Interdum stultus opportuna loquitur...

Thursday, November 25, 2004

Another Record, Despite the Data

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

My sincere thanks to Stuart and Bill; it is far too much of an understatement to call your actions a "fine gesture". You're a couple of gentlemen.

And now, it begins...

Economic Statistics

CapEx was weaker than estimates. I think I had posted that consensus estimates were at 3%, but the wires claim it was 2.7%... no matter, because at 1.3% the actual number was less than half of either number.

This will reduce the range of estimates for GDP down to 2.8-3% annualised, from 3.2-3.5%; it's not a huge deal, but it is a bit of a concern when things like housing cannot be expected to make such a contribution in out-quarters.

The median house price in Australia also fell this quarter, down 1.65% to a lazy $364k.

Think really hard about this: average annual household income is about 1.4x average weekly ordinary time earnings.

AWOTE is about $50k nowadays, so average household pre-tax income is about $70k. You get raped 40% of that in tax and 9% in super, leaving you with about half after tax.

So the median house price - the price below which 50% of house prices can be found - is a lazy 10x annual (approximate) tax-home earnings.

Now think about this...

65% of income earners actually earn less than the average; the median income is a decent whack below the average.

364 "clicks" for the median house is, repeat after me, MADNESS. Honestly, this is going to be the reverse of the 1970s - when everyone struck it lucky by buying property just before a massive burst of inflation.

Major Market Indices

The All Ords continues to defy gravity - mostly because the Yanks are doing the same.

Now I have said for two years that the domestic market is better value than most global markets - on any measure - once you ignore dross like News Corpse and other over-priced over-hyped broker-tip garbage like CSL and COH. That's why the crew at IWL found it so easy to beat 95% of fund managers in their Model Portfolios - chuck out News Corpse and you're guaranteed to outperform 80% of managers right there!

As far as COH and CSL (and their ilk) are concerned...

I've said it before - I love the fact that COH can help little deaf kiddies to hear, but there's not that many of them around whose parents have the wherewithal to pay for the fix (after the mortgage on their half-a-bar brick veneer excresence in Bacchus Marsh).

As for CSL, I said when it was $46 that people would have to start bathing in blood before it was remotely worth 100x its earnings. Its multiple has contracted as lot, but it's still overpriced and overhyped, in my view.

Anyhow - enough about the high-PE end of the spectrum... now a warning about Banks. That's where the nasty surprises lurk, in my opinion.

Banks do a lot of stupid things - and often get holding the baby at the end of a period of stupidity (like the massive commercial property loan books they all held at the end of the 80s). HomeSide showed holders of (then $35) NAB shares that NAB was not allergic to making stupid decisions in the mortgage market, and the stock price hasn't been the same since.

Think hard about those sums above: 10x average household take-home earnings... an awful lot of it mortgaged...and where is all the mortgage debt?

If you said "all the high-risk stuff is on the books of the mortgage brokers, like RAMS and Aussie Home Loans" I urge you to think a bit harder. Where do they get the money? The tooth fairy?

XAOAll Ordinaries3914.820.10.52%658.84m
XTLS&P/ASX 202078.59.50.46%105.49m
XFLS&P/ASX 503830.622.60.59%211.32m
XTOS&P/ASX 100316617.60.56%357.37m
XJOS&P/ASX 2003904.221.70.56%515.2m
XKOS&P/ASX 3003913.821.60.55%585.31m
XMDS&P/ASX Mid-Cap 503845.413.20.34%146.06m
XSOS&P/ASX Small Ordinaries2319.911.70.51%227.94m

S&P/ASX200 GICS Sector Indices

I hate GICS. These are only here under sufferance, because someone I like asked for them.

(That doesn't mean that others who have asked for stuff that hasn't appeared are people I don't like... it means that setting up this table was the easiest of the requests thus far).

Telcos were the only non-advancing sector today - becassue the market got its hopes up that Ziggy was on the chopping block. remember back when he organised the big hookup with the Chinese (or Hong-Kongians - I forget)? Everyone was singing his praises, except nasty old GT - back in the IWL days.

CodeGICS SectorClose+/-%Volume
XDJConsumer Discretionary2310.211.90.52%42.61m
XSJConsumer Staples5311.611.50.22%50.26m
XIJInformation Technology369.40.50.14%12.53m
XPJProperty Trusts1754.90.90.05%95.74m
XXJASX200 ex Property Trusts4639.328.30.61%61.95m

All Ordinaries Volume Leaders

BHPBHP Billiton15.170.191.27%29.88m
RACReinsurance Aust0.570.035.56%24.38m
BPCBurns Philp & Co0.870.022.35%24.01m
MAPMacquarie Airports3.010.103.44%17.97m

All Ordinaries Top 5 % Gainers

PEPRPeplin Rights0.0180.0180%1.32m
RCDRecord Invest6.040.7313.75%2.16m
SGLSydney Gas1.040.099.47%6.6m
CNTCentamin Egypt0.2950.039.26%1.28m

All Ordinaries Top 5 % Losers

PBDPort Bouvard1.32-0.14-9.59%108654
MTTMetcash Trading2.88-0.27-8.57%8.41m
SSSSam's Seafood1.42-0.09-5.96%69411
HWEHenry Walker Eltin0.51-0.03-5.56%8.17m
FWDFleetwood Corp8.86-0.49-5.24%152844

Main SFE Futures Contracts

SPI04ZSPI200 Index SFE3913150.38%10405
IR04Z90-day Bank Bills SFE94.610.040.04%92587
YT04Z3-yr Bond SFE94.940.070.07%149652
XT04Z10-yr Bond SFE94.740.080.08%34889