Sell everything! My challenge to Andrew Roberts of RBS

Wed, 13 Jan 2016  |  

Andrew Roberts, the “sell everything” analyst at RBS, has certainly gained a lot of coverage for himself and his business. If that was the aim, it was a great success to write such headline grabbing 'research' on the hope the media would run with it.

So ten out of ten for Andrew.

But the work prompted me to think about what Andrew was actually saying and I am wondering whether he is will to put his money where his mouth is. To that end, I sent his the following email.

Dear Andrew

I note with interest your “sell mostly everything” note from earlier this week. I think you will be wrong and in the spirit of the market and healthy competition would like to offer you a chance to personally benefit from your forecast.

How about a bet of, say, A$10,000, that more than half of the items in list below will be stronger on 31 December 2016 than they have been in recent days? I am open to a different amount to wager, just let me know what you are comfortable with.

I note with each the recent level or market price and if it is higher on 31 December, chalk that one to me, if it is lower, that is for you. I have 11 variables that you imply are a “sell” – they cover a range of asset classes and locations and if you are correct with your forecast, most will be lower than today. SO the winner will have six or more go in their favour.

US stocks (S&P 500) 1925.0 points

Brazil stocks (Ibovespa) 39,500 points

China stocks (Shenzhen) 1,850.0 points

Japan stocks (Nikkei) 17,200.0

US house prices (Case-Shiller 20 city) 182.83 points

UK 20 city house prices (Hometrack measure) GBP228,800

Sydney House prices (Corelogic index) 915.00

Iron Ore US$40.50 a tonne

Oil WTI $US31.50 a barrel

Copper US$4,325 a tonne

AUD/USD 0.7000

Please let me know if you are happy to take up the offer. I am will to put my hard earned money where my mouth is – I hope you are too.

All the best

Stephen

 

Andrew has yet to respond to my very generous offer. After all, he only has to get six out of 11 to win – not “everything”. I will confirm whether or not Andrew is up for the challenge.

Either way, I will track this post from time to time.

comments powered by Disqus

THE LATEST FROM THE KOUK

The recessionary horror of the Western Australian economy

Wed, 28 Sep 2016

This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/the-recessionary-horror-of-the-western-australian-economy-002509793.html 

-----------------------------------------------

The recessionary horror of the Western Australian economy

Western Australia is in a deep and increasingly nasty recession. There are no signs that the economy is near a bottom which is disconcerting. The plunge in mining investment and the slump in commodity prices have hit WA hard and the economic scorecard is, quite simply, miserable.

During 2008, the unemployment rate in WA fell to a stunning low of 2.3 per cent. After a temporary rise with the GFC, the unemployment rate was 3.5 per cent during 2012. This was the lowest in Australia by a large margin. Most recently, unemployment spiked to 6.3 per cent which is now third highest in Australia, behind only South Australia and Tasmania. Since the middle of 2015, there has been no increase in employment levels.

State final demand, which is effectively GDP excluding net exports, peaked in September 2012 and since then, has been trending lower. From that peak, State final demand has slumped 13.2 per cent. While exports of iron ore and other commodities are strong and adding to activity in WA, from the perspective of private and public sector spending and investment, the economy is going backwards.

Why the Turnbull government's plan to issue 30-year bonds is an unnecessary risk

Mon, 26 Sep 2016

This article first appears on The Guardian website at this address: https://www.theguardian.com/business/2016/sep/22/why-the-turnbull-governments-plan-to-issue-30-year-bonds-is-an-unnecessary-risk 

------------------------------------------

Why the Turnbull government's plan to issue 30-year bonds is an unnecessary risk

The Turnbull government has indicated that it will start issuing 30-year government bonds.

In layperson’s terms, this means the government will be borrowing money for a 30-year fixed term, paying interest every six months over those 30 years to the holder of those bonds. This locks in interest payments as a part of the budget bottom line right through to 2046 and probably beyond. The government will use the revenue from those borrowings to fund the budget deficit and maturities of existing bonds. The deficit continues to hold at levels well above the levels the Coalition government inherited from the Labor party when it won the 2013 election.

The decision by the government to borrow money for such an extended duration – via the Australian Office of Financial Management (AOFM) – sits oddly with the rhetoric from Malcolm Turnbull and Scott Morrison about their core objective of “budget repair” and the goals of returning to surplus. If these objectives were genuinely part of the government’s economic strategy, there would be no need to borrow money for 30 years. The current 25-year bonds are more than sufficient to cover the government’s deficit requirements, especially if the projections for a return to surplus in about three years are still relevant.