Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, 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.

"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.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Tuesday, 4 October 2016

Some bounce to the ounce...finally (national income to rise in Q3)

Rebound continues

The Reserve Bank's Index of Commodity Prices rose again by +1.9 per cent on a monthly average basis in September, following on from a revised +1.9 per cent gain in August.

Hurrah! After five desperate years the the index has actually stopped crashing!

Let's hope it doesn't slip on another oil slick.

In Aussie dollar terms the index rose by +2.3 per cent in the month.

In SDR terms the index is now up by +3.1 per cent over the past year, led higher by strengthening gold and coking coal prices, though the strength of the Aussie dollar is proving to be quite a persistent headache.

These charts a tad fiddly, but you can expand them by clicking on them. Or swiping them. Whatevs.


While the cash rate was predictably left unchanged today at 1.50 per cent, the "appreciating exchange rate" was noted in the associated monetary policy statement, a "complication" which could ultimately result in further interest rate cuts in the cycle (most goods and services that Aussies trade on the international markets are bought and sold under US dollar denominated contracts).

In plain Pommie, the strong Aussie dollar is not helping exporters get a very handsome price for our iron ore, coal, or gas.

Bulks bounce

Australian's index is naturally enough heavily dependent upon the performance of its key component bulk commodities.

Namely these are iron ore, for which the price outlook is arguably very dim, and coal, which perversely is absolutely screaming higher. 


Indeed, the RBA's index based on spot prices for the bulk commodities is a thunderous +17.2 per cent higher than a year ago. 

In respect of the the key commodities the RBA's figures are based upon monthly average estimated export prices, and so to date have not yet reflected the incredible +164 per cent boom in coking coal spot prices (where a supply side 'perfect storm' has caused the price to more than double within a matter of only six weeks).

Even the bulk commodity index based upon spot prices is still playing catch up here, since it is based upon an average across the month. 


If sustained, therefore, commodity prices could rise quite a bit further over the remainder of the year, particularly if oil and LNG prices don't poop themselves again.

However, stockpiles suggest that the market for iron ore is well oversupplied, and in all likelihood the price declines in the post here will offset most of the gains from the coal price bonanza.