Blog

Mon, 03 Mar 2014  |  

• Job ads up
• House prices up
• Home building approvals up near record highs
• Retail spending strong
• Company profits growth up over 10 per cent
• Government tax revenue stronger than expected
• Business conditions lifting
• ASX near 6 year high
• Exports booming
• Interest rates at record low
• Government demand no longer restrictive
• Aussie dollar low
• Non-residential construction up
• Inflation lifting to upper part of RBA target band

VERSUS

• Mining investment falling very sharply (but note above the other 90 per cent of the economy)
• Employment weak (but note above, the ANZ job ads)

I'll take the high road on the weight of that evidence.

Mon, 03 Mar 2014  |  

The Australia economy is significantly stronger than was forecast at the time of the release of the Mid-Year Economic and Fiscal Outlook in late December.

So says Finance Minister Mathias Cormann.

The Government Monthly Financial Statement for the six months to December, shows that tax revenue is flowing in to the government coffers at a 1.1 per cent faster pace ($1.754 billion in six months) than was forecast at MYEFO.

Encouragingly, the increase is quite broadly based.

Fri, 28 Feb 2014  |  

With today's $800 million borrowing from the Federal government, the total amount of gross borrowing has topped $50 billion - $50.65 billion to be precise - since the election in September last year.

The government has had to borrow to cover the existing deficit as well as to cover some of its decisions on 'border protection' and the $8.8 billion is spent on the reserves of the Reserve Bank of Australia.

The total amount of gross debt on issue stands at $300.6 billion, a record high and up some $27.4 billion since the election.

Wed, 26 Feb 2014  |  

Adam Smith, the father of economics, noted:

• "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from regard to their own interest".

So too Australian farmers.

Tue, 25 Feb 2014  |  

It seems most of the market has missed it, but the Australian dollar has already had its sell-off, dropping from 110 US cents in July 2011 to 86.60 cents just last month. The peak to trough fall is over 20%.

Down at around 87 or 88 cents was the time to get in because the pick up, back to around 90 cents at the moment, is just the start of trend that should see the AUD move back to 95 cents and then above parity.

Mon, 24 Feb 2014  |  

UPDATE 1.20pm, Canberra time:

Aussie dollar now 0.8945; US stock futures down 0.2 per cent, Chinese stocks down 2 per cent, European stock futures down 0.5 to 1 per cent. Market assessing the G20 growth objective as useless, meaningly and unreachable. Hot air swallowed by an easily plied few, but not the markets.   SK

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It's Monday morning and financial markets are passing their judgment on the G20 Finance Ministers and Central Bank Governor's meeting in Sydney over the weekend.

The headline grabbing quest for an additional 2 per cent economic growth over 5 years for the world economy has been met with nonchalant indifference. US stocks futures are a piddling 0.1 per cent higher, recouping a fraction of the 0.3 per cent fall that was registered on Friday; commodity prices are flat; and in what should be a super-charging development for the Australian dollar – stronger global economic activity – the Aussie is less than 0.1 per cent higher at 0.8980.

Fri, 21 Feb 2014  |  

The Abbott government just borrowed a further $800 million, which brings the cumulative total of gross borrowings since 9 September 2013 to $48.85 billion.

The Australian Office of Financial Management has indicated it will borrow a further $1.8 billion next week which will bring the amount of gross debt issued since the election to over $50 billion in just over five months.

Thu, 20 Feb 2014  |  

This article was first published in The Melbourne Review https://www.melbournereview.com.au/commentary/article/joe-hockey-treasury-or-trickery 

 

In the move to a budget surplus, how much is Joe Hockey's prowess as Treasurer and how much is trickery?

The Abbott government's chances of re-election in 2016 will be driven by the budget next year.

On 12 May 2015, Treasurer Joe Hockey will deliver his second budget and in doing so, he will announce that the budget is back on track, the Labor mess has been cleaned up and that for 2016-17 and beyond, there will be budget surpluses.

Fri, 21 Feb 2014  |  

Treasurer Joe Hockey and Employment Minister Eric Abetz must be delighted with the current structure of the industrial relations system and the degree of flexibility in the labour market.

Recent labour force data have confirmed a near text book degree of flexibility in wages. At a time when employment growth is softening and the unemployment rate has been edging up, there has been a slowing in the pace of wages growth.

Here are the facts.

Tue, 18 Feb 2014  |  

The $882 million tax 'refund' to News Corporation is a lot on money.

Browsing through the budget papers puts some context on what $882 million can buy.

THE LATEST FROM THE KOUK

My house price bet with Tony Locantro - an update

Mon, 01 Apr 2019

This article first appeared on the Yahoo Finance web page at this link: https://au.finance.yahoo.com/news/aussie-property-crash-looking-even-unlikely-heres-021138614.html 

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My house price bet – I’m very happy and getting ready to collect

I recently made a bet with Tony Locantro, Investment Manager with Alto Capital in Perth on the extent to which house prices would fall over the next three years.

Just to reiterate, the bet centred on Locantro’s view that prices would drop 35 per cent or more by the end of 2021 from the peak levels in 2017, a forecast that looked absurdly pessimistic given the raft of factors that influence house prices over the course of years.

For Mr Locantro to win the bet, house prices measured by the Australian Bureau of Statistics on a quarterly basis in either Sydney, Melbourne or for the average of the eight capital cities would need to fall by 35 per cent or more from the peak levels by the time the December quarter 2021 data are released. The ABS released the latest residential property price data last week which presents an opportunity to see how the bet is unfolding, admittedly with three years to go until it is settled.

As everyone knows, house prices are falling in most cities, reversing part of the boom over several decades.

Get ready for a cash rate cut in April

Mon, 25 Mar 2019

This article first appeared on the Yahoo Finance website at this link: https://au.finance.yahoo.com/news/get-ready-cash-rate-cut-april-193244245.html

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Get ready for a cash rate cut in April

The data is in and it is compelling.

The Australian economy is faltering and the risk is that it will weaken further if nothing is done to address this decline.Not only has there been recent confirmation of a per capita GDP recession – that is, on a per person basis the economy has been shrinking for two straight quarters – but inflation is embedded below 2 per cent, wages growth is floundering just above 2 per cent, house prices are dropping at 1 per cent per month and dwelling construction is in free fall.

Add to this cocktail of economic woe an unambiguous slide in global economic conditions, general pessimism for both consumers and business alike and a worrying slide in the number of job advertisements all of which spells economic trouble.Blind Freddie can see that there is an urgent need for some policy action. And the sooner the better.For the Reserve Bank of Australia, there is no need to wait for yet more information on the economy.

It has been hopelessly wrong in its judgment about the economy over the past year, always expecting a growth pick up “soon”. Instead, GDP has all but stalled meaning that inflation, which is already well below the RBA’s target, is likely to fall further.In short, no. It is not like a 25 basis point interest rate cut on 2 April and another 25 in, say, May or June will reignite inflation and pump air into a house price bubble.

Such a claim would be laughable if there are any commentators left suggesting this.