Weekly Ramblings of an Australian Stock Trader – incorporating ASXweekendtrader.com

One thing you can guarantee never receiving with a Port Phillip Publishing subscription is a consensus view. Each editor is free to do his own thinking and form his own strategy. But if there is a bit of theme between them right now, we could probably boil it down to this:

Cash is king in this market.

There’s two sectors of the market where this key asset can often be in scarce supply – small capsand junior miners.

In other words, right where Diggers & Drillers and Australian Small-Cup Investigator go hunting for outsized gains.

So today’s Money Weekend will show you how editors Dr Alex Cowie and Kris Sayce see things across the board, and the strategy to use… [Read more →]

The continuing collapse in the Japanese Yen and rapid increase in Japanese bond yields is the most interesting development in the financial markets over the past few months.

From a low yield of around 35bps, after the Kuroda bombshell announcement that they were going to print their way back to prosperity, the JGB’s have sold off sharply to a yield of over 90bps.

The bond market was shut down twice this week due to circuit breakers based on volatility. It escaped being shut down a third time by 1 basis point.

In other words the market is no longer orderly. Investors are trying to get out in droves and there is a chance we could see the volatility increase even further from here.

I wonder how comfortable the government will be once yields start shooting above 1%? To put things in perspective, every 1% rise in bond yields takes another 25% of government revenue. There has to be a few nervous nellies eyeing the bond market and praying that the sell-off is contained.

Now that the US dollar has busted up through the psychologically important 100 level against the Yen there is very little stopping the ongoing collapse in the Yen. I believe you’ll see the US/Yen heading above 105 and towards 110 before long. [Read more →]

Aside from walking what other green alternatives are there to get from A to B at a decent speed? Not many. Except for inventions like the Segway.

But now, a new invention has taken the place of the Segway. And it’s called the Hovertrax.

From Shane Chen, a serial inventor, Hovertrax is’an autobalancing electric transporter with gyro technology.‘ [Read more →]

Looking back at the articles I’ve written about silver over the years, if there’s one theme that keeps recurring, it’s the word: ‘frustrating’.

Silver can meander about and do nothing for years. Then, when your back’s turned, it’ll suddenly spike to unheard-of levels, making its owners rich.

Then, just as suddenly, it’ll plummet, leaving all those who hold the metal heading for the poor house.

Yet, for all its volatility, for all the dark rumours of shortages and manipulation, it trades in a remarkably symmetrical pattern.

For a few brief hours in the spring 2011, it cost $50 an ounce. Now it’s less than half that price, at $23.

So is it time to be playing the silver game once again? [Read more →]

In the global quest for yield, it seems as though investors have labelled the whole resource space as ‘growth stocks’, and left them on the shelf.

Yet a quick scan through mining stocks shows resource stocks pay dividends too.

Some of them yield as much as 7%, 9%, or even 11%…

The Reserve Bank of Australia’s (RBA) interest rate cut to 2.75% last week took us to a historically low rate. Anyone funding their lifestyle from interest is going to find things harder than ever. Falling rates have forced investors into riskier assets in the search for yield.

We’ve seen this in the financial stocks, with the XFJ index exploding 45% in a year.

And we’ve seen it in industrials too. Smaller players have done very well. Veterinary business Greencross (ASX: GXL) has increased ten-fold! [Read more →]

In the world of central banking, the gloves are coming off. You can blame theJapanese.

At the G7 meeting, everyone smiled politely and said that they completely understood why the Japanese were printing unprecedented amounts of money and hammering the yen.

The main reason they gave Japan a free pass is because lots of other countries are hoping to get away with doing the same.

Central banks overseeing around a quarter of the world’s GDP have cut rates this month alone, notes Bloomberg.

The currency wars are just getting started… [Read more →]

What do you think has been named the ‘sexiest job of the 21st century’? International footballer? Supermodel? Brain surgeon?

All wrong. The answer is in fact ‘big data scientist‘. This does not mean a data scientist who happens to be six foot six and 20 stone. It refers to those who can make sense of the vast and constantly expanding heap of digital data. The amount of data that is gathered is astonishing.

According to IBM, we create 2.5 quintillion bytes of data every day. This means that 90% of the data in the world today has been created in the last two years alone.

Where does it all come from? The constant use of the internet generates data all the time. Every time you use your mobile phone, you create data. But human interaction is not the only cause. There is the ‘internet of things’.

Two million security cameras in the UK record images that are faithfully filed away. Sensors also give out stores of data, such as climate information and detecting possible faults on aeroplanes and cars. At home we could even have sensors which tell us when to turn on the radiator or even restock the fridge. [Read more →]

Not long ago I was in Toronto for a couple of days for a conference on what people in the resource space call ‘Technology Metals‘. These are critical elements that go into all manner of advanced materials, electronics, optics and more.

Without technology metals, most modern technological systems won’t work like the builders advertise and users desire.

In a global economic sense, all sorts of people and companies produce all manner of technology metals. Technology metals are key to many supply chains, such as high-priority military technology.

For example, Boeing builds airplanes. Much of the structure and skin of airplanes is made of aluminium. So Boeing buys aluminium from, say, Alcoa, which in turn has a chain of processing facilities, smelters and ore in the ground at mine sites, located in faraway corners of the world.

Or Boeing buys jet engines from, say General Electric. GE has all manner of suppliers who build parts and components for those engines. The suppliers, in turn, have their own supply chains, including for exotic, high-strength metals like titanium.

Eventually, when you trace the flow for titanium, you’ll find an ilmenite deposit in the rocks of, perhaps, Quebec, or a sandy beach in Australia. [Read more →]

Last week the market sounded the latest in a recent series of warning signals for a new bull market in resources.

You probably don’t realise it, but the Australian resource sector just put in its best week in more than four years.

Over the week the Metals and Mining index gained 9.4%.

Major moves like this aren’t common. You have to go back to March 2009 to find a bigger weekly gain. This is important. Moves of this size are often typical of violent changes in trend.

Sure enough, that move in March 2009 was the week that the mining sector began a two-year bull market in earnest.

So with a similar sized move last week, the evidence is now really mounting that investors should plan for the next resource rally… [Read more →]

John Wooden – the late, great UCLA basketball coach – once said, ‘Things turn out best for the people who make the best of the way things turn out.‘

With coach Wooden’s advice in mind, let’s think positive. Let’s review the upside of the resource news flow.

Hey, oil prices are stable. The Brent crude oil price is hovering in the low $100 range, while North American oil prices – embodied in the price for West Texas Intermediate (WTI) – are $10 less, give or take.

Of course, OPEC oil exporters hate $100 oil…

That’s because most of the OPEC producers need much higher prices to balance their national books. That addiction to oil income is part and parcel of leaders allowing their respective countries to evolve into petro welfare states. The usual Middle Eastern names come to mind, although even Russia has an oil problem.

Russia is entering a recession after two years of stagnant or declining economic growth. Some of this is blowback from the overall chronic weakness in Europe. [Read more →]