Finance News

Happy new financial year!

Posted on Monday, July 1, 2019
At the stroke of midnight just a few hours ago, we put last year behind us and took our first strides into the future. Overall, I think FY2019 was a good year, with significant positive momentum since Christmas, and in particular following the federal election result in May. This is borne out by the numbers, with a 10% slump in Q2 followed by 18% growth in the stock market across Q3&4. It’s been a nervy time for investors over the past 12 months, with a downturn in the property market during the first three quarters of the financial year. Therefore, investors chasing returns have had little choice but to turn to the stock market, which despite the doom and gloom, has in many cases yielded good returns. BHP is up 34% this year, Rio Tinto up 38%, Fortescue up 132%, CBA up 20%, Telstra up 56%, Transurban up 30%, and property developer Mirvac up 52%. Despite this, the RBA remains concerned about the lack of wage growth across the country with most people’s income barely keeping up with inflati ... Read the rest of entry »

The rate cut we had to have

Posted on Tuesday, June 11, 2019
Last week’s interest rate cut was the cut we had to have.   And in my opinion it’ll be the first of two this year, with the second coming either in August or October.   The cut should flow through to your accounts towards the end of the month, with each of the Big Four cutting their variable rates in some capacity.   Westpac and ANZ failed to pass on the full cut this time, though I expect that they’ll even out when that second cut comes later in the year.   The result of the cut – along with the Coalition’s election victory consigning changes to negative gearing and franking credits to the dustbin of history – is that the economy is feeling a bit more positive.   This should lead to business feeling a little wealthier and the advantage of that for small business is the opportunity to take advantage of the government’s $30,000 instant asset write-off scheme, so we should see a spike in spending between now and June 30.   The f ... Read the rest of entry »

The RBA is almost certain to cut rates tomorrow

Posted on Monday, June 3, 2019

An interest rate cut is what we need and tomorrow I think we will get it.

I have predicted correctly since August 2016 when I predicted the cut, and tomorrow I am predicting another one.

Weak inflation data is certainly a factor, but unemployment rising to 5.2% was the final straw.

My retail clients are doing it tough, with high rents and another increase to the minimum wage next month, adding to the election campaign consumer spending freeze.

The Reject Shop is an example. Last week they announced more store closures, reduced profit and the CEO's resignation.

If you’re a dollar watcher it may drop to 68 US cents, however the cut has been priced into the AUD as it has the share market.

The Reserve Bank meets tomorrow. Watch this space.

GST take is down, interest rates likely to follow

Posted on Monday, May 27, 2019
Are you paying your GST? I certainly am! Despite this, a slowdown in GST revenue as shoppers shut their wallets is giving fresh impetus to the Reserve Bank to drive ahead with cuts to official interest rates, while forcing the Morrison government to rely on workers and their superannuation to repair the budget. A breakdown of Finance Department budget figures reveals GST revenue, a barometer for the health of consumers, is running behind the government's most recent forecasts in a development that will also hit the bottom line of every state and territory. Our share market has rallied in the past week with many sectors aided by the status quo being maintained on income tax, capital gains tax, franking credits and negative gearing following the Coalition's shock election win. However, trade tensions between the US and China remain frosty as China has denounced comments from US Secretary of State Mike Pompeo, confirming there is no connection between Huawei CEO and Beijing. Wh ... Read the rest of entry »

We are just as surprised as you!

Posted on Tuesday, May 21, 2019
We are just as surprised as you! Last week we were drafting franking credit emails, looking at alternative options for retirees, and contemplating negative gearing changes. Now all of that is in the bin - for the moment. The next issue for the Coalition is that given that they went into the election with a very modest set of policies, how they will govern from here? What are their big ideas for Australia? What kind of government will this be? The Coalition should not allow this unexpected triumph to be an excuse for complacency on their policy platform, or how they conduct debate within their parties. The Coalition’s surprise election win has given local stocks a healthy shot in the arm, sending the Australian share market surging to a fresh 11-year high on Monday. Bill Shorten and his proposed changes to negative gearing, capital gains tax and franking credits had been perceived by the market as detrimental. The challenge will now be for Scott Morrison to get his tax agenda through the pa ... Read the rest of entry »

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