It's the economy, stupid!

 
  don_dunstan Minister for Railways

Location: Adelaide proud
AMP plunges another five percent today to touch record lows of $2.38 - the ASX also failed to gain after a rally this morning and the AU$ is almost below the key psychological barrier of US$0.70.
Hello All,

as AMP ( formerly Australian Mutual Provident Society , ie Insurance ) has now sold its Insurance arm , it imminent demise is , I suspect , about to begin .

First , so called Wealth (mis ) Management goes , then we off load Insurance , so what is now left ? And is it worth holding , or better off to sell up , clear debt , pay big bonuses , and then return the remnants to the shareholders .

Regards, Radioman.
Radioman
Like Pan Am, sold off all the profitable bits and then promptly went broke.

Sponsored advertisement

  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
Good times are definitely over for the banks (and thus for your Super and Self/Part Funded Retirees).

Sure ANZ and NAB maintained their dividends but that's not good when they haven't gone up for several years.
  DirtyBallast Chief Commissioner

Location: I was here first. You're only visiting.
Good times are definitely over for the banks (and thus for your Super and Self/Part Funded Retirees).

Sure ANZ and NAB maintained their dividends but that's not good when they haven't gone up for several years.
Groundrelay
it's all relative. Even if ANZ kept paying $0.80 every 6 months forever, it equates to an ongoing yield of well over 6% if you bought now. For some people, that is attractive enough. Also, if dividend reinvestment plans didn't exist, EPS would naturally be higher, and so too would dividends.

Banks are still a cash cow for investors looking for income, and always will be.
  georges Train Controller

Banks are still a cash cow for investors looking for income, and always will be.
DirtyBallast
Never say never. In the meantime, beware of an ALP government cancelling franking credits.

There are better ways of raising at least an equivalent amount of revenue - https://investmentmagazine.com.au/2018/11/franking-credit-plan-soaks-more-than-rich-critics-say/
  don_dunstan Minister for Railways

Location: Adelaide proud
Costello should never have initiated that overly-generous piece of policy.

In the meantime it looks almost certain that we're headed into a full-blown real estate crash, all the signs are pointing to it. Shane Oliver, economist at AMP writes today that Sydney and Melbourne auction clearances will again finish up below the 40% mark, this is the lowest they've been for a few decades. Hang onto your hats...
  don_dunstan Minister for Railways

Location: Adelaide proud
Smiles Inclusive (ASX:SIL) is now worth half what it was when it floated only in April of this year - looks like institutional investors are trying to cash out and they're crashing the share price.

There's been so many bad IPO's on the Australian Stock Exchange, prices manipulated by hedge or superannuation funds, etc. It's hard to imagine where you could put your money on the ASX now with some certainty that you won't be sold out by someone else with an interest in driving the same company downwards.
  DirtyBallast Chief Commissioner

Location: I was here first. You're only visiting.
…. prices manipulated by hedge or superannuation funds, etc. It's hard to imagine where you could put your money on the ASX now with some certainty that you won't be sold out by someone else with an interest in driving the same company downwards.
don_dunstan
Yep.

The people who pull the levers are constantly betting on share price movements rather than intrinsic value, and people with money to park are left floundering. I think this is why there has been a rush to LIC's (let the experts work it out; hopefully they will steer clear of shorted stocks!) instead of putting further trust in other traditional investments that are starting to sour.

IMHO short selling should be illegal.
  don_dunstan Minister for Railways

Location: Adelaide proud
Chatswood NSW is feeling the heat from the housing bust more than anywhere in the nation (from News.com.au):

Just two bidders competed for the three-bedroom home on a 757 sqm block at 17 Beresford Ave, Chatswood and agents couldn’t get them to offer even $1000 more than the vendor bid of $1.7 million.

After the gavel fell, Karen Davis, of Standen Estate Agents, said: “Last year our vendors might have got $2.4 million for this but now we’re having to ask them to consider $800,000 less than that”…

After the gavel fell, the agents managed to get the bidder up to $1.67 million, but it was still a way off the $1.75 million reserve.

“Yes we are heartbroken,” Mr Kerr said. “We expected to get something more reasonable than this. “This is garbage.”

Mrs Kerr, whose mother, Yvonne Foster, had lived in the home up until four years ago when she moved into a nursing home. She passed away about a year ago…

Got the house for nothing (inherited it) and now they're complaining that they're only going to get $1.7 million for it? Sheer greed.
  RTT_Rules Dr Beeching

Location: Dubai UAE
Like Pan Am, sold off all the profitable bits and then promptly went broke.
don_dunstan
They sold the good bits to raise cash to prop up the bad bits long enough so they have time to try and fix the problem, but were not able to do so. AMP could go the same way
  don_dunstan Minister for Railways

Location: Adelaide proud
NSW is going to install a real-time tracking system to monitor people in public places in NSW - Fairfax:

Under new laws the federal and state governments will be able to access data and photos from passports, driver licences, and visas for a national facial recognition system called the “National Facial Biometric Matching Capability”

The Department of Home Affairs has been compiling the database for what is known as “The Capability". Unlike the controversial My Health Record, people can’t opt out of their details being included in the system.

The NSW Government has allocated $52.6 million over four years to support The Capability. The NSW Minister for Counter-Terrorism David Elliott said it would enable authorities “to quickly identify a person of interest to help keep the community safe."

You know I was really worried about the NSW government's Orwellian intentions but then I read the magic words "help keep the community safe" and suddenly I felt better.
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
Good times are definitely over for the banks (and thus for your Super and Self/Part Funded Retirees).

Sure ANZ and NAB maintained their dividends but that's not good when they haven't gone up for several years.
it's all relative. Even if ANZ kept paying $0.80 every 6 months forever, it equates to an ongoing yield of well over 6% if you bought now. For some people, that is attractive enough. Also, if dividend reinvestment plans didn't exist, EPS would naturally be higher, and so too would dividends.

Banks are still a cash cow for investors looking for income, and always will be.
DirtyBallast
Yes but as everyone knows you never try and pick the market. CBA for example almost hit $100 a share.

My point is banks are not the cash cow they once were given this uncharacteristically long run of stagnated DPS.
  don_dunstan Minister for Railways

Location: Adelaide proud
The Financial Review is reporting that our esteemed Treasurer Josh Frydenburg is asking the banks if they can please open the credit taps a bit more:

“I would encourage the banks when it comes to lending, in particular for small business, make sure you get the balance right, keep the books open and don’t lose sight of the broader public good.

We all know the royal commission has brought into focus the issues of responsible lending and examples of misconduct. While both issues are important, I do see them to some extent as separate, with different responses required.”

I have no idea what he means by 'balance right' and 'books open'... is he accusing them of deliberately going slow on the credit and mortgage fronts? Josh in probably secretly telegraphing the banks to let them know that nothing will happen as a result of the Royal Commission and that it's business as usual (surprise, surprise) but he's also probably been looking at the latest real-estate figures for Sydney and Melbourne which show a disaster unfolding... -7.4% annualised drops for Sydney (houses worse than apartments at -8.4%) and Melbourne -4.3% (with houses again worse at -6.25%).

Even poor old Perth, after the capital losses slowed to an almost-halt earlier this year they're once again picking up speed at -2.15% for the last quarter. These losses are not sustainable; if they keep up then there's going to be a real-estate precipitated recession caused by the fact that nobody is going to invest in assets that perform really poorly like that.
  neillfarmer Chief Train Controller

The slow down in the housing market is probably caused by several events occurring at once. Firstly a bubble in property values was forming in Sydney and Melbourne, so sooner or later a correction had to occur. Then the Labor party foreshadows an end to negative gearing so that dampens enthusiasm for investors. Finally the banks get heavily criticised for loose lending practices so they naturally tighten up their procedures and make doubly sure all borrowers can be sure of meeting their repayments.
Buyers are influenced by both fear of buying a property that is falling in value or will not make an adequate return, and banks will no longer lend to the stretched buyer who would normally be depending on increasing values.
It will all return to normal eventually.
  don_dunstan Minister for Railways

Location: Adelaide proud
Like Pan Am, sold off all the profitable bits and then promptly went broke.
They sold the good bits to raise cash to prop up the bad bits long enough so they have time to try and fix the problem, but were not able to do so. AMP could go the same way
RTT_Rules
There's another possible candidate for exactly the same type of death, unthinkable only a few years ago: General Electric. Too much debt, not enough money coming in - also compounded their own problems by engaging in a share buy-back that didn't work. Discussed more at Wolf Street:

GE shares plunged another 10% this morning to a low of $8.15 before recovering a little. They’re now a big step closer to the Financial Criss low of $6.66, which had been the lowest since the early 1990s... GE, which lost $23 billion in the third quarter based on a huge write-off, is in the process of dismantling itself to deal with its debts and stay alive, after “unlocking value” by blowing and wasting $152 billion in mostly borrowed cash since 2013 on buying back its own shares.

It now is buckling under $263 billion in liabilities, not counting any off-balance-sheet liabilities. Its accounting is being scrutinized by federal authorities, GE disclosed. And there are fears that some unknown unknowns might emerge. GE has been shedding divisions and assets to shrink itself to health, and as it is dismantling itself, there are fewer business units available to generate cash-flow to pay for this debt.
  RTT_Rules Dr Beeching

Location: Dubai UAE
Like Pan Am, sold off all the profitable bits and then promptly went broke.
They sold the good bits to raise cash to prop up the bad bits long enough so they have time to try and fix the problem, but were not able to do so. AMP could go the same way
There's another possible candidate for exactly the same type of death, unthinkable only a few years ago: General Electric. Too much debt, not enough money coming in - also compounded their own problems by engaging in a share buy-back that didn't work. Discussed more at Wolf Street:

GE shares plunged another 10% this morning to a low of $8.15 before recovering a little. They’re now a big step closer to the Financial Criss low of $6.66, which had been the lowest since the early 1990s... GE, which lost $23 billion in the third quarter based on a huge write-off, is in the process of dismantling itself to deal with its debts and stay alive, after “unlocking value” by blowing and wasting $152 billion in mostly borrowed cash since 2013 on buying back its own shares.

It now is buckling under $263 billion in liabilities, not counting any off-balance-sheet liabilities. Its accounting is being scrutinized by federal authorities, GE disclosed. And there are fears that some unknown unknowns might emerge. GE has been shedding divisions and assets to shrink itself to health, and as it is dismantling itself, there are fewer business units available to generate cash-flow to pay for this debt.
don_dunstan
GE is on the nose in more ways than you mention above and likely nose, unfortunately I cannot say more.
  don_dunstan Minister for Railways

Location: Adelaide proud
GE is on the nose in more ways than you mention above and likely nose, unfortunately I cannot say more.
RTT_Rules
Can you give us any hints?
  don_dunstan Minister for Railways

Location: Adelaide proud
Treasurer Josh Frydenburg has begun the great bank-bailout in earnest - starting off with a nice round $2 billion so that the banks can resume providing credit for small business (via AFR):

The creation of a taxpayer-backed securitisation fund to invest in small and medium enterprise (SME) credit will also potentially expand an asset class for institutional investors such as superannuation funds to invest in.

Treasurer Josh Frydenberg and Small Business Minister Michaelia Cash will announce the small business funding policy on Wednesday, promoting the soon-to-be-established Australian Business Securitisation Fund as a way to overcome banks typically only lending to the self-employed when they pledge their personal home as collateral.

The government fund will buy packages of secured and unsecured SME loans issued by smaller banks and non-bank lenders such as fintechs, boosting funding to these non-big bank lenders to lend to small businesses and potentially lowering SME borrowing costs.

So the banks are on strike with their credit and the Commonwealth comes to the rescue with a big lump of money for them to lend to small business and make money on. The start of what will probably be many bail-outs for our crappy banking system... there's no other business like it is there. Imagine a corner shop not doing very well and the Commonwealth comes along and says "here's free money". The banks are a government-protected cartel that will not be allowed to suffer from the consequences of their own bad behaviour.
  Carnot Chief Commissioner

GE is on the nose in more ways than you mention above and likely nose, unfortunately I cannot say more.
Can you give us any hints?
don_dunstan
Too much greed to be honest, especially the cushy retirement packages:
https://www.dw.com/en/how-general-electric-became-a-general-disappointment/a-42542423

Funny how former CEO Jack Welch was worshipped as a demigod 20 years ago, and yet he had a key role in it woes today.
  RTT_Rules Dr Beeching

Location: Dubai UAE
GE is on the nose in more ways than you mention above and likely nose, unfortunately I cannot say more.
Can you give us any hints?
don_dunstan
Mmm, not easy publicly and its only about a small portion of it, I'll send a PM.
  don_dunstan Minister for Railways

Location: Adelaide proud
I read this morning that Myer are not releasing their quarterly sales figures because they're so terrible; there's a rumour that it's going to be either wound up or offered to David Jones because its been haemorrhaging money for years.

On top of yesterday's announcement of the closure of the Roger David chain leaving 500 people without work - looks like retail is having a terrible time right now.
  42101 A end Junior Train Controller

CH7 news just said Myer has been placed in a trading halt by ASIC.
  BrentonGolding Chief Commissioner

Location: Maldon Junction
Too much greed to be honest, especially the cushy retirement packages:
https://www.dw.com/en/how-general-electric-became-a-general-disappointment/a-42542423

Funny how former CEO Jack Welch was worshipped as a demigod 20 years ago, and yet he had a key role in it woes today.
Carnot
Interesting article. GE invented the locomotive! Whowouldathunkit!

BG
  don_dunstan Minister for Railways

Location: Adelaide proud
CH7 news just said Myer has been placed in a trading halt by ASIC.
42101 A end
Actually I got that slightly wrong; the story is that the last quarter sales figures were leaked to the ASX and they show a five percent drop in sales (in just one quarter!). So Myer placed themselves into a halt while they sort it out; the whole thing is a farce. Five percent in one quarter - that's completely unsustainable in anyone's language. You'd wonder how they can afford to keep the lights on with those sorts of disastrous figures.
  DirtyBallast Chief Commissioner
  locojoe67 Assistant Commissioner

Location: Gen X purgatory/urban Joh-land
Like Pan Am, sold off all the profitable bits and then promptly went broke.
don_dunstan
Here in Qld the Govt did that to Qld Rail. Arguably a less than stellar move.

The passenger services have since been described as rail fail, with the much delayed NGR rollout, the poorly handled driver training program and various other things suggesting QR is still hampered by Translink, and saddled with a management team that don't seem interested in actually running a train service.

Aurizon have closed workshops, cut train crew and staff and only seem interested in hauling rocks (coal), having sold off seeds (grain) and abandoned intermodal (container) services.

And we still have zero Commonwealth funding for Cross River rail.

Neither branch of politics is immune from blame. Each wing of the oligopoly seems bent on ruining PT in their own unique way.

Sponsored advertisement

Display from: