Pete Wargent blogspot

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

5 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's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete 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 & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Monday, 4 January 2016

Commodities dive in December

December dive

Consumers may be enjoying lower oil prices, but they aren't do so much for Australia's Index of Commodity Prices

As the chart below shows Australia's index is weighted heavily towards iron ore (34.7), metallurgical coal (12.1), and thermal coal (8.1), but LNG (8.1) and crude oil (5.3) also account for a significant weighting.

Preliminary estimates for December showed the index getting smashed by 4.9 per cent in SDR terms, following on from a revised 3.1 per cent decline in November. 

The monthly decline was largely due to drops in the price of iron ore and oil. 

Over the past year the commodities index has been smoked by 23.3 per cent, driven by the massive declines in iron ore and coal prices, the bulk commodities. 

The Reserve Bank also now includes an index using spot prices (in addition to the index which uses market information for bulk export prices), and this commodities index is down by some 25.6 per cent over the year. 

In theory movements in the Aussie dollar may help to cushion the shock a little, with the index down by 17.1 per cent in AUD terms over the past year. That said the preliminary estimates show a wicked 6.0 per cent decline in the month of December alone. 

There doesn't appear to be a great deal of hope for coal prices at the moment, but iron ore has seen ~14 per cent bounce from its most recent nadir, while China's stock indices crashing into their circuit breakers today may well lead to a spike in the gold price. 

So the decline back towards long run averages may or may not be temporarily arrested in January. 

As for crude oil, some are predicting a rebound, but who knows really?

In other news, AIG reported that its manufacturing index expanded for a sixth month.