Tue 6 Oct 2015

In Portfolioticker today

eGrants.com: 10th anniversary

1a45e93 Ten years ago today our company commenced the development of eGrants.com – a disruptive end-to-end SaaS system for government grants. Its first project was a $200m program (CWG) to improve conservation of water during a national drought. Our first client won a Minister’s Achievement Award.

At the worst of the GFC, the Australian Government urgently needed to inject money into the economy through local government infrastructure projects. eGrants was invited to help. Applications had already opened, however eGrants was configured and implemented before applications had closed, and most applications were received though eGrants. eGrants supported this program (RLCIP) providing urgent infrastructure funding to thousands of projects for 560 local governments in Australia through two funding rounds. The RLCIP (allocated grants) program was audited by the Australian National Audit Office and was given a clean report.

We continued development, enhancement, operation and support of eGrants for about 6 years, to the extent that its productivity improvement reduced the cost of administration of government grant programs by about 90%. At our end eGrants was automated to the extent that it became a completely “hands-off” SaaS system. It was certified to PCI-DSS standards and externally audited for security on a daily basis. eGrants had a 99.5% takeup and compliance rate, and a 95% user satisfaction rating (satisfied or very satisfied). Fraud was eliminated with the exception of a couple of instances which were quickly identified for recovery. By the time eGrants.com was parked it had supported tens of thousands of projects in government grant programs across several departments with combined budgets of around AUD 1 billion.

Why was eGrants parked? Many reasons – it was disruptive, automating and changing many work practices; it put program (business) managers in charge of their own IT support (instead of the Departmental CTOs); it used a commercial model (SaaS) the government was not comfortable with (the government preferred to own its IT systems); and our clients were uncomfortable about giving million dollar contracts to a company operated by only two people (our system was fully automated – but clients saw our small staffing as a risk). In the end, our clients built new internally hosted systems, incorporating many of the ideas from the eGrants business model.

Today at the stock market Opinion NBR

bull/bearA rout in biotechnology shares halted the longest rally in U.S. stocks this year, while the weakening dollar boosted emerging-market equities toward the highest level since August.

The Standard & Poor’s 500 Index slipped after gaining 5.6% in 5 days – its best 5-day run since 2011 – as concern about drug pricing and earnings rekindled a selloff in biotech. Energy shares in the index capped the biggest 6-day rally of the bull market as crude surged to a one-month high.Bloomberg

The Nasdaq also ended lower on Tuesday, ending a 5-day winning streak, as investors eyed upcoming quarterly reports that are expected to show a dip in corporate earnings. S&P 500 companies are expected to report a 4.2% fall in earnings in upcoming Q3/2015 reports, the biggest decline in 6 years, according to Thomson Reuters data.

Investors were also concerned that a weak U.S. jobs report hinted at economic weakness which also lowered expectations the Federal Reserve will raise interest rates this year.

The International Monetary Fund cut its global growth forecasts for a second time this year, citing weak commodity prices and a slowdown in China.Reuters

Market indices today
^ Market indices today (Chart: Yahoo Finance)

Market indices

Index Ticker Today Change 31 Dec 14 YTD
S&P 500 SPX (INX) 1,979.92 -0.36% 2,058.90 -3.84%
DJIA INDU 16,790.19 +0.08% 17,823.05 -5.80%
NASDAQ IXIC 4,748.36 -0.69% 4,736.05 +0.25%

The portfolio today Opinion

Index values

:-) Outperformed Currency Today Change 31 Dec 14 YTD
USD-denominated Index USD 1.924 +0.21% 1.741 +10.5%
Valuation Rate USD/AUD 0.72231 +1.19% 0.82153 -12.08%
AUD-denominated Index AUD 2.663 -0.97% 2.119 +25.68%

Stock price movements

The shape of the portfolio today
^ The shape of the portfolio today (Chart: Yahoo Finance)

Portfolio stock prices

Stock Ticker Today Change 31 Dec 14 YTD
Apple AAPL $111.31 +0.48% $110.38 +0.84%
Amazon AMZN $537.48 -1.14% $310.35 +73.18%
Ebay EBAY $25.68 -0.21% $23.57 +8.95%
Facebook FB $92.80 -1.29% $78.02 +18.94%
Google A GOOGL $671.64 -0.01% $530.66 +26.56%
Google C GOOG $645.44 +0.62% $526.40 +22.61%
Linkedin LNKD $195.52 +0.45% $229.71 -14.89%
PayPal PYPL $31.86 -2.48% $32.55 -2.12%
Twitter TWTR $27.62 -1.88% $35.87 -23.00%
Visa V $72.08 -0.21% $65.55 +9.96%
VMware VMW $81.31 +2.29% $82.52 -1.47%

52-week performance Opinion

USD and AUD denominated indices over the last 52 weeks (Chart: Bunting)
^ USD and AUD denominated indices over the last 52 weeks (Chart: Bunting )

Purely out of interest, what did our portfolio’s indices look like a year ago? Our USD-denominated index was performing better last year than this year: up 35.87% last year, compared to only 17.67% this year. However the AUD has depreciated against the USD much more this year than last, widening the space between the blue line and the red line, and boosting our AUD-denominated index to about the same for both years: 46.26% last year, 42.09% this year.

USD and AUD denominated indices over 52 weeks to 6 Oct 2014
^ USD and AUD denominated indices over 52 weeks to 6 Oct 2014


AUD movements against the USD
^ AUD movements against the USD today (Chart: xe.com)

The AUD rose against the USD today as the Reserve Bank of Australia decided to keep its Official Cash Rate at 2% while the US Federal Reserve is expected to delay its “normalisation” of interest rates. The Bloomberg Dollar Spot Index dropped for a fourth day.” Bloomberg

AUD movements against the USD over the past 2 months
^ Context: AUD movements against the USD over the past 2 months (Chart: xe.com)

Oil and Gas Futures

Futures prices

Oil prices rose 5.25% – 5.6% today!

Prices are as at 15:29 ET

  • NYMEX West Texas Intermediate (WTI): $48.70/barrel Chart
  • ICE (London) Brent North Sea Crude: $52.00/barrel Chart
  • NYMEX Natural gas futures: $2.47/MMBTU Chart

flag_australia Australia: International Trade Opinion

Australia’s trade balance has stayed in the red with a worse-than-expected deficit of $3.1 billion in August, following a revised deficit in July of $2.8 billion. Economists had expected a deficit of $2.4 billion in August.AFR



In trend terms, the balance on goods and services was a deficit of $3,250m in August 2015, a decrease of $22m (1%) on the deficit in July 2015.

In seasonally adjusted terms, the balance on goods and services was a deficit of $3,095m in August 2015, an increase of $303m (11%) on the deficit in July 2015.

Jun 2015 Jul 2015 Aug 2015 Jul-Aug 15
EXPORTS of goods and services (Credits)
Trend estimates $25,951m $26,025m $26,148m +0.47%
Seasonally adjusted $25,974m $26,639m $26,509m -0.49%
IMPORTS of goods and services (Debits)
Trend estimates $29,190m $29,297m $29,398m +0.34%
Seasonally adjusted $29,320m $29,431m $29,604m +0.59%
BALANCE on goods and services
Trend estimates -$3,239m -3,272m -$3,250m -0.67%
Seasonally adjusted -$3,346m -$2,792m -$3,095m +10.85%

Australian Bureau of Statistics, “5368.0 – International Trade in Goods and Services, Australia, Aug 2015“, 6 Oct 2015 More

flag_australia Australia: RBA Cash Rate Decision


At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.

The global economy is expanding at a moderate pace, with some further softening in conditions in China and east Asia of late, but stronger US growth. Key commodity prices are much lower than a year ago, in part reflecting increased supply, including from Australia. Australia’s terms of trade are falling.

The Federal Reserve is expected to start increasing its policy rate over the period ahead, but some other major central banks are continuing to ease policy. Equity market volatility has continued, but the functioning of financial markets generally has not, to date, been impaired. Long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low. Overall, global financial conditions remain very accommodative.

In Australia, the available information suggests that moderate expansion in the economy continues. While growth has been somewhat below longer-term averages for some time, it has been accompanied with somewhat stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.

In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney and Melbourne, though trends have been more varied in a number of other cities. Regulatory measures are helping to contain risks that may arise from the housing market. In other asset markets, prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved lower and been more volatile recently, in parallel with developments in global markets. The Australian dollar is adjusting to the significant declines in key commodity prices.

The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board’s ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.

Reserve Bank of Australia, “Monetary Policy Decision“, 6 Oct 2015 Statement

flag_usa USA: International Trade Opinion

U.S. exports took a hit from an ailing global economy in August and imports from China surged, fueling the largest expansion of America’s trade deficit in five months. This illustrates the U.S. economy’s vulnerabilities to a strong dollar and weak demand in foreign markets, which could impose further caution on the Federal Reserve’s plans to hike interest rates.

The trade deficit swelled by 15.6% to $48.3 billion in August, according to data that is adjusted for seasonal factors. The scope of the increase was accentuated by the unusually narrow trade deficit registered in July.

But the size of the gap stands well above the average levels seen in recent years. This puts the onus on U.S. consumers to deliver stronger economic growth because the rest of the world will probably be a drag.

Overall exports fell 2% to their lowest level since October 2012. Exports to Mexico fell by $1.5 billion in August and the European Union bought $500 million less from America than it did in July, according to data on bilateral trade which is not seasonally adjusted.Reuters


The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $48.3 billion in August, up $6.5 billion from $41.8 billion in July, revised. August exports were $185.1 billion, $3.7 billion less than July exports. August imports were $233.4 billion, $2.8 billion more than July imports.

The August increase in the goods and services deficit reflected an increase in the goods deficit of $6.6 billion to $67.9 billion and an increase in the services surplus of $0.1 billion to $19.6 billion.

Year-to-date, the goods and services deficit increased $17.6 billion, or 5.2 percent, from the same period in 2014. Exports decreased $58.9 billion or 3.8 percent. Imports decreased $41.3 billion or 2.2 percent.

US Census Bureau, “US International Trade in Goods and Services – August 2015“. 6 Oct 2015 (08:30) More