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, 1 February 2016

Spots the difference

Commodities slump

The Reserve Bank's Commodity Price Index continued its reversion with a -2.9 per cent decline (on a monthly average basis) in SDR terms, following on from a revised -3.9 per cent decline in December, to hit its lowest level since October 2005.

The monthly decline reflected weak prices for oil, coal and iron ore, while the base metals and rural exports subindices also declined slightly in the month. 

Over the past year the index has been smoked by -25.8 per cent lower in SDR terms, driven by sharp declines in the bulk commodities, iron ore and coal.

Aussie dollar offsets

In Aussie dollar terms the index was a somewhat less painful -17.2 per cent lower over the year to January, and indeed, there has been a bit of a bounce in commodity prices of late. 

In fact, the A$ commodities index using bulk commodities spot prices increased by +2.1 per cent in January.

Similarly, while the A$ bulk commodities index increased only moderately in January, using spot prices the bulk commodities index jumped by +5.5 per cent. 

The weights for the index are shown in the following chart.

Crude oil has rebounded from 13 year lows of $27.50/barrel to above $30/barrel, but there remains a risk that the bounce is not sustained if the "taps are turned back on".

If there's one thing the last few months have flushed out, it's a long list of people who can't predict oil prices (but reckon they can)!

The iron ore price has been similarly staring into the abyss of a supply glut, and the spot price this morning is US$42.50/dry ton (A$:59.90), which is also a rebound from the record low spot prices seen in December of well below US40.