The Bull

Wednesday 17

January, 2018 6:40 AM



TheBull PREMIUM

  • Fundamentals

Investor Signposts: Week Beginning November 23 2015

Investor Signposts: Week Beginning November 23 2015

By Expert Panel 23.11.2015


Craig James – Chief Economist (Author) - CommSec



Business investment grabs local attention

·       Another busy week is in prospect with the quarterly business investment figures dominating the economic agenda. In China, no key economic data is expected. And in the US, the economic calendar is well populated in the lead up to Thursday’s Thanksgiving Day holiday.

·       In Australia, the week kicks off on Monday with the CommBank Business Sales index – a measure of economy-wide spending.

·       On Tuesday ANZ and Roy Morgan release the weekly consumer sentiment index. Confidence levels are holding just shy of the best levels of the year, underpinned by a positive outlook for consumer finances.

·       Also on Tuesday the Reserve Bank Governor delivers a speech at the Australian Business Economists annual dinner. Investors will be looking for any remarks on the housing market, Australian dollar and likelihood of further rate cuts.

·       On Wednesday, the Australian Bureau of Statistics (ABS) releases preliminary data on construction spending in the September quarter. The estimates of residential building completions feed into the calculation of economic growth in the quarter. And the commercial and engineering data provides early indications of the following day’s business investment figures. Home building is once again expected to be the key driver of construction growth although it is unlikely to offset the weakness in engineering activity.

·       Also on Wednesday Reserve Bank Assistant Governor Guy Debelle delivers a speech at the FX Week Europe Conference in London.

·       On Thursday the ABS releases Private Capital Expenditure and Expected Expenditure – business investment or just business spending. The data is broken up into “building & structures” and “equipment” and refers to business spending on longer-lasting assets. However as the title suggests the data covers not just actual spending but also planned spending over the next 18 months.

·       In the June quarter, investment fell by 4 per cent, driven by weakness in spending on buildings and equipment. The slide marked the fourth straight quarterly decline. Unfortunately the weakness continues with spending expected to have eased by 6 per cent in the September quarter.

·       But probably more important than the September quarter results are the forecasts for investment in the 2015/16 year. In the June quarter the third estimate of investment in 2015/16 came in at $114.8 billion, up 9.9 per cent on the second estimate (the biggest increase in the third estimate of investment in five years). If planned investment lifts – especially outside the mining sector – then the Reserve Bank will think harder about the need for another rate cut.

US data dominates in a holiday-shortened week

·       In the US, the week begins on Monday with the release of the Chicago Federal Reserve National Activity Index, existing home sales and the “flash” reading on US manufacturing.

·       On Tuesday, a clutch of key indicators is released: economic growth; home prices; consumer confidence; and the influential regional survey by the Federal Reserve in Richmond.

·       The preliminary estimate of economic growth should show that US economy grew at a 1.9 per cent annual rate in the September quarter. Consumer confidence probably lifted in November while the Case-Shiller home price measure probably showed annual growth of prices near 5 per cent.

·       On Wednesday, another significant clutch of economic data releases is expected in a holiday-shortened week. The data includes: personal income/spending; durable goods orders; new home sales; the Federal Housing Finance Agency measure of home prices; and consumer sentiment.

·       A key measure of business spending – durable goods orders – is expected to have lifted by 1.5 per cent in November but a more modest 0.4 per cent increase is expected if transportation orders are excluded.
·       And while little change is expected in measures of personal income and spending, new home sales may have lifted by between 7-8 per cent in October after the 11.5 per cent slide in September.

Sharemarkets, interest rates, commodities & currencies

·       Rewind eight years to late October/early November 2007 and sharemarkets across the globe were at or near record highs. Then followed the Global Financial Crisis, the European Debt Crisis and hesitant economic recoveries across the globe. Predictably sharemarkets spectacularly slumped in response to the GFC. On March 9 2009, the US Dow Jones was at 6,547, down 54 per cent from the October 9 2007 high of 14,164.

·       But just as spectacularly as it slumped, the Dow Jones spectacularly recovered, lifting to fresh record highs and peaking at 18,351 on May 9, 2015. And despite the pullback in the last few months the Dow Jones is up 167 per cent in the past 6½ years since hitting the March 2009 lows.

·       Similarly European markets have hit fresh record highs earlier this year with the German Dax now up by 206 per cent since its 2009 lows, while the UK FTSE has lifted by 81 per cent since its 2009 lows.

·       And while the gains have also been spectacular across Asia, the Australian market has more work to do to return to levels of late 2007. The ASX 200 remains 25 per cent away from the 2007 record highs after lifting too far in the China mining boom. But importantly, given the significance of dividends, total returns on the Australian market hit record highs in late April 2015, and are now up by 117 per cent from the 2009 lows.

>> BACK TO THE NEWSLETTER: Click here to read other articles from this week's newsletter 

 




FROM THE NEWSLETTER

Are we in for a rough year in 2018?

If 2018 pans out like some of the early... More

Top 30 shorted stocks

Each week we feature the top 10 shorted stocks... More

Investor Signposts: Week Beginning January 15 2018

A raft of key economic indicators are due for... More

What we can expect from China's economy in 2018

In 2017, we saw the consolidation of China's... More



WHAT’S ON THIS WEEK

week 19 January 2018
    • 15
    • CoreLogic Capital city house prices for the week just ended | 8:30 AM
    • 16
    • ANZ Roy Morgan Consumer Confidence weekly survey | 8:30 AM
    • 17
    • ABS Housing finance for November | 8:30 AM
    • 18
    • BHP Half year operational review | 8:30 AM
    • 19
    • ABS Lending finance for November | 8:30 AM

TheBull.com.au

TheBull.com.au

TheBull PREMIUM article search



Markets
Index: Points Change Percent

Featured Comment

That could be an opportunity for patient value investors to buy at lower prices and gain exposure to one of the few small Australian retailers with an expanding global footprint and less exposure to the online threat.

Retailers that can survive online barrage

Broker buys

  • ASX Code
  • Company
  • Broker
  • FMGFortescueSanlam Private Wealth
  • WSAWestern AreasSanlam Private Wealth
  • GRRGrange ResourcesFairmont Equities
  • ORGOrigin EnergyFairmont Equities
  • NANNanosonicsShaw and Partners
  • GMAGenworthShaw and Partners

Broker sells

  • ASX Code
  • Company
  • Broker
  • CGCCosta GroupSanlam Private Wealth
  • A2MA2 MilkSanlam Private Wealth
  • VRTVirtus HealthFairmont Equities
  • SHLSonic HealthcareFairmont Equities
  • SEKSeekShaw and Partners
  • NHFNib HoldingsShaw and Partners

Central Banks Rates

  • RBA1.50%
  • FED0.50%
  • BOE0.25%
  • BOC0.50%
  • RBNZ2.00%
  • ECB0.00%
  • SNB-0.75%
  • BOJ-0.10%

Upcoming dividends

  • ASX Code
  • Company, Div., Franking
  • Ex-Div.

Eight brokers like these stocks

  • ASX Code
  • Company Name
  • Consensus Target

Upcoming Floats

  • ASX Code
  • Company Name
  • Float Date

PLEASE SUPPORT OUR SPONSORS, AUSTRALIA'S LEADING BROKERS:



© Copyright The Compare Group Pty Ltd. All rights reserved.