Fed Raises Rates

and they say

. Strong demand for resources from the rapidly growing Chinese economy caused commodity prices – and thus Australia’s terms of trade – to rise substantially between 2001 and 2011. Associated with this, the Australian dollar appreciated by around 80 per cent in real trade-weighted terms over that period

 

key phrase: caused commodity prices to rise

For example, iron ore rose from 25 to 160, coal from 50 to 175, etc.

That's not the same effect as to increase the volume of some type of export which contribution is 10%-15% of all export.

If AU export volume is increased by 10% (because of doubled LNG export), but prices of LNG are reduced by 20%, the result would be opposite. It's unknown for now.

IMO gas and oil prices never be high again as 5 years ago, too many competitors plus increase in renewable energy. But if we increase volume of all exports, not just LNG, I agree that impact will be huge.

 

Who knows, goldman sachs begs to differ and my understanding is as per Sachs is that there are less players in the industry now

Goldman Says Big Oil Is Poised for Its Best Year in Decades

FYI, renewables share of energy consumption is that little orange sliver...getting bigger but still relatively small.

 

I think what's going to force rates up here is solid jobs growth. Unemployment is pretty low, and the RBA has already hinted pretty strongly that as soon as wages start rising, so will rates. Let's hope they manage it carefully when the time comes. Two or three rate rises has seen price drops of up to 20% in parts of Canada, where the BoC was all but forced to hike on the back of economic improvements and very strong jobs numbers. The RBA will eventually have to move up, unless the banks pick up the slack for them (and bank rate rises I think are the main reason the RBA hasn't raised official rates as yet).

 

Well the general view is that tax cuts for businesses will create an incentive for big firms like Apple to repatriate billions in cash stashed overseas which companies did not want to get taxed previously. So its is intended to have a stimulus effect and acceleration in economic growth, which would likely mean more jobs and wage gains.

US FED has been hesistant to doing rapid rate rises as inflation has generally been low and wage gains were not really there despite what looks like really good employment numbers. So if tax cuts translate to wage gains and inflation kicking up as intended, then yes there will pressure for more rate rises to keep a handle on inflation.

IMHO i think the benefits of tax cuts will balance out as FED rolls back its previous stimulus and shrinks its balance sheet. So in the end the tax cuts may in the short term just balance out the tightening by their central bank. In the longer term, i think the core problem is still the massive amount of debt the country has as well as the divide between politicians.

And what the US does, the rest of the world including us will likely follow. There has been talk of tax cuts as well over here.

 

Parts of Canada are/were in a similar bubble to parts of Australia (similarities. Toronto and Vancouver in particular were sitting up with Sydney and Melbourne on a median-multiple basis (median household incomes by median prices, a very common indicator and measure of bubbles). Watching the market dip has been interesting. Lots of developer discounting and buyers attempting to back out of contracts, due to the rapid drop (which began only in April).