Last Week, in Finance

Hi team,

As has become tradition now, Sunday has been followed up with Monday, and well, here we are.

The Land Down Under (AKA Australia)

  • The ASX200 index, which tracks the value of the largest 200 companies trading on the ASX fell last week, ending 1.20% weaker.
  • The All Ordinaries index, which tracks the largest 500, was also down, finishing 1.08% lower

I told you last week there was a good chance the market would be lower as some of the big institutions were likely to be “taking profits”. Well the market was lower, but I don’t think that was the reason why. In fact 75% of last week’s fall occurred on Tuesday, and we already talked about what caused that. So where to this week? Well, firstly, no-one has a clue, particularly me.

Australia’s stock market is dominated by two sectors, Financials (ie banks) and Mining (ie iron, oil, gas etc). Those two alone account for nearly 60% of the total value of all companies listed in the ASX200. Crazy no? So, if you want to guess where the market is going to go, having an inkling on these will help. So what do we know?

  • Financials: The big four banks pay out a dividend once every 6 months and it’s a pretty chunky amount. Usually about 2-3% of the value the stock itself. So if you hold the banks shares, you will receive two pretty sizable cash payments each year and with the official interest rate at just 1.5% a lot of people are attracted to this as a form of “steady” income. In fact,  it is one of the biggest “trades” out there, particularly for retirees. In order to receive the dividend you have to hold the stock on a certain date. For NAB, Westpac and ANZ, this date was last week. So in the lead up to this date, investors have been buying the banks so they would qualify to receive the dividend. Increased buying increases prices and that’s exactly what has happened. Now that date has passed, there is a good chance some people will be selling out again. Increased selling means prices should fall. Should. Not will.
  • Mining: There is a little bit going on at the moment between Iran and Saudi Arabia. With so much oil produced out that way, any conflict will play havoc on oil prices. Investors are getting a tad bit nervous and oil prices have been rising already as a result. This should mean oil stocks will rise. Should. Not will. Iron ore, which is Australia’s single largest commodity and export has seen its price going up too. Not on any news. It just happens to be trading higher. And when it goes higher, companies which mine it out of the ground tend to do better too.

So financials are likely to be weaker. Oil stocks and Iron ore companies (like Rio, BHP and Fortescue) stronger. And there is still supposed to be some profit taking too. What happens this week in summary, is anyone’s guess.

Trumpville (AKA the United States of America)

  • The Dow Jones index which tracks the 30 largest companies in the US was down 0.27% for the week
  • The S&P500 index which tracks the 500 largest was down 0.13%
  • The NASDAQ which is an index pretty much dominated by technology stocks was up by 0.47%

All I’ll say on this is watch for any update on Trumps massive tax cuts. This news alone will dictate whether the market goes higher or lower. If investors get scared that the tax cuts may be delayed, watered down or cancelled, the market will fall. Alternatively if it starts to look more and more likely they’ll go through in their current form, the market will jump higher.

Bitcoin
ANOTHER F*)^&%@!  RECORD HIGH. EVERYTIME I WRITE THAT LINE A LITTLE BIT OF ME DIES INSIDE. AND GIVEN HOW OFTEN I’VE BEEN FORCED TO WRITE IT A FAIR BIT OF ME IS DEAD ALREADY. As of right now, one bitcoin will set you back nearly 8,100 USD. By the way, just 7 days ago it was trading at 5,605 USD. 7 days before that it was 7,100 USD.

I’ll put it to you another way. As of right now, the total value of all bitcoins outstanding is 134 billion USD dollars. Last Monday, it was 92 billion USD. The Monday before that it was 117 billion USD. It rose 42 billion dollars last week after it fell 25 billion dollars the week before. What the FU** changed so dramatically week on week to justify that?

Come on guys. Give me a break..

That’s 5 minutes. I’m out. 



Categories: Investing

Tags: , , , , ,

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