Data Diary » XDJ

Australian Retail Sales – February 2010

Rohan Clarke — Tue, 06 Apr 2010 06:18:16 +0000

Playing catch-up – so for posterity (well, more for my records) following are the ABS data on Australian retail sales released last week (you can find the ABS release here).

The retail sector is clearly lagging the feel-good story emanating from the real estate industry. In my view, the incremental increases in household debt will make it a lot harder for the retailers over the next few years – expect something more like the 80′s than the ‘put that on my credit card’ 90′s and early noughties.

This will lead to a contraction in valuation multiples for the sector – it will just take time.

Australian Lending Finance for January 2010

Rohan Clarke — Wed, 17 Mar 2010 03:41:26 +0000

Consistent with the global trend to deleveraging – Australia’s latest finance figures show that both businesses and consumers keep reducing their borrowings:

Now sure there is some seasonality to January’s numbers – but on a like-for-like basis the total for Jan 2010 was $26.5bn, some 17% lower than last January’s $31.9bn and the lowest since January 2005. Or looked at another way, the 12 month rolling average is still heading south…this has got to make it hard for the discretionary sector doesn’t it?

Which leading indicator is leading the Australian market?

Rohan Clarke — Wed, 27 Jan 2010 10:36:58 +0000

One of the objectives of this site is to develop a set of tools that will help us understand how the market will respond to economic developments. The thing is that the Australian market suffers from a bipolar disorder that can make this a little hard in practice. Consider the following chart tracking the OECD’s composite leading indicator against the All Ordinaries:

The correlation between the two appears weak at best. And there’s the rub – the All Ordinaries is both an index for global demand for commodities and for Australian centric consumer demand.

So what then to make of the OECD’s leading indicator? On reflection, it may then have more application to those sectors of the market that are reliant on domestic economic conditions. In this context, consider the following charts of the ASX200 Consumer Discretionary and the ASX200 Industrials indexes mapped against the OECD’s CLI:

On the face of it, the OECD”s leading indicator has a tighter correlation to these sectors. This makes the following charts pretty interesting then:

Seems like turns in the OECD’s CLI have a irregular habit of smoking out moves in these domestically focussed indices. More on this later as we delve deeper into the bowels of the Australian economy…