Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

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.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"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'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Thursday, 27 February 2014

Mining cliff arriveth at last

Don't have time to analyse in full, but the capex data is out and it is very weak!

Total capex fell by a seasonally adjusted 5.2% in the quarter alone.

The downward trend in total capital expenditure is now at last here and entrenched.

Graph: Total asset, total industry

Source: ABS

Note, in particular, the massive 17.4% drop in the Estimate 1 for 2014/15:
  • "Estimate 1 for 2014-15 is $124,880m. This is 17.4% lower than Estimate 1 for 2013-14."
The market was looking for a 10% decrease so this was a huge miss to the downside.

These things are easier to see in a picture:

Chart: Financial year actual and expected expenditure- Total Capital Expenditure

Source: ABS

At last looking quite dramatic.

I've noted in various posts recently that ASX releases have telegraphed this coming for some time and sharp cutbacks in capex are to be expected.

The Aussie dollar dived to 89.2 cents. 

GDP will be impacted next week.

And you can basically forget interest rate hikes. 

First the RBA may need to reintroduce its easing bias, and then, if required, may need to cut interest rates again later in the year.

Market anticipate that the cash rate will remain stone dead flat for the next year.