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 July 2016

Commodity prices rebound in Q2

Commodities rally

There has been quite a significant rally in commodity prices lately, including in iron ore, natural gas, oil, copper, silver, aluminium, sugar, and most recently a substantial run-up in the gold price on global uncertainty.

Over the three months to June Bloomberg's commodity index recorded its best quarter since 2010. 

Since exports are shipped throughout the period - and not only only the last day of the month - the Reserve Bank of Australia (RBA) calculates its Index of Commodity Prices on a monthly average basis.

On this measure the index was down by 0.4 per cent in SDR terms in June after rising by the same figure in May.

Nevertheless over the second quarter this index did move 1.5 per cent higher, despite being 9.9 per cent lower of the year. 

Notably in Aussie dollar terms the index was some 3.7 per cent higher on a monthly average basis over the second quarter, taking the annual decline down to 5.7 per cent. 

Income up

Australia's commodity index is very heavily weighted towards the bulk commodities iron ore and coal, by far our most valuable commodity exports.

The most recent figures show the iron ore price well off recent lows at US$55.56/tonne to be 10 per cent higher over the last week of the calendar month. 

Overall the iron ore price rose by 11 per cent through the month June. 

However, with those gains being overwhelmingly skewed towards the end of the month they are not yet fully reflected in the RBA's commodity price index. 

It's early days, but on a monthly average basis it is therefore quite likely that there will be further gains in the index in July.

In terms of the national accounts for the second quarter, while it's too early to call but it seems that the economy probably grew by about 3 per cent in the financial year to June 2016.

The commodity price rally should be a welcome boost to the much-maligned real gross national income measure in Q2, the figures to March 2016 being represented by the green line below. 

100 quarters not out

On June 30, Australia passed an amazing 25 years of consecutive growth without experiencing a recession.

A remarkable record to make other developed economies envious.