Forum Replies Created
- Jpcashflow wrote:
Hate negative news but here we go…
It looks unemployment rate is increasing in every state
Being in shipping we usually can tell where the economy is heading by talking to a number of clients
Also news ato and Bp sacking a number of staff
what effect is this going to have on property or shares ??
The recent news to raise the debt ceiling is a good indicator along with increasing unemployment. The RBA has made it clear that the high AU is hurting us economically and making it difficult coming of the expansion in investment in the resources industry for other sectors to pick up the slack.
Appears to be a race to the bottom unfortunately JP as the RBA tries to lower the AU.
I really think global share markets are set up for a correction particularly the US markets. Stocks are looking expensive in relation to earnings on weak economic fundamentals. Markets globally are reaching all time highs which is hard to believe in this environment. We all know the markets are psychologically driven. I don't know exactly what the trigger will be, although I have a fair idea, but when the market does start to correct it'll be panicked and fast selling which will perpetuate the move downwards.
If or when the US fed attempts a taper I would imagine the markets will spasm similar to the reaction before the September FOMC. We also witnessed hot money flowing out of the emerging economies and back to the US.
Europe is still a basket case with the French credit rating being downgraded to AA. A taper would see French borrowing costs escalate.
The fed believes inflation isn't present but assets globally are increasing including stock markets and I think that's where the inflation is.
When the situation does correct, and it will at some point, there will be huge opportunities. I'm keeping some powder dry!
Jack
Goldman Sachs like a rat with a gold tooth!
http://online.wsj.com/news/articles/SB10001424052702303491304575187920845670844
Hey Freckle,
You know I respect your views they are interesting and you always present an interesting debate. The simple fact is that it is easy to find articles, figures and white papers that present different perspectives on subject matter. I acknowledge that i do this myself depending on what views i believe in. This robust discussion could persist forever as we speculate on energy security and consumption into the future. The organisation i presented my figures above was the same one as you used to reference your graphs and visual data all i did was read and present their projections after examining the research.
I personally would not give Goldman Sachs the time of day after their criminal and morally disgraceful activities in recent times Freckle and you and I both agree on that (GFC Subprime collapse).
So I think we'll have to agree to disagree on this one Freckle.
Freckle wrote:Coal (thermal) is near it's peak I'm guessing. The Chinese are choking themselves to death on pollution and the rest of the world as well. In the scheme of things India takes bugger all. See graphic below for usage distribution.Since this chart was released China has capped its use of thermal coal because of pollution so the graphic should show China's consumption as a fixed amount after 2014. China takes/uses around 50% of global production. 7% is coking coal for steel production. A pullback on consumption will hurt prices and keep the pressure on coal mining for the foreseeable future. I can't get excited about QLD as an investment opportunity. I think they will struggle in all respects for some time and that's without the world going pear shaped in the mean time.
International climate-change diplomats, who have had a rough decade, got some potentially exciting news in May when reports emerged that China will consider an absolute cap on carbon emissions in advance of the climate talks scheduled in Paris for 2015.
A hard emissions cap would be a dramatic policy shift for the People’s Republic, which has previously limited emissions reduction schemes to compressing the Chinese economy’s energy intensity (the amount of CO2 released per unit of GDP) and which has decried international efforts to limit the greenhouse gas (GHG) emissions – and thus the economic growth – of developing countries.
The shift was signaled by remarks made by Jiang Kejun, a carbon policy researcher at the influential National Development and Reform Commission in Beijing, who told the Financial Times, “I am sure China will have a total emission target during the 13th Five-Year Plan.”
The move could enable an achievement that has eluded the world’s major nations for years: a binding international agreement on carbon caps that includes both the developed economies of West and East Asia and rising economic powers like China and India.
If true, this move would mark the latest in a series of measures to reduce GHG pollution in China, the world’s largest producer of atmospheric CO2. Seven Chinese cities plan to enact experimental carbon-trading programs, starting in 2014. Already the world’s largest investor in renewable energy, China has set the goal of obtaining 15% of its power from nuclear power and renewables by 2020. Since taking office in March, President Xi Jinping has made shifting to a less resource-intensive economy and reducing the country’s catastrophic air pollution major priorities. In many respects China has leaped ahead of both the United States and the European Union in its efforts to shift away from fossil fuels.
There’s one problem with this scenario: any program to reduce carbon emissions on the mainland depends on shrinking China’s reliance on coal – and coal-fired power in China is not going away anytime soon.
No Peak Soon
“It is very unlikely that demand for thermal coal in China will peak before 2030,” said William Durbin, the Beijing-based president of global markets with Wood Mackenzie, an energy research and consulting firm, in a statement accompanying the release of a new report entitled “China: The Illusion of Peak Coal.”
“Despite efforts to limit coal consumption and seek alternative fuel options, China’s strong appetite for thermal coal will lead to a doubling of demand by 2030,” the report concludes. Coal consumption in China, bolstered by a period of rampant construction of coal-fired plants that has only recently slowed, must rise to feed China’s explosive demand for power, which will nearly triple to 15,000 TWh by 2030.
Even existing goals for reducing coal consumption are sketchy, many analysts believe. “Achieving these targets eventually would come at considerable economic cost,” John Reilly, an environmental economist at MIT, told New Scientist magazine.
China is by far the world’s largest importer of coal, and despite massive investments in nuclear, wind, and solar power, along with a crash program to develop domestic natural gas reserves, no other energy source can replace coal as a source of primary power in the next two decades. China’s leaders are determined to replicate America’s shale gas boom, but “natural gas supplies will struggle to meet demand growth due to modest investment in conventional reserves and the very slow development of domestic unconventional shale gas reserves,” Wood Mackenzie states.
Gray Market, Black Fuel
The continued coal boom in China also reflects the provincial divisions that make enacting nationwide policies increasingly challenging for leaders in Beijing. Most coal-reduction schemes are centered in the big cities of the coast, while the poorer provinces of the interior still rely on dirty, cheap coal. Ambitious plans to build long distance ultra-high-voltage transmission networks, for example, won’t reduce overall coal burning; they’ll simply shift coal demand from the coast to the interior. What’s more, official statistics on coal use in China significantly underestimate the true demand, because of the size of the gray market consisting of small, unlicensed mines and untracked sales. A 2011 report on the Chinese coal industry produced by Stanford’s Program on Energy & Sustainable Development stated the problem clearly: “One important driving force underlying the existence of gray coal markets in China is the historic and chronic difficulty of compelling local officials to obey central policies.”
China’s evident intention to institute firm caps on GHG emissions is an encouraging sign. But the grim reality is that such a cap has no chance of succeeding without a dramatic, and unlikely, reduction in power generation from coal.
Always interesting Freckle. Using the eia as a reference (http://www.eia.gov/forecasts/ieo/coal.cfm), it's clear that China continues to increase it's reliance on coal until circa 2040 where alternatives start really asserting themselves. In relation to capping the use of coal, I still think it's early days and that issue is highly debatable at this stage. (See link below.) Incredibly India's population overtakes China after 2020 as an expanding middle class demands energy consuming appliances. This is what I see as a major driving factor for GVK and Adani securing coal energy in Australia now.
There is no doubt that circa 2040 it appears coal does drop and alternative energy sources begin to take the lions share of the market. By then I'll be drinking Mai Tai's on Lake Taupo!
http://www.forbes.com/sites/pikeresearch/2013/06/24/chinas-coal-conundrum/
In the IEO2013 Reference case, which does not include prospective greenhouse gas reduction policies, coal remains the second largest energy source worldwide. World coal consumption rises at an average rate of 1.3 percent per year, from 147 quadrillion Btu in 2010 to 180 quadrillion Btu in 2020 and 220 quadrillion Btu in 2040 (Figure 70). The near-term increase reflects significant increases in coal consumption by China, India, and other non-OECD countries. In the longer term, growth of coal consumption decelerates as policies and regulations encourage the use of cleaner energy sources, natural gas becomes more economically competitive as a result of shale gas development, and growth of industrial use of coal slows largely as a result of China's industrial activities. Consumption is dominated by China (47 percent), the United States (14 percent), and India (9 percent), with those three countries accounting for 70 percent of total world coal consumption in 2010. Their share of world coal use increases to 75 percent in 2040
In the non-OECD countries, coal consumption increases at an average rate of 1.8 percent per year through 2040, more than compensating for the 0.2-percent average annual rate of decline in OECD coal use. As a result, the share of world coal consumption for non-OECD countries, led by China and India, increases from 70 percent in 2010 to 81 percent in 2040. China alone contributed 88 percent of the growth in world coal consumption from 2001 to 2009, which led to a significant increase in coal's share of world total energy consumption, from 24 percent in 2001 to 29 percent in 2009. China's share of global coal consumption increases from 47 percent in 2010 to 57 percent by 2025, followed by a decline to 55 percent in 2040. The sustained rapid expansion of coal use in India allows it to surpass the United States as the second-largest coal-consuming country after 2030.
Despite the significant increase in coal use by non-OECD countries, the environmental impacts of mining and burning coal have driven policies and investment decisions in favor of cleaner and increasingly competitive energy sources—natural gas in particular—in many key coal-consuming regions. Worldwide, all other energy sources, except liquids, grow faster than coal. In the electric power sector, the coal-fired share of world electricity generation declines from 40 percent in 2010 to 36 percent in 2040, whereas the combined share of renewable energy, natural gas, and nuclear power resources increases from 56 percent to 63 percent. Coal's share of fuel consumption for electricity generation declines from 43 percent in 2010 to 37 percent in 2040 (Figure 72).
World coal production parallels demand, increasing from 8.0 billion tons in 2010 to 11.5 billion tons in 2040 and reflecting the same expansion in the near term followed by much slower growth in later years. Global coal production is concentrated among four countries—China, United States, India, and Australia—and in the other countries of non-OECD Asia (mainly Indonesia30) (Figure 73). Their combined share of total world coal production increases in the IEO2013 projections from 78 percent in 2010 to 81 percent in 2040. China alone accounts for 44 percent of global coal production in 2010 and 52 percent, at its peak share, in 2030. Growth in coal production is significantly different from region to region, ranging from strong growth in China to limited growth in the United States, to steady decline in OECD Europe.
International coal trade grows by 65 percent in the Reference case, from 24.0 quadrillion Btu in 2010 to 39.6 quadrillion Btu in 2040. The share of total world coal consumption accounted for by internationally traded coal remains near the 2010 level of 16 percent, increasing slightly to 17 percent in 2020 and 18 percent in 2040. The relatively stable share primarily reflects the ability of the world's largest coal consumers—China, the United States, and India—to satisfy most of their future coal demand with domestic production.
The OECD's role in world coal consumption diminishes as fuel market fundamentals and environmental regulations shift in favor of natural gas and renewables, particularly in the OECD Americas and OECD Europe regions. OECD coal consumption declines from 45 quadrillion Btu in 2010 to 41 quadrillion Btu in 2016, recovers to 42 quadrillion Btu in 2020, and remains slightly above that level through 2040. OECD Europe and the United States, which together consume almost three-quarters of the OECD total, lead the trend toward lower consumption. Coal consumption in most other OECD subregions or countries, except for the Mexico/Chile region and South Korea, also trends downward (Figure 74). The decline in OECD coal consumption—at an average rate of 0.2 percent per year— causes the coal share of the region's total primary energy consumption to fall from 19 percent in 2010 to 15 percent in 2040. In comparison, the share of OECD energy supply from renewable energy, including hydropower, increases from 10 percent in 2010 to 15 percent in 2040.
India, the world's third-largest coal consumer in 2010, surpasses the United States as the second-largest coal consumer over the next two decades. The growth of India's coal consumption, from 12.6 quadrillion Btu in 2010 to 22.4 quadrillion Btu in 2040, is led by the electric power sector, which accounted for 65 percent of its coal consumption in 2010. India's rapidly growing population and an average GDP growth rate of 6.1 percent per year through 2040 lead to electricity demand growth of 3.8 percent per year in the IEO2013 Reference case, which is higher than in any other IEO2013 region. India's population surpasses China's after 2020, with an expanding middle class that results in the greater use of electricity-consuming appliances. Coal fueled 68 percent of India’s total electricity generation in 2010, and as the country strives to provide enough electricity to meet growing demand, coal-fired generation grows by 3.1 percent per year, even as generation totals from both nuclear and renewable energy (including hydropower) grow more rapidly than in any other IEO2013 region. From 2010 to 2040, India's net coal-fired electricity generation grows by a total of 910 terawatthours, more than doubling from the 2010 total. Consequently, its coal consumption for electricity generation nearly doubles, from 8.2 quadrillion Btu in 2010 to 15.6 quadrillion Btu in 2040.
Hey Freckle….
Time will tell mate…
However, as we have discussed previously in respect to something you quite rightly asserted Freckle – global energy demand cannot compete with the velocity of global population growth and we simply don't have the commodities in the ground to meet supply. I think you are absolutely right. Coal is a cheap form of energy, cheaper at this stage than any other alternative, and to deny billions of people in the developing world a better way of life would be a travesty.
There is no doubt we are towards the bottom of the commodity cycle. That is plain to see however, this is more about securing future energy supply. I'd also suggest more so by India than China due to Adani and GVK having a stake in the development of the Galilee Basin. If my information is correct the majority if not all the coal in the Galilee Basin is thermal coal not met coal.
You always raise some interesting points Freckle.
You have to hand it to Campbell Newman he's determined to see the development of the Galilee Basin…..
THE Queensland premier is about to announce discounted royalty rates for mining companies that proceed with multi-billion projects in the Galilee Basin.
The new incentive is part of a Galilee Basin development strategy, which includes using state powers to speed up planning and land acquisition processes.
It will also involve the reservation of land at the Abbot Point coal terminal for first movers, Fairfax Media reports.
Dwindling coal prices have fuelled speculation that long-awaited projects in the Galilee Basin, in central west Queensland, will not proceed.
But Premier Campbell Newman is confident the strategy will ramp up mining in the basin.
"I know it will be of great interest to potential project operators that we are also willing to consider new ways to lower their start-up costs," he told the Australian Financial Review.
"Specifically, we're going to look at proposals for a ramp-up royalty period for the first mover as a key incentive."
Mining companies and the Queensland government will negotiate the size of the discounted royalty rate.
The announcement of the strategy comes less than a week after federal Environment Minister Greg Hunt approved GVK's Kevin's Corner project in the Galilee Basin, set to be the country's largest coal project.
The Alpha Coal project – a joint venture between GVK and Gina Rinehart's Hancock Coal – was approved in August last year and is expected to be up and running in 2016.
Clive Palmer's Waratah Coal and Indian energy company Adani also have projects planned in the Galilee Basin.
Mr Newman will formally announce the Galilee Basin development strategy at the 2013 Major Projects Conference in Brisbane on Thursday.
Freckle wrote:engelorumora wrote:WOW,There might be some good buying opportunities again if the bottom falls out from all of these funds.
Thanks.
Not in the US and maybe for a long time. The next GFC event will almost certainly hasten a change in the reserve currency from the US$ to a basket of currencies (incl the US$). That creates a huge problems for the US currency.
The US currency is seen as a commodity to facility global trade. The US can run deficits into the global system to supply the US$'s countries need to trade effectively. If the US$ is not needed then the trillions of US$ in the system become surplus and essentially worthless. You might get 10 cents on the dollar until the system rebalances … I'm not sure how it's going to work out but it certainly won't be good. Anybody holding US$ or assets in US$ will have a bad day.
If the US$comes under threat in this way then interest rates are likely to rise substantially (think mid 80's @ 22%) to mop up excess US$ liquidity.
Currently inflation is being misreported by the US government because if the true rate were published (in excess of 10%) then interest rates would have to rise substantially to contain inflation. There's no way they raise rates without going belly up.
It is very difficult to envisage any way in which a transition from US$ reserve status to a basket of currencies will play out. I can't see any way in which it will be good for investors. The upside is that the US economy would become more competitive by a significant margin. You might even see the US and China sort of change positions. China becomes a consumer and the US a manufacturer. God knows US manufacturing quality is streets ahead of the Chinese.
Interesting times ahead.
Nigel, Engelo or anyone in the US market….
I think Freckle has bought up some really relevant issues that on a thread dedicated to US property may have substantial consequences…..
Would anyone like to provide any argument against those issues put forth or alternatively comment on them based on factual analysis for the benefit of the rest of us including those exposed to the US markets…….?
Hey Freckle,
Yes I agree with you in parts.
India is a basket case economically at the moment. I don't have an in-depth knowledge into the GVK company balance sheet so I can't comment on the feasibility of the finance required or possible debt issues that they may or may not effect it's involvement in this project. However, you are correct the numbers and debt used will be substantial like most other projects of this type.
As you quite rightly alluded to investment in gas, particularly in WA, is substantial in comparison.
What you and I also agree on Freckle is the head winds that still persist in global economics and the effects on tangible commodities. I totally agree that at this point in the cycle thermal coal is marginal at best. Companies have been forced to increase productivity which is a healthy benefit to the industry and separates the wheat from the chaff effecting global supplies to a more acceptable supply/demand level.
You and I have discussed the dire future the globe faces in relation to energy security. There simply just isn't' enough of the commodity in the ground to sustain burgeoning population growth. Alternative and clean sources of energy such as wind/sun/wave are too expensive to realistically rely on to produce the amount of energy required globally. There are several of these planned mines in the Galilee Basin so potentially substantially more than $10b of investment and Aldani isn't too far behind with it's Carmichael mine approval imminent.
That's if we all survive Fukushima……
The significance of this development is without a doubt simply massive. Many don't understand the true significance the role of global energy security is going to play in the future…particularly for developing countries.
The industry has trimmed costs and increased productivity and as a result is better off for it. IMHO this development is also well timed given the position in the commodity cycle. Assuming we are somewhere near the bottom, and production coming on line after 3 years of construction, margins should be healthy and viable.
jmsrachel wrote:Well I guess all we can do now is sit and wait. Reminds me a bit of that movie deep impact.Why not profit from it….?
Someone always has to profit Joe.
Market corrections are either devastating for some or an opportunity to take advantage for others…
There are clues to opportunity. You only have to look back in history to the dot-com bubble in 2000-2002 and more recently to the 2007-2009 correction.
The very simplistic equation is: Massive monetary printing causing systemic currency debasement injecting hot money into the stock market, money that has not reached other parts of the US economy where it is needed, sends global stock markets soaring to new highs on extremely weak economic data. Higher and higher we go yet the economic fundamentals are weak and anemic. The fed is disparately trying to inflate the balloon. The higher we go the bigger the fall because the market will always settle at its intrinsic value.
The clues IMHO are there even here in Australia in bright lights, flashing…. Even in politics. Joe Hockey no sooner steps off the plane from his 'secret' meeting with the central planners of the globe in Washington and he's pumping AU$8.8b into the RBA stating, "The rise in the value of the Australian dollar has inflicted heavy losses on the Reserve Bank, which is required to hold sufficient foreign exchange reserves to manage any extreme movements in the currency market….Australia's economy is still growing but trouble lurks on the world stage. We've got some headwinds coming out of the US in early next year and headwinds coming out of Europe."
But the stock markets are at all time highs! How can that be Mr Hockey…
Danger Will Robinson!
I'd suggest that if there was a black swan event, and I would again suggest it would be originate from the US, money would flow out of the stock markets as the herd stampedes in a panic trying to get their money out the market taking it lower and lower as the fat fingers push the 'sell at market' button in desperation. If you look back into history when it happens it happens in a day and the smart money is usually out the previous day leaving the rest of us to only watch on in horror as the market corrects…and they short it down because someone's going to make money out of it
Last night the Dow Jones rallied to fresh all time highs on WEAK economic data out reassuring investors that the fed will continue with its aggressive quantitative easing policies pumping US$85b of hot money into the system further encouraging people to enter a toppy share market in the search of higher returns. BEWARE ITS A HOUSE OF CARDS!
Hey Freckle,
Survived the aftermath of an enjoyable celebration, paid the price and now recovered.
Interesting.
I have little doubt the USD is systematically being pushed from it's status as a global currency. We can clearly see that is happening as China is proactively negotiating and implementing trade agreements with a number of nations including oil producing countries and destabilising the US Petrodollar cycle.
China, as I'm sure you know, is importing huge amounts of gold through Hong Kong and also encouraging it's citizens to hold gold. We'd also have to acknowledge that China is the biggest producer of gold and the vast majority of this product stays in China not to mention gold that is illegally smuggled into the China.
In relation to Chinese citizens being encouraged by the state to hold gold, one argument put forward is that this obviously increases to influx of gold into China. If we look back into history there are a number of nations, including the US, that have then passed laws restricting the holding of gold by private citizens. The state takes back the gold and backs it's currency against the gold standard. It would not surprise me at all to see the Renminbi backed by gold and a global currency sometime in the next decade.
It'll be interesting to see how the US is going to reduce QE if it ever does at all. It may have missed it's best opportunity last month when a taper was already priced into the market. Conveniently we saw the government go into spasm over raising the debt ceiling and as a result disrupt economic data forcing the fed to delay any thoughts of tapering the 85 billion a month it's printing and pumping into the system. What's also 'convenient' is that we'll see it all happen again early in 2014…..!
One things for sure, someone somewhere is getting richer by the second.
JT7 wrote:Freckle wrote:moxi10 wrote:Perfect description of a "captive market"
Yep. Captured by big money. The small time PI doesn't realise they have the tiger by the tail.
quoting the words used by the truly great late Jim Rohn, 'things are…..MESSED UP'
By the way, I've got more to contribute I just need a bit of time. I've got a freight train running through my head on account of a date with a bottle of Sailer Jerry last night!
Freckle wrote:moxi10 wrote:Perfect description of a "captive market"
Yep. Captured by big money. The small time PI doesn't realise they have the tiger by the tail.
quoting the words used by the truly great late Jim Rohn, 'things are…..MESSED UP'
Freckle wrote:JT7 wrote:Yes well…. Gold up $49 over night. I think I might take the goldies out for a run this morning.Anyone care to join me?
Sure beats all in on red on the roulette table!
It's rolling with the USD nothing more. I think you missed the boat. I expect to see a smack down soon, perhaps Fri US markets.
Hey Freckle,
been on the boat a while and doing quite nicely. Sure….smack downs there's been plenty of those mate and I just see them as just another buying opportunity.
Green day today. Take some off the top buy on the dip.
Yes well…. Gold up $49 over night. I think I might take the goldies out for a run this morning.
Anyone care to join me?
Sure beats all in on red on the roulette table!
jmsrachel wrote:Jp, I know nothing about shares so could you explain this to me, what is the difference between the shares you purchased yesterday and going to the casino and putting it on black? Isn't what you done another form of gambling?You can get to know a sector of the market particularly well.
For example, if you have a look at Precious Metal Miners when gold appeared to hit a low of $US1180 in June. The miners were over sold heavily and for the following 6 weeks the PM market rebounded and the miners shadowed that bounce.
A good example of this sort of movement would have been Saracen Mineral Holdings ASX code SAR. SAR hit a low of around the 10c mark and moved up to around 32c a share. I realise it's difficult to pick the bottom and top of the market but still good money to be made trading in and out of those stocks if you are watching the market closely.
If you know the fundamentals of a particular market you can also predict with accuracy particular future movements. Again I'll use the PM market as an example, when economic data is released it will have an effect on the PM market. Poor economic data such as a poor US Nonfarm Payrolls release which ultimately effects further QE tapering most likely will cause gold and silver to rise. However, in saying that, the markets have been extremely erratic of late. There are also a range of other economic data that will effect the PM market for example.
Jpcashflow wrote:Hi,Love your post!!!
I think you are right, I have a bit of shares in the Australia market and I am planning to sell most of my stock by end of week: why?
1) Earnings for most companies have decreased and it’s amazing to see how many business are running at a loss.
2) Our stock market is fed by “SUPER” and with this, it really creates a “fake demand for shares”. Most people who have super locked into a fund they are not even sure what shares they own.
3) Value of stock: The ASX has grown over 20% in a market where business have only grown 2% to 4 %. So a correction is due.
DEBT: Allot of people simply have too much debt, ranging from SMSF on property, car leases, personal credit card / Personal loans debt and massive home loans for both investments and personals.
This cycle is required and needed but in falling times there are still opportunities.
It'll be very interesting JP what eventuates over the coming months…
I happen to agree with you and at best I think the markets are due for a pull back after a good run up on stimulus in particular which is the very issue that scares the bejesus out of me…. Artificial Stimulus and the markets inability to go without….
September 18, 2013 the Dow hit an all time high at 15,676.
On October 9, 2007, the Dow closed at its pre-recession all-time high of 14,164.43 by January 2, 2009 the Dow had crashed down to 6,594.44.
Certainly not saying it's going to happen again but there are some serious issues. I hope all we endure is a healthy pull back in the markets…..
http://useconomy.about.com/od/stockmarketcomponents/a/Dow_History.htm
