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'.

Tuesday, 2 May 2017

Commodity prices roll

Rolling over

The Reserve Bank of Australia (RBA) released its Index of Commodity Prices for April 2017, which showed commodity prices retracing by 3.5 per cent in the month. 

The drop in the price of iron ore more than offset the increase in coking coal prices.

That said, if you used the spot prices for the bulk commodities the index actually increased in April. 

Over the past year the index of commodity prices increased by a crunching 38.6 per cent (or 43.5 per cent using spot prices for the bulks).

The below chart is a fair illustration of why Australia's Budget forecasts are forever a crapshoot.

Don't dream it's over...

The commodities index has been re-weighted effective 1 April, as it is each year.

It is interesting to note that iron ore now accounts for less than 30 per cent of the index, down from nearly 35 per cent only two years earlier. 

LNG now represents 9.7 per cent of the index for its highest ever share, while gold increased its share to 8.7 per cent. 

Nevertheless the index remains heavily weighted towards Australia's key commodities of iron ore and coal, and the outlook for national income is still heavily dependent upon the prices of these exports.

And it looks as though the dream run for the bulk commodities may now be over.

This is not unexpected, but it will be yet another headwind for those arguing for rate hikes, in addition to the forthcoming residential construction downturn.

The Reserve Bank meets today and will keep the cash rate on hold. 

All eyes turn to the May Budget and rumours of infrastructure plans...