Blog

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.

Mon, 17 Feb 2014  |  

In 2012-13, average earnings for a worker in paid employment in Australia were approximately $57,000 for the year.

On those earnings, the income tax plus the Medicare levy was approximately $10,925.

The tax refund to News Corporation reported in today's AFR, as it won a legal battle "from a series of paper shuffles between subsidiaries", as the AFR's Neil Chenoweth put it, was $882 million.

This $882 million from "paper shuffles" is equal to the income tax paid, including the Medicare levy, for around 80,700 workers on average incomes.

Just sayin'.

Mon, 17 Feb 2014  |  

There are lots of people who spend $2,000 each year and more going to concerts, plays, movies and the opera. But is the cost of these tickets dead money or money well spent?

That few thousand dollars no doubt provides a good dose of inspiration and entertainment in the delights of Carmen, One Direction, Mary Poppins, The Summer of the Seventeenth Doll, Hamlet and a mix of the Hollywood blockbusters and fringe movies that are always a bit quirky.

Most who spend a chunk of their hard earned cash on any such array of cultural fulfillment will no doubt think it money well spent.

But is it?

Fri, 14 Feb 2014  |  

The Abbott government borrowed a further $800 million today. This brings the amount of gross government debt issued since the election in September 2013 to $47.25 billion.

Allowing for the fact that some of this borrowing is in the form of short term T-Notes and covers bond maturities which means there is some double counting in the new borrowing total, the amount of total gross government debt has increased by $26.1 billion to $299.2 billion since the election.

THE LATEST FROM THE KOUK

The houe price bet is on! Tony Locantro takes the offer

Fri, 21 Sep 2018

While Martin North from DFA rejected my generous offer to have a wager based on his call for a 40 to 45 per cent fall in house prices, Tony Locantro, an Investment Manager with Alto Capital in Perth has decided to take up the offer on the same terms that I offered Mr North.

Specifically, we are wagering $15,000 to $2,500 that Sydney or Melbourne or national wide house prices will or will not fall by more than 35 per cent from their peak at any stage before and up to the December quarter 2021.

The measure will be based on the Australian Bureau of Statistics Residential Property Price Indexes, Eight Capital Cities, Catalogue No. 6416.0.

This means that if, at any stage the price index for any of Sydney, Melbourne or the aggregate eight capital cities prices is down 35.0 per cent or more, I will give Tony $15,000 cash. Conversely, if by the time the December quarter 2021 data are published and the peak to trough decline is 34.9 per cent or less in Sydney, Melbourne or the eight capital cities, Tony has to give me $2,500.

Who knows, it might be the start of a wonderful friendship. We have added a nice informal touch – when the cash is handed over, the winner will buy a dinner with a nice bottle of red to console the loser.

I will be providing regular updates as the numbers roll out.

Trump boosts US stocks with borrowed government money

Thu, 20 Sep 2018

This article first appeared on the Yahoo 7 Finance website at this link: https://au.finance.yahoo.com/news/trump-boosts-us-stocks-borrowed-government-money-011637215.html 

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Trump boosts US stocks with BORROWED government money

US stock prices continue to trade at near record highs and a lot of the recent rise has a lot to do with the policies of President Donald Trump.

The surge in the Dow Jones Industrial Average has been phenomenal. Since the November 2016 Presidential election, the Dow Jones is up around 50 per cent despite a few hiccups at the start of 2018 as the US Federal Reserve hiked interest rates and the threats of a US trade war turned into a reality.

The rise in US stocks, whilst impressive, is built on all the wrong things. ‘Wrong’, that is, in terms of sustainability.

As President, Donald Trump has delivered a range of tax cuts that have a total cost to the budget of around US$1.5 trillion. This one-off, impossible to replicate policy like any other policy that dumps cash into the economy has underpinned stronger economic growth and a temporary lift company profits. The tax changes has seen US companies engage in a record level of stock buy-backs which by design, has been a powerful driver behind rising share prices.

The problem with the Trump tax cuts is that every cent of the US$1.5 trillion has been funded with money borrowed by the government.

Such is the destruction to the US budget, that the US Congressional Budget Office is now estimating the US budget deficit to average a staggering 4.8 per cent of GDP in every year in the decade from 2018 to 2028. When Trump became President, the budget deficit had narrowed to just 2.5 per cent of GDP.