider selling investments like property, i.e. A recovery is possible, and it could be as high as 125 Yen. The deciding issues are going to be:</div><div style="text-align: justify;">1. <b>Japanese budget balance</b> - The extent to which the government resorts to taxation vs printing money to resolve the domestic public sector debt</div><div style="text-align: justify;">2. <b>Your time line</b> - the longer you wait, the greater prospect of a US recovery. The US is still absorbing all their surplus property stock and liquidating the related debts.</div><div style="text-align: justify;">-------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-3195670566973985862010-08-22T15:38:00.001-07:002010-08-22T15:43:25.883-07:00Flat EUR-USD currency market outlook<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_IEvPDYSlOTg/THGnTxyPjBI/AAAAAAAACQU/7PXnwzVsnQM/s1600/EUR-USd-23Aug10.JPG"><img style="text-align: justify;float: right; margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 10px; cursor: pointer; width: 320px; height: 278px; " src="http://2.bp.blogspot.com/_IEvPDYSlOTg/THGnTxyPjBI/AAAAAAAACQU/7PXnwzVsnQM/s320/EUR-USd-23Aug10.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5508367777474251794" /></a><div style="text-align: justify;">The EUR can be expected to fall back weaken in the short term. It might sfind support around 1.24, or otherwise fall back to previous support at 1.1879. My position is the former proposition, and we can in the middle term expect a stronger EUR. Of course its all relative with the major currencies, as both governments and the Japanese engage in currency debasement.</div><div style="text-align: justify;">--------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-7097456802182852982010-08-22T15:22:00.000-07:002010-08-22T15:32:32.642-07:00The outlook for the AUD positive<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_IEvPDYSlOTg/THGjr5fZReI/AAAAAAAACQM/IN4rnNTrK7Q/s1600/AUD-USD-23Aug10.JPG"><img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 320px; height: 280px;" src="http://4.bp.blogspot.com/_IEvPDYSlOTg/THGjr5fZReI/AAAAAAAACQM/IN4rnNTrK7Q/s320/AUD-USD-23Aug10.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5508363793813030370" /></a><div style="text-align: justify;">The Australian dollar is confronting several competing forces at the moment. In the short term there is the uncertainty of an unknown election result, even if it appears as if the Coalition will have the power in the House of Representatives, given that most of the Independent MPs are alligned to Liberal-National values. </div><div style="text-align: justify;">The trading in the AUD suggests that the currency is close to breaking out to a new high, or set to fall to the old 80c support. </div><div style="text-align: justify;">I am confident that once the election uncertainty has cleared we are going to see a stronger AUD. The reasons will be:</div><div style="text-align: justify;">1. An end to the Emissions Trading Scheme</div><div style="text-align: justify;">2. An end to the Mining Tax</div><div style="text-align: justify;">3. Strong mineral export revenues</div><div style="text-align: justify;">4. Strong business investment by the Chinese and Indians in coal & iron ore</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The economy is currently bumping along with capital inflows of $3.5-4 billion per month. They are going to keep the AUD strong for the foreseeable future. The USD does not convey such strength, but the Chinese economy does. I see no reason to expect a slump in China, which is still benefiting from a great deal of stimulus. I can see upside for the AUD to as high as 98.38c, the previous high. I cannot see that support being broken in the medium term. It is probable that Australia will witness a recovery in domestic spending by that point. i.e. When Australians know they are on a good thing they go out with their credit cards in hand. </div><div style="text-align: justify;">---------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-60383840119332983302010-08-18T15:30:00.000-07:002010-08-18T15:42:37.854-07:00Forex market attitudes to Australian PM candidates<div style="text-align: justify;">Interestingly the Forex markets are signalling that Australia is confronting a bad choice of leaders - between two idiots to be sure. The <a href="http://news.smh.com.au/breaking-news-business/nz-dollar-surges-against-aussie-20100819-12fhl.html">NZD is surprisingly strong</a>. I think the markets are anticipating a bad choice either way. Certainly there is no question that Gillard is dire news for the AUD in the short-medium term (say 0-5 years), whereas Abbot is the opposite I feel. Really its about the Gillard risk. The considerations are:</div><div style="text-align: justify;">1. <b>Resource Rent Tax</b> - it will kill investment in the long term, but committed projects will continue. In the long term there will be balance of payments benefits in the Australian government receiving more money through extortion, but there will be a retained distaste in financial markets in the form of an interest rate risk premium for the extortion, and its surprise introduction. </div><div style="text-align: justify;">2. <b>Ideology </b>- Gillard is a socialist who will invest long term in education. It will be inefficient spending, so considered a debasement of the currency value. Mind you? Any worse than Obama? The implication however is that wealth will unnecessarily be squandered. </div><div style="text-align: justify;">3. <b>Interest rates</b> - I think both parties will have similar implications for interest rates - except for the Gillard 'tax premium' of say 0.25% x $750 billion of household debt for Australia. Basically they will have soft monetary policies because of the high housing debt, so they will let the exchange rate jump around with commodity prices and speculation about global economic growth.</div><div style="text-align: justify;">4. <b>Fiscal policy</b> - Abbot could be expected to cut govt spending to repay debts.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Little surprise then that investors wanting AUD exposure are bidding up the NZD. Expect that disparity to correct after the election results. </div><div style="text-align: justify;">---------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-51104209992161465962010-05-17T15:42:00.000-07:002010-05-17T15:51:28.831-07:00AUD-USD close to support levels<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_IEvPDYSlOTg/S_HGalxu3rI/AAAAAAAACOI/F--7oGfolVY/s1600/AUD-USD-18May10.JPG"><img style="text-align: justify;float: right; margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 10px; cursor: pointer; width: 400px; height: 266px; " src="http://4.bp.blogspot.com/_IEvPDYSlOTg/S_HGalxu3rI/AAAAAAAACOI/F--7oGfolVY/s400/AUD-USD-18May10.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5472373182351466162" /></a><div style="text-align: justify;">The AUD has fallen off considerably in May. The AUD is destined to find support at the 0.8574 level, which ought to provide a good platform from which to trade forward. The critical factors shaping the AUD are interest rates and the Resource Rent Tax (RRT) under consideration by the Rudd government. A RRT would undermine a great deal of investment interest in Australia, particularly in the iron ore, coal, coal seam methane and the conventional oil & gas sectors. Several LNG terminals have been proposed. If this tax is adopted, a few more energy projects will be directed towards Oman and Yemen instead. That is how seriously Kevin Rudd has crippled the sovereign risk weighting of Australia. What an idiot! Rudd can be categorised with other infamous expropriators of private wealth - President Mugabe and President Chiraz. A 40% tax off the top is not much better than nationalisation with nominal compensation. </div><div style="text-align: justify;">I would not even be surprised to see the AUD breach this support. The factors working against this are the internally strong economy, and thus its relative merits over other economies, since it promises to keep interest rates relatively high. </div><div style="text-align: justify;">--------------------------------------------</div><div style="text-align: justify;">Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a></div>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-78116360855133860082010-05-17T15:37:00.000-07:002010-05-17T15:42:22.901-07:00EUR-USD turnaround imminent<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_IEvPDYSlOTg/S_HFcifgeHI/AAAAAAAACOA/jGcKHjY2waA/s1600/EUR-USA-18May10.jpg"><img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 400px; height: 286px;" src="http://2.bp.blogspot.com/_IEvPDYSlOTg/S_HFcifgeHI/AAAAAAAACOA/jGcKHjY2waA/s400/EUR-USA-18May10.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5472372116317829234" /></a><div style="text-align: justify;">Expect weakness in the USD this week, as the focus shifts from the Eurozone to the USA. The Euro has fallen to an important support level, and recent trading suggests it will find support at these levels. This of course provides a good basis for future trading once the downtrend is technically breached. </div>------------------------------------Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-76602505508513452652010-03-01T17:19:00.000-08:002010-03-01T17:24:41.171-08:00USD has short term upside, though consolidating<div style="text-align: justify;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_IEvPDYSlOTg/S4xnvRnJlAI/AAAAAAAACKk/mNuV0GKvw64/s1600-h/USD-JPY-1Mar10.jpg"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 320px; height: 281px;" src="http://1.bp.blogspot.com/_IEvPDYSlOTg/S4xnvRnJlAI/AAAAAAAACKk/mNuV0GKvw64/s320/USD-JPY-1Mar10.jpg" alt="" id="BLOGGER_PHOTO_ID_5443840111463207938" border="0" /></a>The USD is likely to experience some strength in the short term against the Yen. We can see in the chart that there is upside to 91.89. Thereafter I would expect it to preserve its consolidation for the next few months.<br /></div>--------------------------------------------<br />Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0tag:blogger.com,1999:blog-15474230.post-26060966513778635642010-03-01T17:12:00.000-08:002010-03-01T17:19:19.244-08:00Euro weakness in the short term<div style="text-align: justify;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_IEvPDYSlOTg/S4xmANJbheI/AAAAAAAACKc/qvEKC6hAP1o/s1600-h/EUR-USD-1Mar10.jpg"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 320px; height: 269px;" src="http://2.bp.blogspot.com/_IEvPDYSlOTg/S4xmANJbheI/AAAAAAAACKc/qvEKC6hAP1o/s320/EUR-USD-1Mar10.jpg" alt="" id="BLOGGER_PHOTO_ID_5443838203299333602" border="0" /></a>The Euro is coming under pressure because of the Greek, Portuguese and Spanish economic fears. I don't see much of a problem with this exposure, but its weighing on the market. There is talk of a bail out. It seems probable that the Euro is falling back to 1.2492 support, though there is an interim support level at 1.2969 which will need to be tested.<br />The best outcome for the Eurozone would be for these 3 nations, as well as other Eastern European countries lacking in monetary and fiscal discipline to have their own currency, so the puritans in the north can define their own monetary identity. The Mediterranean countries can then peg their new currency to the price of red wine.<br /></div>-------------------------------------------<br />Andrew Sheldon <a href="www.sheldonthinks.com">www.sheldonthinks.com</a>Andrew Sheldonhttp://www.blogger.com/profile/15469120006156639030noreply@blogger.com0