Finance News

Market volatility is the new COVID-normal

Posted on Thursday, December 2, 2021
Market volatility is back! And whilst December is historically a strong month for global share markets, this year could be different. Last night the Dow Jones was up more than 400 points, then the news hit that the COVID-19 Omicron variant had turned up in California. This sent the market into panic mode, falling 500 plus points at the close. And this is just a day after the head of Moderna said existing COVID-19 vaccines may not be as effective against the Omicron variant, which is now appearing in a growing number of countries around the world.   Experts are saying it's premature to assume that Omicron could derail economic growth, but COVID is a winter disease and markets are always looking forward, now to the northern winter. So what does all this mean for you?   Firstly, volatility can mean opportunity. Depending on your personal circumstances and risk profile, there might be opportunities to take advantage of the fluctuations. If that’s you, we’re happy to he ... Read the rest of entry »

Where to for interest rates? Watch New Zealand.

Posted on Wednesday, November 24, 2021
News out of New Zealand today is that their Reserve Bank has lifted interest rates for the second month in a row. The cash rate across the ditch is now at 0.75%, while in Australia it remains at 0.1%. The Reserve Bank of New Zealand offered the below as reasons for the rate rise: New Zealand’s public health restrictions are easing as the country transitions into the COVID-19 Protection Framework, which will enable greater mobility of people, and goods and services.  Underlying economic strength remains supported by aggregate household and business balance sheet strength, fiscal policy support, and strong export returns. Capacity pressures have continued to tighten. For example, employment is now above its maximum sustainable level. A broad range of economic indicators highlight that the New Zealand economy continues to perform above its current potential. The RBNZ’s overall concerns are around labour shortages, and a property market that has defied gravity. They ... Read the rest of entry »

Spend or save? What does your summer look like?

Posted on Friday, November 19, 2021
There are some things we can control, and some things we can’t.
Last week’s article on the seemingly constant increases in insurance premiums, is an example of something we can’t control. Costs like this are very frustrating when trying to budget and plan.
But one thing we can control, is our discretionary spending.
Coming out of lockdown and into summer, retailers, restaurants, and other consumer-based businesses are banking on us opening our wallets and splashing our cash.

And if the US example is anything to go by, it’s looking good for those businesses. Retail sales in the US in October were up 1.7%, with Walmart and Home Depot both reporting massive gains.
From a wider perspective, these strong retail numbers are also a strong indicator that the public is confident to spend money, and that the global economy is recovering from the pandemic.

So what about you? Do you think you will spend more this Christmas than previous years?

Why are my insurance premiums always going up?

Posted on Thursday, November 11, 2021
It's almost become an annual event: waiting to learn how much your insurance premiums have increased by. Many of us have untold numbers of insurance policies, including car, home, contents, life, TPD, pet, business, the list goes on and on. And every one of these seems to have a steady year-on-year premium increase that's contributing to the ever-growing cost of living, while wage growth remains essentially stagnant. So why do insurance premiums increase every year? It's a pretty simple answer. Every time someone makes a claim, the insurer pays out, and given insurers are businesses, they want to maintain and grow their profits, so to cover the cost of payouts, they have to increase their premiums. As an example, here's MLC's rate increases for this year: Death cover (stepped and level premiums): up 3.5%. TPD: up 3.0%. TPD – Additional Rate changes: up 15%. Critical Illness: up 15%. Income protection (stepped and level premiums): up between 5-35%. One way t ... Read the rest of entry »

Inflation's up, our dollar's up, what about interest rates?

Posted on Friday, October 29, 2021
A ten second economics lesson: as inflation goes up, the yield of bonds goes up, with the global expectation that interest rates will also go up. But in Australia that’s happening any time soon. Inflation is a critical economic measure that’s reported quarterly. But in my view, it needs to be reported monthly. Despite that, yesterday’s underlying annual CPI rate came in higher than the RBA expected. It landed at +2.1% for the September quarter which is first time since 2015 that the actual rate has snuck into the RBA target range. The general view now is that the RBA will cease quantitative easing by mid next year and increase interest rates in the first half of 2023. The spike in petrol prices and the jump in the cost of building a new house and renovations and the cost of shipping have soared. Any outsized price jumps - and declines - are cut out of the CPI, then recalibrated. What is left is the ‘trimmed mean’ – the RBA’s preferred measure. ... Read the rest of entry »

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