I know I promised to give you an overview of the information regimes of some of our competitors but our normally reliable source didn’t come through - I will get back to you on it.
In this week’s newsletter we issued results of the Australian Grower Planting Survey. Apart from our survey we don't currently have a comprehensive survey of grower’s plantings. Our survey is but a small snippet required to be confident in the accuracy of the numbers - it is not statistically valid, but we are confident that the trends are usually correct, particularly on the major crops.
There is still a level of skepticism in the grower community about providing open access to information - our view is that good information makes markets work better. For example service providers can better plan for the needs of their customers who can then make better decisions based on good information. As Alan Greenspan used to say 'when the facts change so do my decisions'.
What many don't realise is that ABARE plantings estimates are a combination of expert opinion and the views of their analysts - they are not survey based. In this week's newsletter we plan to review our historical survey results to actual ABARE figures. But if the ABARE figures are not survey based then which benchmark can we use to measure our results against? A prime example is the WA canola crop last year; our survey suggested a massive increase in plantings and we produced a massive crop, but ABARE put much of this down to stellar yields rather than considering if they had under-estimated plantings.
The other gripe I have with the way ABARE approach things is that they assume all plantings are actually harvest, but we know there is often a high level of abandonment. Rather than adjusting harvested acres they just decrease yields to fit the planted number to the production estimate. So in fact they are underestimating yields on the portion that was harvest.
Don't get me wrong, I am not bashing ABARE. I think their work has improved significantly since Phil Glyde has taken over but we have a long way to go to meet the information regimes of our competitors to bring us into the 21st century. These needs will be covered in the coming weeks.
Update to last week’s rant – Information is right for all
In an update to last week’s rant, CBH has still not provided me with results of their online survey where they asked growers whether they would like CBH to release more harvest related information. They have, however, selectively released results to parts of the industry where they say the results have been 'mixed'.
Our survey conducted in conjunction with efarming of over 1000 growers was almost 90% in support of the bulk handlers releasing more 'aggregate' information. CBH are attempting to run a scare campaign suggesting that what we are requesting is the release of individual grower information which is a misleading.
Anyway because CBH disagree with my view - that they should be keeping the market more informed - they are not speaking to me anymore. But apparently I am not the only one. Exporters are highly disgruntled about the new CBH proposal on the management of shipping allocation for the upcoming year. CBH say they have consulted with industry, but apparently the conversations have been my way or the highway type stuff - no different to the experience I have been having. Are they reminding you of anything?
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Monday, July 6, 2009
Sunday, July 5, 2009
Information is a right for all
I have had better weeks; I got into another car bingle and both my footy teams lost again, meaning another quiet September (I might go on holidays or take up another hobby like gardening – except I don’t have a garden). At least it is raining - it’s a pity grain markets are in a coma and stuck in a trance following financials.
Anyway, I want to continue to press an issue that I have been banging on about for a while. It concerns the release of market critical information. It seems the debate has been polarised by the noisy minority who don’t want to tell anyone anything to the exporters who want to know everything. The problem with this is it is easy for CBH to run interference to their betterment.
CBH have gone to ground on the whole affair. They won’t even release results of a survey they took of growers on this issue, on the grounds that ProFarmer will misconstrue the data (I found this quite offensive). The survey we conducted with efarming.com.au suggested that 87% of the 1078 growers who voted, agreed that the bulk handlers should be compelled to release more aggregate information. I have provided CBH with formal, peer reviewed economic studies that suggest that information facilitates trade and overcomes market inefficiencies. CBH conveniently fail to acknowledge these ‘established’ economic theories.
The sad thing is that CBH won’t even enter into a debate about the subject. They are showing clear signs that they intend to abuse their market power by withholding information for as long as they can– but to whose benefit? The Grain Pool and Agracorp have a vested interest in withholding this data because as market leaders they have better information than any of their competitors – this benefit will erode as their market share diminishes. That is if you believe that the Chinese walls between their operations and trading teams are effective.
Growers are kidding themselves if they believe withholding data is to their benefit. All the buyers they are selling grain to have much more sophisticated market intelligence systems, and the grower only sees the information from their own port hole.
In their submission to the ACCC, CBH reckon ABS and ABARE release sufficient data to the market. But there are gaping holes. The ABS and ABARE stocks and usage information is dated (5-8 weeks late), and only covers wheat (what’s the integrity of this data). They fail to release information on other commodities and the ABS excludes barley exports that are only released at a national level (state export data is deferred by six months – a hangover from statutory market days) meaning it is impossible to formulate an east coast feed grain balance sheet.
Plus we only have a quarterly production report (which is survey based after consultation with industry experts i.e., CBH and their counterparts); no planting intentions, actual plantings or abandonment statistics or ongoing weekly crop conditions, receivals and exports.Some groups want CBH to release a plethora of information. We don’t agree this is necessary, but if CBH continue to stonewall on the release of basic data they will further alienate the people they are supposed to serve.
We need a new information regime that reflects the needs of a changing market. Next week we will articulate the types of data our competitors release to benefit market participants.
If you are interested in receiving this information and more on a regular basis, please call us toll free on 1300 302 143 to organise your subscription. Click HERE to subscribe online or Click HERE for a 4-week FREE Trial
Anyway, I want to continue to press an issue that I have been banging on about for a while. It concerns the release of market critical information. It seems the debate has been polarised by the noisy minority who don’t want to tell anyone anything to the exporters who want to know everything. The problem with this is it is easy for CBH to run interference to their betterment.
CBH have gone to ground on the whole affair. They won’t even release results of a survey they took of growers on this issue, on the grounds that ProFarmer will misconstrue the data (I found this quite offensive). The survey we conducted with efarming.com.au suggested that 87% of the 1078 growers who voted, agreed that the bulk handlers should be compelled to release more aggregate information. I have provided CBH with formal, peer reviewed economic studies that suggest that information facilitates trade and overcomes market inefficiencies. CBH conveniently fail to acknowledge these ‘established’ economic theories.
The sad thing is that CBH won’t even enter into a debate about the subject. They are showing clear signs that they intend to abuse their market power by withholding information for as long as they can– but to whose benefit? The Grain Pool and Agracorp have a vested interest in withholding this data because as market leaders they have better information than any of their competitors – this benefit will erode as their market share diminishes. That is if you believe that the Chinese walls between their operations and trading teams are effective.
Growers are kidding themselves if they believe withholding data is to their benefit. All the buyers they are selling grain to have much more sophisticated market intelligence systems, and the grower only sees the information from their own port hole.
In their submission to the ACCC, CBH reckon ABS and ABARE release sufficient data to the market. But there are gaping holes. The ABS and ABARE stocks and usage information is dated (5-8 weeks late), and only covers wheat (what’s the integrity of this data). They fail to release information on other commodities and the ABS excludes barley exports that are only released at a national level (state export data is deferred by six months – a hangover from statutory market days) meaning it is impossible to formulate an east coast feed grain balance sheet.
Plus we only have a quarterly production report (which is survey based after consultation with industry experts i.e., CBH and their counterparts); no planting intentions, actual plantings or abandonment statistics or ongoing weekly crop conditions, receivals and exports.Some groups want CBH to release a plethora of information. We don’t agree this is necessary, but if CBH continue to stonewall on the release of basic data they will further alienate the people they are supposed to serve.
We need a new information regime that reflects the needs of a changing market. Next week we will articulate the types of data our competitors release to benefit market participants.
If you are interested in receiving this information and more on a regular basis, please call us toll free on 1300 302 143 to organise your subscription. Click HERE to subscribe online or Click HERE for a 4-week FREE Trial
Thursday, June 25, 2009
Fundamentals not strong enough
Just as prices started to claw their way into hedging territory, canola prices copped a sudden hammering this week. Grower bids have fallen the best part of A$50/t for both old and new crop after nearing our targets of A$600/t. But these big falls were mainly isolated to canola with bean markets only softer to the tune of A$10-15/t.
These big falls come at a time when the Canadian crop is getting smaller - last week the Canadian Wheat Board cut their crop to 10.2mmt, down 19% from last year’s 12.6mmt monster and the market range continues to contract with estimates in a wide range from 10-11.5mmt. Canadian weather forecasts have improved but plenty of damage appears to be done and unless the rain is extensive and widespread, much more will be required to attain average yields.
Rumours that China has cancelled some forward orders may have played a role, but it seems these cancellations were at the margins and haven’t significantly changed the S&D outlook. With global oilseed production and canola likely to fall this year, we are moving towards a much better fundamental situation.
Canola prices vs. beans are at the lowest levels in 5 years (for spot months), at a US$50/t discount, and back to near contract lows for new crop (at a US$11/t premium), both down US$30/t in a week.
It appears that much of the recent weakness has been inspired by the funds which have been pulling back their exposure in commodities. As one of the more thinly traded markets we feel that the punishment dished out to canola may have been overdone.
That said, we can’t see much on the fundamental horizon, near-term, that is going to be strong enough to push markets back to recent highs. We are a little wary of the Nth American planting intentions reports, due out on the 23rd and 30th of this month, from Stats Can and the USDA respectively. These agencies both produced surprising reports in March, where the trade felt they low-balled canola and bean planting intentions across Canada and the US.
Canada could find another 0.5-1m acres – although recent weather will negate the impact. The wild card could be beans. The USDA could easily find 2-5m acres thanks to switches from corn, wheat and idle land to beans as planting delays and higher prices have encouraged farmers. A plantings shock is all we need in the current environment where outside markets are providing limited support.
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These big falls come at a time when the Canadian crop is getting smaller - last week the Canadian Wheat Board cut their crop to 10.2mmt, down 19% from last year’s 12.6mmt monster and the market range continues to contract with estimates in a wide range from 10-11.5mmt. Canadian weather forecasts have improved but plenty of damage appears to be done and unless the rain is extensive and widespread, much more will be required to attain average yields.
Rumours that China has cancelled some forward orders may have played a role, but it seems these cancellations were at the margins and haven’t significantly changed the S&D outlook. With global oilseed production and canola likely to fall this year, we are moving towards a much better fundamental situation.
Canola prices vs. beans are at the lowest levels in 5 years (for spot months), at a US$50/t discount, and back to near contract lows for new crop (at a US$11/t premium), both down US$30/t in a week.
It appears that much of the recent weakness has been inspired by the funds which have been pulling back their exposure in commodities. As one of the more thinly traded markets we feel that the punishment dished out to canola may have been overdone.
That said, we can’t see much on the fundamental horizon, near-term, that is going to be strong enough to push markets back to recent highs. We are a little wary of the Nth American planting intentions reports, due out on the 23rd and 30th of this month, from Stats Can and the USDA respectively. These agencies both produced surprising reports in March, where the trade felt they low-balled canola and bean planting intentions across Canada and the US.
Canada could find another 0.5-1m acres – although recent weather will negate the impact. The wild card could be beans. The USDA could easily find 2-5m acres thanks to switches from corn, wheat and idle land to beans as planting delays and higher prices have encouraged farmers. A plantings shock is all we need in the current environment where outside markets are providing limited support.
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Monday, June 15, 2009
Markets Sending Mixed Signals
There were some very mixed signals being sent by markets last week. Firstly the USDA lifted wheat end stocks after they were expected to fall, while oilseed and corn stocks were projected lower. Projections for a fall in corn stocks – a result of lower yields – should provide the fundamental support for grains markets, taking the batten from beans which have carried markets higher over the past quarter.
Markets still seem to be transfixed on oil, the $US and inflationary expectations. Oil prices have quietly skipped above US$70/bll with the International Energy Agency (IEA) revising its 2009 demand upwards, despite signs that US gasoline demand has peaked (a result of more ethanol blending). While we have outside markets pulling our way, the greater the chance that prices could spike higher on further weather scares. Outside money is gently rolling back into commodity markets.
Already, torrid early season conditions in Canada have seen the Canadian Wheat Board reduce Canadian production expectations by around 20% for wheat and canola. US wheat production is expected to fall by the same amount (delayed plantings and lower yields). It is still dry in Argentina, conditions have improved in Europe - although it is dry in south-east Ukraine - and we have seen a good general plant in Australia (with only central and south-eastern WA needing more planting rain). Strong carryover wheat stocks are keeping prices in check, but the margin for error has narrowed and further major production issues will have an impact.
Heavy losses on pork production (swine flu and weak demand) and very narrow cattle feeding margins and poor dairy prices suggest that the impact of the economic slowdown on demand for commodities is very real. Demand for our commodities from the traditional food sector isn’t showing signs of recovery, but with oil prices on the rise, demand for corn for ethanol will help take up the slack and provide the backbone for prices across the commodities sector.
Prices have neared hedging targets the past couple of weeks, but we are only entering the period of seasonal volatility associated with the maturity of the US corn crop. The next market mover could be the USDA 30 June prospective plantings report which is likely to show a further shift from corn to ethanol from earlier reports.
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Markets still seem to be transfixed on oil, the $US and inflationary expectations. Oil prices have quietly skipped above US$70/bll with the International Energy Agency (IEA) revising its 2009 demand upwards, despite signs that US gasoline demand has peaked (a result of more ethanol blending). While we have outside markets pulling our way, the greater the chance that prices could spike higher on further weather scares. Outside money is gently rolling back into commodity markets.
Already, torrid early season conditions in Canada have seen the Canadian Wheat Board reduce Canadian production expectations by around 20% for wheat and canola. US wheat production is expected to fall by the same amount (delayed plantings and lower yields). It is still dry in Argentina, conditions have improved in Europe - although it is dry in south-east Ukraine - and we have seen a good general plant in Australia (with only central and south-eastern WA needing more planting rain). Strong carryover wheat stocks are keeping prices in check, but the margin for error has narrowed and further major production issues will have an impact.
Heavy losses on pork production (swine flu and weak demand) and very narrow cattle feeding margins and poor dairy prices suggest that the impact of the economic slowdown on demand for commodities is very real. Demand for our commodities from the traditional food sector isn’t showing signs of recovery, but with oil prices on the rise, demand for corn for ethanol will help take up the slack and provide the backbone for prices across the commodities sector.
Prices have neared hedging targets the past couple of weeks, but we are only entering the period of seasonal volatility associated with the maturity of the US corn crop. The next market mover could be the USDA 30 June prospective plantings report which is likely to show a further shift from corn to ethanol from earlier reports.
If you are interested in receiving this information and more on a regular basis, please call us toll free on 1300 302 143 to organise your subscription. Click HERE to subscribe online or Click HERE for a 4-week FREE Trial
Tuesday, June 2, 2009
Bio-fuels we can take - but no subsidies and no mandates
I am speaking at a Sugar Conference in Cairns this week. To be honest I have been roped in as a favour but at least most of the big end of town will be there. Most of the final day constitutes an assessment of the impact of bio-fuels on the agricultural industries.
I think they envisage me as being supportive because we are involved in the grains industry that has been one of the major beneficiaries of bio-fuels. Two of the founding principles of Profarmer are free trade and minimal Government involvement (along with absolute independence). So to support the Australian bio-fuel industry in its current form would be to turn our back on these principles. While it may prove unpopular with some of our subscribers (like our opposition to the Single Desk), we have to remain true to our principles.
Anyway here is my argument. Declining global grain stock trends are undeniable and bio-fuels have played a role in these trends and the extreme price rises witnessed over the past couple of years. A lift in demand, ignited somewhat by the euphoria surrounding bio-fuels, increased demand at a time of inelastic demand as grain stocks fell to historically low levels. Trends in grain consumption from the ethanol sector in the US are undeniable and are linked to rising mandates (not price sensitive).
A leading US Ag Economist Keith Collins reckoned bio-fuels were responsible for lifting prices 25-60%. In the US, rightly or wrongly bio-fuels will stay, mainly because it makes political sense - it is a palatable way of selling farm subsidies and is a vote winner.
But why are we doing it here? They don’t seem to be a major vote winner politically. It won’t create jobs and may destroy jobs in industries built on our sustainable competitive advantages.
• They won’t save the environment (2-5% mandates in oz?)
• We aren’t world competitive in producing bio-fuels so it will result in a tax on consumers/industry• We aren’t world leaders - at least 10yrs behind in producing ethanol from grain
• If we were genuinely concerned about the environment lets import it from the lowest cost supplier
So bio-fuels sure, but no subsidies or no mandates.
To us mandates and subsides stink of populous follow-the-leader - silly politics where all we will do is make ourselves busy for no real gain. Shouldn’t we be concentrating on building infrastructure to support our industries built on our sustainable competitive advantages.
But we recognize market failure does exists and if the Government were to get involved how about we lead the world in research in 2nd generation bio-fuels produced from waste from feedstock that we produce on a scale which is globally competitive?
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I think they envisage me as being supportive because we are involved in the grains industry that has been one of the major beneficiaries of bio-fuels. Two of the founding principles of Profarmer are free trade and minimal Government involvement (along with absolute independence). So to support the Australian bio-fuel industry in its current form would be to turn our back on these principles. While it may prove unpopular with some of our subscribers (like our opposition to the Single Desk), we have to remain true to our principles.
Anyway here is my argument. Declining global grain stock trends are undeniable and bio-fuels have played a role in these trends and the extreme price rises witnessed over the past couple of years. A lift in demand, ignited somewhat by the euphoria surrounding bio-fuels, increased demand at a time of inelastic demand as grain stocks fell to historically low levels. Trends in grain consumption from the ethanol sector in the US are undeniable and are linked to rising mandates (not price sensitive).
A leading US Ag Economist Keith Collins reckoned bio-fuels were responsible for lifting prices 25-60%. In the US, rightly or wrongly bio-fuels will stay, mainly because it makes political sense - it is a palatable way of selling farm subsidies and is a vote winner.
But why are we doing it here? They don’t seem to be a major vote winner politically. It won’t create jobs and may destroy jobs in industries built on our sustainable competitive advantages.
• They won’t save the environment (2-5% mandates in oz?)
• We aren’t world competitive in producing bio-fuels so it will result in a tax on consumers/industry• We aren’t world leaders - at least 10yrs behind in producing ethanol from grain
• If we were genuinely concerned about the environment lets import it from the lowest cost supplier
So bio-fuels sure, but no subsidies or no mandates.
To us mandates and subsides stink of populous follow-the-leader - silly politics where all we will do is make ourselves busy for no real gain. Shouldn’t we be concentrating on building infrastructure to support our industries built on our sustainable competitive advantages.
But we recognize market failure does exists and if the Government were to get involved how about we lead the world in research in 2nd generation bio-fuels produced from waste from feedstock that we produce on a scale which is globally competitive?
If you are interested in receiving this information and more on a regular basis, please call us toll free on 1300 302 143 to organise your subscription. Click HERE to subscribe online or Click HERE for a 4-week FREE Trial
Tuesday, May 26, 2009
Are we being fooled by fundamentals?
It was another promising week for grains with prices grinding higher amid deepening production issues and demand showing ongoing signs of resilience. But with global economic sentiment rising, we ask ourselves the question; is the rally just a ‘mirage’ and will supportive grain market fundamentals hold if investor sentiment turns?
The production issues include further downward revisions to the Argentine bean crop – at almost 90% harvested you can almost be certain that these won’t be going up. There are also significant planting delays in key US wheat and corn producing states.
In nth Dakota, spring wheat seedings reached just 31% as of May 17, well behind the five-year average of 87% and in Minnesota spring wheat seedings reached only 34%, compared to a five-year average of 90%. The US normally produces 16mmt of spring wheat and the mounting premiums in Minneapolis spring wheat futures – up from 88USc/bu to 127USc/bu – indicates that the market is taking this seriously. But the planting pace should pick-up this week with some dry weather forecast. For local growers, the late plant (including similar issues across Canada too) augurs well for higher protein wheat producers.
In Illinois, one of the largest US corn producing states, it is getting to the stage where they should be planting soybeans (June bean plantings are considered late), but as at the end of last week just 20% of the corn crop has been planted. This is setting the scene for a wild ride this season as the bulk of this crop will be pollinating and yields will be forming in the ‘dog days of summer’. The threat of a big swing in plantings to beans has capped the rally, but plantings issues have lead to renewed fund interest in ownership of both corn and beans.
In Europe winter crops are travelling sweetly, but spring crops were planted into less than ideal moisture and are now starting to stress right across Europe. This is a situation that bears watching, particularly on the malt barley front.
Production wise, the only bright spot is a solid and general improvement in local planting conditions which should see the bulk of intended acres planted, albeit a bit late and with less than optimal subsoil moisture in most places – but you would take it given the run we’ve had in recent years.
We have been maintaining a consistent line that the world will be disappointed with how much grain is produced globally in 2009.
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The production issues include further downward revisions to the Argentine bean crop – at almost 90% harvested you can almost be certain that these won’t be going up. There are also significant planting delays in key US wheat and corn producing states.
In nth Dakota, spring wheat seedings reached just 31% as of May 17, well behind the five-year average of 87% and in Minnesota spring wheat seedings reached only 34%, compared to a five-year average of 90%. The US normally produces 16mmt of spring wheat and the mounting premiums in Minneapolis spring wheat futures – up from 88USc/bu to 127USc/bu – indicates that the market is taking this seriously. But the planting pace should pick-up this week with some dry weather forecast. For local growers, the late plant (including similar issues across Canada too) augurs well for higher protein wheat producers.
In Illinois, one of the largest US corn producing states, it is getting to the stage where they should be planting soybeans (June bean plantings are considered late), but as at the end of last week just 20% of the corn crop has been planted. This is setting the scene for a wild ride this season as the bulk of this crop will be pollinating and yields will be forming in the ‘dog days of summer’. The threat of a big swing in plantings to beans has capped the rally, but plantings issues have lead to renewed fund interest in ownership of both corn and beans.
In Europe winter crops are travelling sweetly, but spring crops were planted into less than ideal moisture and are now starting to stress right across Europe. This is a situation that bears watching, particularly on the malt barley front.
Production wise, the only bright spot is a solid and general improvement in local planting conditions which should see the bulk of intended acres planted, albeit a bit late and with less than optimal subsoil moisture in most places – but you would take it given the run we’ve had in recent years.
We have been maintaining a consistent line that the world will be disappointed with how much grain is produced globally in 2009.
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Monday, May 18, 2009
Australia - a quiet harbour in a global storm
I had breakfast with the Reserve Bank of Australia (RBA) last Friday. They were relatively upbeat about the prospects of the Australian economy bouncing back from what they reckoned was the ‘worst contraction in global GDP since World War 2’. But get used to relatively weak levels of growth.
What the global economy has gone through has been shocking; however our local economy doesn’t provide any measure of how tough global conditions are. Australia has been a quiet harbour in a global storm. Most of the graphs which the RBA showed looked like someone falling off a cliff. The worst of the slowdown has been in developed countries leading to sharp falls in business and consumer confidence.
Conditions seem to be gradually improving, but very much linked to huge stimulus packages being unleashed by Governments around the world. The Chinese economy has been very responsive with Chinese banks being told to lend money - businesses didn’t even have to ask, it was just dropped into their bank accounts. It will be interesting to see whether the recovery will be sustained.
For me, the key signs will be unemployment and consumer sentiment in developed countries. While Australia has been one of the least affected developed countries, my gut-feel is that it will be very tough through 2009. Lower interest rates have been cushioning us from the impact, but private sector debt levels are high and further rises in unemployment will affect consumer sentiment. It is much worse elsewhere and I don’t think we can claim a recovery until unemployment in developed economies has been stemmed, enabling a recovery in consumer sentiment.
Another key risk to the outlook for a slow, steady recovery is further financial sector issues. It seems our eastern European mates have fallen foul of the old ‘Swiss francs lending’ scenario and defaults across the region are on the rise - the bulk of the fall seems to have been carried by Swiss, Austrian and Nordic banks. We wouldn’t be surprised to see some further financial market problems before the recovery is set in train.
Global Governments have turned bankers to overcome these, by taking over crimpled financial institutions and buying bonds (by printing money) to recapitalize these. With unemployment still rising, Government’s have been writing blank cheque’s to cover future losses - incurring almost unlimited liability.
At what cost you might ask? Well taxpayers will need to pay back these loans and the cost will be future levels of growth.
If you are interested in receiving this information and more on a regular basis, please call us toll free on 1300 302 143 to organise your subscription. Click HERE to subscribe online or Click HERE for a 4-week FREE Trial
What the global economy has gone through has been shocking; however our local economy doesn’t provide any measure of how tough global conditions are. Australia has been a quiet harbour in a global storm. Most of the graphs which the RBA showed looked like someone falling off a cliff. The worst of the slowdown has been in developed countries leading to sharp falls in business and consumer confidence.
Conditions seem to be gradually improving, but very much linked to huge stimulus packages being unleashed by Governments around the world. The Chinese economy has been very responsive with Chinese banks being told to lend money - businesses didn’t even have to ask, it was just dropped into their bank accounts. It will be interesting to see whether the recovery will be sustained.
For me, the key signs will be unemployment and consumer sentiment in developed countries. While Australia has been one of the least affected developed countries, my gut-feel is that it will be very tough through 2009. Lower interest rates have been cushioning us from the impact, but private sector debt levels are high and further rises in unemployment will affect consumer sentiment. It is much worse elsewhere and I don’t think we can claim a recovery until unemployment in developed economies has been stemmed, enabling a recovery in consumer sentiment.
Another key risk to the outlook for a slow, steady recovery is further financial sector issues. It seems our eastern European mates have fallen foul of the old ‘Swiss francs lending’ scenario and defaults across the region are on the rise - the bulk of the fall seems to have been carried by Swiss, Austrian and Nordic banks. We wouldn’t be surprised to see some further financial market problems before the recovery is set in train.
Global Governments have turned bankers to overcome these, by taking over crimpled financial institutions and buying bonds (by printing money) to recapitalize these. With unemployment still rising, Government’s have been writing blank cheque’s to cover future losses - incurring almost unlimited liability.
At what cost you might ask? Well taxpayers will need to pay back these loans and the cost will be future levels of growth.
If you are interested in receiving this information and more on a regular basis, please call us toll free on 1300 302 143 to organise your subscription. Click HERE to subscribe online or Click HERE for a 4-week FREE Trial
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