What happened to the economic clock?

I am just wondering where we are on the clock?
Usually stock market boom followed by bust and boom on property.
We had property boom that was followed by stock market boom and bust.
Now we have both markets going south.

It reminds me that we shouldn't extrapolate.

 

Hey Sim roughly what would the time frame be on the clock for a full cycle?

 

can someone post a JPEG of the economic clock?

 

I would have thought we were a little further through the slow down, somewhere like 3 o'clock, but that could just be me being optimistic.

 

I'm guessing a large chance of hold, small chance of a 25BP raise in May or June if the inflation report is bad this Wednesday and a very small chance of a cut as strange things can't be discounted.

The spread between the cash rate and the 90d bank bill futures is stubbornly high still and the RBA is quite likely to close this gap at some point based on their own history, the only saving grace would be some more bearish reports on consumer spending and the like.

I think I'm well placed in the game of 'beat the debt eating lion' (I don't have to be the fastest runner just faster than most holding debt), so could weather more increases until the economy goes 'snap'.

I wouldn't be looking for prices to rise in any scenario with falling interest rates though, perhaps a period of extended stagnation to mild deflation, something like the 90's perhaps.

Just guessing.

 

Not that I'm an expert by any stretch of the imagination, but I was thinking that considering most are speculating that interest rates will start for fall in early 2009, that would make us not too far off 7 o'clock... (somewhere around 3 - 5 o'clock).

Plus interest rates have been rising for years, suggesting that we are probably well through 1 o'clock. We have also seen large drops in the stock market (regardless of cause) which started in October, that would mean that we are at least at if not through, 2 o'clock. Now whilst commodity prices have not really been falling, that may be due to large demand of the emerging economies of China, Brazil and India, which from what most have been saying are economies that are unlikely slow significantly despite a worldwide slow down.

Then at 5 o'clock we should see tighter finance and falling employment, which I'd argue we are starting to see the first signs of.

At 6 o'clock falling interest rates, falling real estate (recession). I don't think there will be massive price drops in the real estate industry (as Australia seems to have been well insulted from the troubles that have plagued America), though by all accounts there are an increasing number of reports that suggest real estate growth has definitely slowed/stopped and that supply of houses for sale are definitely outstripping demand. In addition to that there has been so much talk about whether the US is going into, or already is in, a recession which is reflective of 5-6:30 on the clock.

But this may just be the "wishful thinking" coming out in me as I "hope" that the stock market and real estate look to start booming again in late 2009, when I'm in a prime position to enter the market.

 

Sailor has posted a clock specific to property in the following thread.
It seems like we are between 7 & 8PM in Sydney.

The upturn stage of the property cycle?? - Somersoft Property Investment Forums

Cheers

 

On the clock 2 PM is Falling Share prices and 3 PM is Falling Commodity Prices. I live in Perth and if you tell people that the commodity prices are falling next they will think you are stupid. Practically everyone that I talked too think the mining boom will go on for at least another 5 years.
Except for Kerr Nielson from Platinum Asset Management that is a bit bearish on commodity prices.

 

Interesting.. does the clock operate in different timezones however?

I am currently in London and we are easily at 6:30pm and I would say that the clock is easily 6-12 months in front of Australia.

In the UK we saw cheap money > high property prices > rising rates > falling shares > and now we are at falling house prices

And now even the GBP is worth 20% less than it was 6 months ago..

So what does this mean to Australia.. if there is a 'time zone' factor, which I believe there is, then does this mean that Australia will see the same effects near the end of 2008 ?

 

Hi Brendan,

The Reserve Bank of Australia has been increasing interest rates.
The Bank of England has been decreasing interest rates.

This means that Australia and England are at different "time zones" in the economic cycle clock.

Cheers,

Dan

 

Well we are a few months on, and things have definitely changed a fair bit in the past 6 months. So where does everyone think we are on the economic clock now?

I'm of the belief we are somewhere between 5 - 7 o'clock...

 

I think it depends on which clock you are looking at.

If we are looking at this one
http://www.paritech.com.au/paritech-site/education/beginners/images/investment-clock.gif

then I believe in Australia we are between 6 & 7pm
Sydney probably at 6.30pm and the rest of Aust. at about 6pm.
If people panic the could be some property price corrections but the combination of interest rates coming down and the doubling of the FHOG is going to put a floor on property prices.

We could still have some turbulance in the share markets but governments are working hard to bring confidence to the markets so I believe the situation will start to turn around after the US elections and shares will start to rise.

IMHO

 

Phew...was that ticking only the clock!..

 

Well we have had tighter finance, falling interest rates and we are being told that unemployment is going to rise.

I guess we are somewhere between 5 and 6...

Cheers,

Dan