Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

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"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

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Thursday, 29 November 2012

How's the end of that mining boom lookin'?

From the ABS release just out:

"Estimate 4 for Mining for 2012-13 is $109,353 million. This is 17.1% higher than the corresponding estimate for 2011-12."

As someone so wittily noted in the Twittersphere..."Crikey, it's lucky that pesky mining boom is over - imagine how much we would have spent!"

I'm unsure as yet how the gloomers will put the negative spin on this one. My guess is something along the lines of: "It'll never last!" - which is naturally true, but then, nor would one expect it to - no boom lasts forever, after all.

Of course, you could argue that the boom is losing some of its momentum which is possibly true. But I still suggest that Aussies are better served to consider the benefits of our growing economy instead of continually trying to point out how things can't get better at the same rate forever (ever heard of a place called Europe?).

Mining capex is still expected to grow by more than a whopping 17% next year to easily the highest level it has ever been. Ergo, the capex phase boom is definitely not over.

The fun part is guessing when the mining capex boom will peak. BIS reckons two years (but their forecasting record is woeful). Stevo reckons the investment boom has "several years to run".  Using my own sophisticated analysis techniques (drawing a neat curve on the back of a fag packet) I reckon the mining boom peak might come around December 2015.

As for what happens in 2016, well, Australia will gradually transition into the production phase of the boom, but I think I'll worry more about that nearer the time, personally.

Perversely, as the overall rate of capex growth is somewhat below expectations, this data is likely to actually slightly increase the rate of an interest rate cut next week to somewhere around a 2 in 3 chance.
Note that these figures only go back to 2007-2008. If you drag the graph back to three or four more years you can hardly see the bars.