NZ Stockmarket set for discontent Winter and Summer

Pressure on the New Zealand stockmarket has been coming from the global credit squeeze and the subsequent fallout from that but negative influence from the local economy has also held sway.

We have seen over 10 finance companies collapse over the last 2 years and the local real estate bubble has started to deflate. A record number of people losing their jobs in the last quarter, negative consumer spending, the lowest ever business confidence index and pressure from ever higher food prices, sustained high mortgage rates, record oil prices and continued reckless government spending forecast in the 2008 Budget don't make for a pretty picture at all.

The New Zealand stockmarket has held up reasonably well to this news over recent months but these economic influences are going to impact on real company results come next reporting season.

We have already seen retailers report their latest profits for the March year and few did well, clearly things look even worse for these retailers come October.

Discretionary retail spending is one thing but impacts are going to be felt in every sector of the market; building, real estate,infrastructure and agriculture, but a few. The only listed companies unlikely to be affected at all are our electricity energy retailers and generators-we still need to heat our homes as we hunker down for this winter of discontent.

Long overdue tax cuts come October 1 are too small to stimulate our economy very much, and perhaps the only thing they will stimulate is inflation and therefore mortgage rates because the tax cuts don't come hand in hand with government cost cutting-very important when you have tight economic times.

I don't pick market bottoms, it is almost impossible to do and it can get awfully smelly if gotten wrong, but hopefully if you have picked your portfolio well and add to it as the bargains come then you will be well positioned when the upswing comes.

Mine is still around NZ$25,000.00 in the green but I'm still prepared to get into the red when the proverbial really hits the fan.

Lets hope the spray back doesn't hit a full blown gale!

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Commodities bubble set to burst

Jed Clampett struck crude in his backyard while a hunt'n and he ended up living the high life in Beverly Hills and lived a very happy life with Jethro and the whole clan. He would have been even wealthier today.

As we speak, the price of Nymex crude futures is US $134.40 a BBL, LME copper futures are US$8299 a metric tonne, wheat futures US $787 a bushel and a whole host of the worlds other commodities: gold, steel, aluminum etc are at record prices and show little sign of slowing down their upwards trajectory.

Sure, much of the reason why these commodities keep climbing are because of unprecedented demand from the likes of China and India and the use of soy, maize and other food crops to make Bio-fuel, are having an impact on food prices but one cant underestimate the effect speculators and traders are having on commodity prices.

At just shy of US$135 bucks the oil price has far outstripped the upward pressure that pure demand would put on it and just like any other bubble, the commodity bubble is inevitably going to burst.

When is not clear but just like the stock booms of the past, the tech bubble of 2000 and the current real estate collapse, what goes up inevitably comes down. It would simply defy history for this not to happen.

So what is the problem? you might ask. Well the big headache will be that this sector of the investing market is now getting manifold increases in money being invested; by individuals, hedge funds, banks, pension funds and all the other derivative, bond holding, debt laden fund raising schemes(that I don't completely understand) that were involved in the Sub-Prime mortgage sector.

This wouldn't be so bad if the direct investors were the only ones burned when things go pear shaped but as we know these things have a tendency to effect the real economy and therefore the average man on the street.

These speculators have bailed from the stockmarket and real estate and are now creating another bubble that will burst like Elle May Clampet out of her gingham top.

The consequences of a commodity bubble bursting though will be a whole lot less attractive than Elle May's décolletage.

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2008 New Zealand Budget News

Michael Cullen will be making probably his last budget and will be pulling out all the stops to retain the power he and his mate Helen crave.

Come and check out a full wrap of news, opinion and facts from the 2008 New Zealand Budget here

Phil Goff interview on ALT TV

From the individual who tried to have the age of consent for "two consenting teenagers" lowered to 12 now comes the Gaff of all Gaffs, submitting to the pip squeak lefty interviewer Oliver Driver that Labour may lose the 2008 Election.

Whether they think they will lose the election or not, the unwritten rule is not to say you might lose!!

Has Phil Goff gone off his medication or is there an element of truth to his slip-up?

Heavens has this man not learn' t anything in 25 years of sponging off the taxpayer ensconced in his comfy leather chair in Wellington?

Even though I dislike Aunty Helen more than the sane world dislikes Al Gore, she is the best person for Labour and the 2005 election, even though its looking like a big loser

Even though Helen and Phil are bestest mates from Auckland University days, he would have been hauled into the 10th floor office for a dressing down over this.

The video is comedy gold by the way.

2008 New Zealand Budget News


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