Blog

Wed, 29 Jun 2016  |  

This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/house-prices-are-falling-232920240.html 

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Are falling house prices masking something more worrying?

For Australia as a whole, the fall is small, at just 0.2 per cent in the March quarter according to official data from the Australian Bureau of Statistics.

This nationwide picture masks something a little more worrying across a number of cities which are showing more significant price falls. This means some buyers are risking negative equity in their house, which means that the value of the mortgage is larger than the value of the property.

In Perth, where the unemployment rate has almost doubled over recent years, the ABS data show housing prices falling 4.8 per cent since the peak in the first half of 2014. Prices are now back to the level of early 2013 meaning that those who have bought a house in the last three years in Perth have either only just broken even – at best – or have lost money.

Wed, 29 Jun 2016  |  

This article first appeared on The Guardian web site at this address: https://www.theguardian.com/business/2016/jun/27/australia-must-consider-fiscal-stimulus-if-brexit-crisis-hurts-the-gobal-economy 

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Australia must be ready to pump cash into the economy if Brexit bites

Brexit is important for Australian policymakers. Whichever side wins the 2 July federal election will need to have policy pragmatism to deal with the potential fallout.

With the British people electing to permanently destroy their wealth, incomes and living standards by voting to leave the European Union, global economic risks have intensified. One only has to witness the savage reaction in financial markets as it became apparent the “Leave” vote was winning.

There were several trillion dollars of value lost to global stock markets, the yield on government bonds fell to never-before-seen levels and currency markets went into meltdown, with the British pound dropping more than 10% to reach its lowest level since 1985.

Australia will not be immune from the fallout from the Brexit vote.

Tue, 28 Jun 2016  |  

Here is a terrific ABC TV The Hack program The War of Young People.

I reckon it was worth a look. Here is the link:  http://iview.abc.net.au/programs/hack-live/DO1527H001S00#playing    

Mon, 20 Jun 2016  |  

Prime Minister Malcolm Turnbull will be on Q&A tonight and let’s hope that at least a few of the questions cut to the key points of economic management. With the economy confronting a range of economic challenges, here are nine questions that Mr Turnbull should be asked.

Tue, 14 Jun 2016  |  

This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/why-negative-gearing-makes-little-difference-to-house-prices-220614834.html 

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Why negative gearing makes little difference to house prices

Negative gearing makes little difference to house prices.

Other factors such as new construction, demand from population growth, the unemployment rate and the overall business cycle are far more important determinants of house price changes than tax rules. One only has to look at the recent capital house price trends for unambiguous proof.

Since January 2015, Sydney house prices have risen by around 20 per cent. Over the same timeframe, Perth house prices have fallen by around 9 per cent.

This massive 30 per cent differential between Sydney and Perth house prices in just 18 months, has occurred with the existing negative gearing and capital gains tax laws in place. Nothing has changed in tax policy over that time. Quite plainly, something other than negative gearing rules are impacting on house prices.

Thu, 09 Jun 2016  |  

This article first appeared on the Yahoo 7 website at this address: https://au.finance.yahoo.com/news/-live-within-our-means---self-serving-clap-trap-222729935.html 

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'Live within our means?' Self-serving clap-trap!

Prime Minister Malcolm Turnbull might as well be talking to a brick wall as he rails against spending.

In recent days, Turnbull has been running hard with the well-worn cliché that “every Australian needs to live within their means”. It is a political tactic designed to belt the Labor Party on its spending proposals, even though as we saw in the budget last month, the Turnbull government is planning to boost spending and run budget deficits for the next five years.

Let’s take a step back. Australians living within their means?

What a load of poppycock!

According to data from the Reserve Bank of Australia, since the September 2013 election the household sector has been borrowing money like a proverbial drunken sailor.

Household debt has risen debt by $247 billion in less than three years. That’s a rise in household debt of 17 per cent in total or an extra $8 billion a month, every month, since the election.

Tue, 07 Jun 2016  |  

This article first appeared on The Guardian website at this address: https://www.theguardian.com/business/2016/jun/04/the-anti-business-labor-hyperbole-wrong-just-look-at-the-facts 

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The anti-business Labor hyperbole is wrong. Just look at the facts

There is a budding theme in the election campaign that the Labor party is “at war with business” because it will reject Coalition policy cutting company taxes and will hold a royal commission into the banking sector.

But it’s time to nip that false perception in the bud.

The anti-business Labor hyperbole and the implied pro-business credentials of the Coalition flies in the face of the performance of the corporate sector when each side of politics has been in government over the past eight years.

An anti-business government would drive business investment and company profits lower, while a pro-business government would do the opposite.

Australian Bureau of Statistics data released over the past few days shed a stark light on private sector business investment and company profit trends over the past few years. It shows that rather than being anti-business, investment and profits boomed under Labor, and rather than being pro-business, they have collapsed under the Coalition.

Here are the facts.

Mon, 06 Jun 2016  |  

It’s almost half a year since RBS analyst Andrew Roberts cranked out his headline seeking ‘sell everything’ recommendation for markets. And oh how wrong he has been.

My offer to him, to have some skin in the game of such a dramatic and massive forecast, was rejected. When we see how things are playing out, it is no wonder he ran away, unwilling to back up his view.

Here is the offer I made to Roberts: http://thekouk.com/blog/sell-everything-my-challenge-to-andrew-roberts-of-rbs.html 

The scorecard this morning is:

The Kouk   10
Roberts       1

Recall that to win, Roberts only had to get six out of 11.

The sole market where Roberts is ahead is the Nikkei which is down 3.2 per cent.

The average change is all 11 items is a gain of 12.9 per cent.

Sat, 04 Jun 2016  |  

This article first appeared on the Yahoo7 Finance web page at this address: https://au.finance.yahoo.com/news/burst-of-good-news-gives-rba-plenty-to-ponder-235236967.html 

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Burst of good news gives RBA plenty to ponder

The RBA Board meets next week with a flood of new information before as it sits down to consider the next step for monetary policy.

Since the last meeting of the RBA, when it surprisingly cut interest rates to a fresh record low of 1.75 per cent, the economic news has been enlightening.

Most of the important news has been strong.

GDP growth was 1.1 per cent in the March quarter and 3.1 per cent over the year. Growth is back at trend and lifting.

House prices surged 1.6 per cent in May to be up 5 per cent since the start of the year and up 10 per cent from a year ago.

Employment rose 10,800 in April and the unemployment rate remained at 5.7 per cent, a two and a half year low.

There was some concerning news, although not all that surprising, was released with the slump in business investment and company profits continuing. This continued the trend evident over the past few years even though it has not been so bad to derail the overall economy. There seems little to no chance the RBA will move interest rates again next week, or in fact again in the cycle.

Sat, 04 Jun 2016  |  

While the bulk of the focus from the March quarter national accounts was on the remarkably good 1.1 per cent growth in real GDP, buried in the data tables was information on the amount (volume) of tobacco consumed by the household sector.

The news on smoking was just fantastic.

It revealed that the consumption of tobacco fell by 2.8 per cent in the March quarter building on falls in each of the previous six quarters.

Since the plain packaging laws for cigarette packets was introduced in December 2011, the volume of tobacco consumed in Australia has fallen a staggering 27.3 per cent.

Think about it - for every 100 packets of cigarettes that were sold at the end of 2011, now only 73 are being sold. 

With population growth of around 7 per cent, that is a one-third fall in per capita smoking.

THE LATEST FROM THE KOUK

Are falling house prices masking something more worrying?

Wed, 29 Jun 2016

This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/house-prices-are-falling-232920240.html 

-----------------------------------------

Are falling house prices masking something more worrying?

For Australia as a whole, the fall is small, at just 0.2 per cent in the March quarter according to official data from the Australian Bureau of Statistics.

This nationwide picture masks something a little more worrying across a number of cities which are showing more significant price falls. This means some buyers are risking negative equity in their house, which means that the value of the mortgage is larger than the value of the property.

In Perth, where the unemployment rate has almost doubled over recent years, the ABS data show housing prices falling 4.8 per cent since the peak in the first half of 2014. Prices are now back to the level of early 2013 meaning that those who have bought a house in the last three years in Perth have either only just broken even – at best – or have lost money.

Australia must be ready to pump cash into the economy if Brexit bites

Wed, 29 Jun 2016

This article first appeared on The Guardian web site at this address: https://www.theguardian.com/business/2016/jun/27/australia-must-consider-fiscal-stimulus-if-brexit-crisis-hurts-the-gobal-economy 

---------------------------------------------

Australia must be ready to pump cash into the economy if Brexit bites

Brexit is important for Australian policymakers. Whichever side wins the 2 July federal election will need to have policy pragmatism to deal with the potential fallout.

With the British people electing to permanently destroy their wealth, incomes and living standards by voting to leave the European Union, global economic risks have intensified. One only has to witness the savage reaction in financial markets as it became apparent the “Leave” vote was winning.

There were several trillion dollars of value lost to global stock markets, the yield on government bonds fell to never-before-seen levels and currency markets went into meltdown, with the British pound dropping more than 10% to reach its lowest level since 1985.

Australia will not be immune from the fallout from the Brexit vote.