Stock Market

The markets are melting down again. The ASX 200 fell $33 billion, or around 3 per cent yesterday, on the back of more European scares. As you’d imagine, people like CommSec Chief Economist Craig James were rather busy yesterday. But we managed to grab him for a few quick questions.

What’s the best case scenario?
The best case scenario is that the Italian Government comes out with concrete proposals to address its budget situation. Another positive proposition would be instead of calling elections for early next year the Government or the Prime Minister simply resigns and a new government is formed. So anything that would provide a degree of confidence to the markets – at the moment we’ve got nothing.

And the worst case scenario?
It could be anything. It could be countries deciding to exit the Eurozone. It could be continued silence from the Italian officials on dealing with the situation. One of the worst case scenarios could be a country actually physically defaulting on its obligations. So there’s a whole range of negatives out there. There’s no one specific bad scenario; there are a number.

Continue reading "Punch Q&A: Should we panic over European meltdown?" »

With the markets still dancing their crazy dance this morning, The Punch threw a few questions at CommSec chief equities economist Craig James. He’s the guy best known for inventing the iPod and iPad indices, which measure the relative price of said products in countries around the world.

Last time, it was the Lehman brothers collapse. What has sparked the market plunge this time?
It’s countries rather than banks or companies this time. The [market plunge] has been sparked by debt levels being held by Europe in particular, but also in the US. Investors as well as ratings agencies have a degree of impatience. They want to see improvements sooner rather than later. In my opinion a lot of investors and rating agencies are unduly focused on debt levels rather than [countries] growing their way out of it.

Continue reading "Relax, it’s not another GFC" »

It’s tough getting off a slippery slope. But we need our politicians to build an off ramp, quick smart, on the slippery slope known as legal prostitution.

Even the hard-nosed readers of The Australian business section must have felt some moral disquiet when they read over the holiday break that the Sydney brothel, Stiletto, could be on the stock market in 2011.

There is something dystopian about a society where mum and dad investors and Super Fund bosses could monitor the stock market on their iPhones to see if their CEO has been working prostitutes productively enough. We will know what kind of society we have become if the stock is reported in the market round-up at the end of the 6pm news each night.

Continue reading "We must not list brothels on the stock market" »

There’s quite a menagerie in the stock market petting zoo. You’ve got your bulls, your bears and the occasional stag. Until now, though, you’ve never had PIGS.

In the past week, the PIGS have run rampant, trampling markets and joining CDO and CDS as acronyms guaranteed to strike fear into the hearts of investors. Like collateralised debt obligations and credit default swaps – those complex financial instruments that fuelled the GFC – anyone with shares needs to keep an eye on the PIGS.

Portugal, Italy, Greece and Spain – collectively, and unkindly, derided as the PIGS – are in a fair degree of financial pain. All of them have budget deficits of more than 10 per cent of GDP, which experts reckon they will struggle to finance on wary international bond markets.

Continue reading "PIGS - the acronym that might fry your portfolio" »