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Aussie central bank rate cut, Aussie $ whacked, global equity happy at this time 8AM, EST

catch22catch22
in Off-Topic
India's central bank did not drop rates again, today.

Side note: India's broad equity market has had small declines for the past several days; after months of gains and the best global equity market returns.

Brief Aussie report link here.

Reminds me of the price drops on remaining items during the last and third day of a community wide "garage sale".

Are there any more "large economy" central banks, remaining in line, for rate cuts?

Well, I need more coffee.

Catch

Comments

  • JohnChisum
    Australia's real estate market which has been in boom mode for quite some time is showing signs of slowing. Property values continue to rise as wealthy Chinese among other foreign buyers snap up properties.

    Sounds like Vancouver BC.
  • TSP_TransferTSP_Transfer
    Copper prices surge on China stimulus hopes
    Feb 3 2015, 10:24 ET | By: Carl Surran, SA News Editor
    Copper prices are on track for their biggest gains since September on speculation that China would use stimulus measures to jump-start its economy and boost demand for the metal.
    "We’re in this perverse world where bad news is good news,” says BNP Paribas analyst Stephen Briggs, and "a lot of people are thinking China’s going to join the rest of the world and lower interest rates or [offer] some kind of monetary response."
    http://seekingalpha.com/news/2267856-copper-prices-surge-on-china-stimulus-hopes
  • hank
    edited February 2015
    JohnC: Thanks for these occassional updates/insights from "down-under."
    The different perspective is appreciated.
  • hank
    edited February 2015
    Some added thoughts on markets. Been pondering the slump in commodities that went lock-step with the oil rout. It's occurred to me that energy at half-price also makes many commodities cheaper to produce. AG is having its first good day in a long time as WTI moves above $50.

    Think about it ... Petroleum is used to manufacture fertilizer, to power farm equipment, in the grain drying process and to ship produce by rail or truck. Lower costs for energy translate into lower AG prices. Further, corn is used as ethanol fuel, and thus competes in price with oil in the energy markets. Suspect you could go further with this into various industrial commodities. (John mentioned copper.) However, I think the relationship between petroleum and AG is especially important - and seems to have been largely overlooked by most financial commentators.
  • Old_JoeOld_Joe
    Good morning, Hank- yes, true, but it's going to be a relatively long-term proposition before all of those factors work their way through the AG economy. We don't have any idea how long this oil game is going to last, and I suspect that when they declare "game over" the prices will shoot back up to the $100 range very quickly.
  • scott
    edited February 2015
    hank said:



    Think about it ... Petroleum is used to manufacture fertilizer, to power farm equipment, in the grain drying process and to ship produce by rail or truck. Lower costs for energy translate into lower AG prices. .

    I own Agrium (AGU). "Agrium’s single biggest product is nitrogen fertilizer. When natural gas prices were higher, 40% of the cost of producing nitrogen fertilizer was of natural gas. Now, the price of natural gas has fallen to two-year lows of $3.00/MMBtu. That’s mainly due to a recent warm spell in what is traditionally a cold Canadian winter, and abundant supply. With lower natural gas prices, that cost amounts to only 20% of producing nitrogen fertilizer. Any further weakness in natural gas prices will only add to Agrium’s benefit." (http://www.fool.ca/2015/01/05/3-reasons-why-now-is-a-good-time-to-buy-agrium-inc/)

    AGU recently increased the dividend payout ratio (40-50% of FCF vs prior 25-35%).

    Potash (POT) also reported very good results the other day and increased div.

    Archer Daniels (ADM) results were mixed, but I thought reasonably good overall and the dividend was increased. ADM discussed ethanol: " ...CEO, Juan Luciano, said that the company witnessed strong demand for its ethanol driven by domestic response to weak oil prices. He said that higher production allowed building up of surplus inventories. This would result in challenging conditions to realize better margin till demand and supplies are aligned." ADM increased the dividend payout ratio last year and the dividend was increased 17% today.

    Long AGU, ADM as long-term holdings, as well as other ag-related companies (CHS preferred shares, etc)

    Also long ICE, which has benefited from increased trading volume with energy volatility.

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