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'.

Saturday, 28 January 2017

Export prices lift off

Terms of trade jump in Q4

We saw earlier in 2016 a huge rebound in the spot prices of Australia's key commodities, iron ore and coal. 

It takes time for spot prices to be reflected in Australian export prices, but we can see that his has now begun to happen, with the exports index having been driven higher by mineral export prices. 

The export price index jumped by 12.4 per cent in the December 2016 quarter, while the import price index has also declined by 4.6 per cent over calendar year.

The quarterly gains the export price index were largely driven by a huge 59.9 per cent leap in the prices received for coal, coke, and briquettes.

So, it's a surprisingly strong improvement for Australia's terms of trade. 

As you can see in the chart above, Australia hasn't benefited from such a strong improvement in its terms of trade since 2010.

Much energy will be directed to guessing the result of GDP for the fourth quarter after the negative print in Q3. 

I'm not inclined to humiliate myself by 'guesstimating' the result now, but the improving terms of trade do suggest that nominal GDP and national income should present well, even if the headline GDP result is weak.

In essence, this is the opposite of what we have been seeing in recent times, which has been strong GDP but weak income growth.