Australia’s economy is going down and under

Australia recently recorded its 104th consecutive quarter of growth without a recession, an achievement which breaks the record set by the Netherlands. It prompted Australia’s federal Treasurer Scott Morrison to claim that the economy was in “surprisingly good shape”. His statement is reminiscent of that old joke. How can you tell if a politician is lying? His lips are moving.

Australia’s economy is not in good shape. Its growth has been built on demand for commodities like coal and steel from China and investment in an over-inflated property market that has been fuelled by years of cheap credit. These dual dependencies are about to be brutally exposed.

The exact timing and full impact of Australia’s economic tailspin is unknown. However, a precise date and exact knowledge of its magnitude are unnecessary in order to take advantage of the collapse as a trader. The circumstances that make an economic crash inevitable are already in place and it is far better to be five months early rather than five minutes late for an opportunity like this.

The inevitability of Australia’s financial meltdown is in part due to an external factor which it has no control over: China.

Societe Generale’s China economist Wei Yao recently said: “Chinese banks are looking down the barrel of a staggering $1.7 trillion worth of losses”. Hyaman Capital’s Kyle Bass calls China a “$34 trillion experiment” which is “exploding”, where Chinese bank losses “could exceed 400% of the US banking losses incurred during the sub-prime crisis”.

Simply put, if China’s economy bends Australia’s will buckle.

Australia’s biggest export is iron ore and frequently the country’s main driver of a trade surplus and GDP growth with 81% of its iron ore exports going to China. However, demand for iron ore in China is falling because 50% of it comes from property development which in 2017 is under stress as prices level off and credit dries up. Critically, the price of iron ore has fallen 60% over the last 6 years.

Australia’s second biggest export is coal with supply increasing to 388Mt in 2016 from 261Mt in 2008. Unfortunately, its value has crumbled over that same period dropping from $54.7 billion to $34 billion. Worse still is the fact that Japan and China are Australia’s biggest customers, and both are scaling back their use of it, with China recently committing to ending all coal imports in the near future.

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Alibaba’s global perspective sends share price soaring

Alibaba’s (BABA) ongoing experimentation with new ways to lure shoppers into spending their money, diversification and expansion into new territories has earned widespread approval in the markets, pushing its share price to record highs of $192.12 ahead of their quarterly earnings report (November 2).

The Chinese e-commerce giant’s shares have more than doubled in value this year (see chart) with much of Alibaba’s growth being fueled by the internet retailing boom in China. The move into cloud computing is currently loss-making, but with the number of users almost doubling to 1 million in a year and expansion into Malaysia and India it is expected to turn that around. Also, Alibaba’s diversification into groceries, digital entertainment and financial services are showing potential for future growth.



Alibaba’s goal is to reach 2 billion customers around the world within 20 years. In some cases, it has begun with digital payments, as in India. In others it has invested in e-commerce sites, as with Lazada, in South-East Asia. But it intends to build a broad range of services within each market, including payments, e-commerce and travel services, and then link local platforms with Alibaba’s in China. 

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Starbucks might be about to surprise Wall Street

For years Starbucks Corporation’s (SBUX) shares have mirrored their phenomenal success, but recently the coffee giant has come under attack from the likes of McDonalds and other fast food giants as well as indie coffee shops which has been reflected in the value of their share price.

After reaching a peak price of $64.87 in June, Starbucks shares are down 1.41% overall this year. However, Starbucks has expanded into new territories and brought greater convenience to its clients with the use of innovation which has prompted some analysts to predict that the coffee-making giant will surprise Wall Street when it releases its fourth quarter earnings on November 2.

Starbucks experienced tremendous growth between 2011 and 2016 with sales growth above 5%. It all changed in the third quarter of 2016 when sales growth was just 4% while for the first time transaction growth was flat. For the next quarter, sales growth remained below 5% while transaction growth was negative (-1%).

Starbucks’ growth has been affected by competition from indie coffee shops and traditional fast food giants who have widened their menus to capture some of the coffee drinking market.


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Bitcoin takes a big stride away from fringes of finance

CME Group’s announcement on Tuesday (October 31) that it intends to offer futures on Bitcoin this month sent the cryptocurrency surging past $6,400 for the first time; the group’s move has been viewed as bringing Bitcoin a step closer to acceptance within mainstream finance by placing it alongside the CME’s stable of futures on interest rates, stock indices, commodities and currencies.

Bitcoin’s price has soared from $966 at the start of the year, breaking through the $5,000 mark for the first time on October 11 before settling at $6,362.65 in afternoon trading on October 31, up by 4% for the day.

Futures are derivatives contracts that investors and companies typically use to speculate on prices or hedge risk against turns in the market. Other major markets like stocks, bonds, commodities and currencies all have derivatives based on them. CME’s futures option would allow investors to hedge bets that the price of bitcoin will rise, something that is difficult at present.

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Who should you trust with your money?

How many of you reading this have or had a bank account with HSBC? My guess is that more of you have banked with them than any other major bank. And why shouldn’t you. After all, they were known for being the world’s local bank and are amongst the biggest in the world.

They’ve been around so long and are so big that trusting them is implicit. You don’t even bother looking at the library of licences they hold for the myriad of financial services they offer.

But have they earned your trust?

Cairn Energy trusted HSBC to carry out a $3.5 billion foreign exchange deal for them in 2011.

The Financial Times reported recently that US prosecutors have accused HSBC of turning an illicit profit from the exchange by exploiting the confidential information they had of Cairn’s sizeable order.

It’s a practice also referred to as scalping and authorities claim it earned HSBC over $8 million at Cairn’s expense.

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The Catalan parliament’s declaration of independence from Spain is set to wreak political turmoil in the country and is sure to have far-reaching repercussions for Europe.

In response, Madrid passed measures to take direct control over the region and called for regional elections for December 21, but these measures will be tested as it’s unclear whether politicians and civil servants of the region will accept direct rule being imposed on them.

On Sunday Spain’s prime minister, Mariano Rajoy, sacked Catalan president, Carles Puigdemont, who now faces up to 30 years in jail for his role in the regional parliament’s declaration of independence.

The result was greeted with joy by pro-independence supporters gathered outside the parliament in Barcelona under the slogan “Let’s make the Republic”, hoping to put pressure on the parliament to act.

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Introducing Skrill at FXB Trading

FXB trading have introduced Skrill as a payment method for funding and withdrawing from your account. If you already have a Skrill account, you’ll be aware that Skrill is an international electronic wallet that you can maintain in your local currency and fund by transferring funds from your bank account, cheque, credit/debit cards or via alternative payment methods available in your country.

You can use Skrill for secure online purchases without worrying about disclosing your credit card information. It’s a safe and efficient online payment method that does not require its users to send payment information every time they make a transaction.

The option to use Skrill is just one of many trusted, international payment service providers that are available to traders at FXB Trading.

How do I fund the Skrill account?

Please see Skrill’s fees for the list of funding methods available in your country as well as respective fees.

How can I make a purchase using Skrill?

Skrill is fully integrated via the ‘Deposit Methods’ screen. While in the members area, click on ‘Deposit Funds’, you will see an option to use Skrill. Please click on the ‘Select’ button located on the Skrill payment method.

You’ll be redirected to the ‘Payment Form’ page. Enter the amount you wish to deposit, check the privacy policy check box after reading it, then on the ‘Continue’ button.

The Skrill login screen will be displayed. Login and follow the on-screen instructions.


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Microsoft flying high on wings of Cloud business

Over the last few years Microsoft (MSFT) has dramatically changed direction as a company to generate new sources of revenue and in doing so altered consumer perception of the brand and impressed a number of Wall Street analysts who are eagerly awaiting the company’s quarterly earnings report (October 26) which they hope will confirm their selection as their top large cap pick.



As the above chart indicates that the recent rally to $78 has carried Microsoft stock into a technically overbought situation. The last similar signal was in June ahead of a pullback from $72 to $68 that occurred in roughly a week. Microsoft shares tend to trade lower ahead of their earnings as traders look to lock-in profits on gains ahead of the volatility caused by the company’s earnings report.

Under CEO Satya Nadella the company is now well-placed to enjoy a period of sustained growth with growing revenue derived from its Cloud offering (which is well on target to reach the $20 billion annually predicted by Nadella by 2018) and increased revenues from new ventures as well as revitalization of revenue from its existing portfolio of products.

Former CEO Steve Ballmer took the initial decision to move into Cloud services and turn Office into a subscription based product. However, when Nadella picked up the baton in February 2014, he ditched many of the business practices that had been in place when the company dominated the marketplace with its Windows operating system.

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