Blog

Mon, 24 Jul 2017  |  

 I am thrilled to be one of the speakers at The Money for Life event in Sydney on Saturday 7 October.

Book tickets via this link: https://www.quadrant2.net/

As the link suggests, it’s a seminar that is straight-talking, no nonsense financial information. It is great to see that there is no pushy marketing or get rich quick schemes, just a range of broad but in depth look at the things that have proven to be wealth enhancing strategies over many years. What is the best way to maximise your wealth both in the short term, but also, to have in place a framework of ideas to maximise the chances of building a decent financial nest egg over the longer run. 

Book now.

Wed, 19 Jul 2017  |  

This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/downside-aussie-dollar-going-040628723.html 

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The downside of the Aussie dollar going up again

The Australian dollar has powered to a two year high above 78 US cents with the rise mainly driven by a sharp fall in the US dollar, amid signs of weaker economic growth in the US.

For some Australian economists, this rise of the Australian dollar, if sustained, is reckoned to be a restrictive force for the Australian economy which risks snuffing out some of the recent economic news pointing to a moderate pick-up in activity.

While a higher value for the Australian dollar does generally trim the rate of economic growth as lower priced imports take business away from local producers and exporters find it a little harder to compete in the international trade market, there are some good reasons to think the current Australian dollar rise will not be a major problem.

Think of it this way.

If the Australia dollar was in fact ‘over-valued’, how would this show up in the real world or the real economy?

In an environment of a floating exchange rate for the Australian dollar, the answer is rather simple.

Wed, 19 Jul 2017  |  

This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/downside-aussie-dollar-going-040628723.html 

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The downside of the Aussie dollar going up again

The Australian dollar has powered to a two year high above 78 US cents with the rise mainly driven by a sharp fall in the US dollar, amid signs of weaker economic growth in the US.

For some Australian economists, this rise of the Australian dollar, if sustained, is reckoned to be a restrictive force for the Australian economy which risks snuffing out some of the recent economic news pointing to a moderate pick-up in activity.

While a higher value for the Australian dollar does generally trim the rate of economic growth as lower priced imports take business away from local producers and exporters find it a little harder to compete in the international trade market, there are some good reasons to think the current Australian dollar rise will not be a major problem.

Think of it this way.

If the Australia dollar was in fact ‘over-valued’, how would this show up in the real world or the real economy?

In an environment of a floating exchange rate for the Australian dollar, the answer is rather simple.

Sat, 15 Jul 2017  |  

Despite the turmoil within the Liberal Party and the unrelenting information in the polls showing Labor with a 6 or 8 point lead, the betting markets show Labor to be only luke warm favourites to win the next Federal election.

The current odds for the election, which is likely to be held in the latter part of 2018, but could be held in the first half of 2019are:

Labor  $1.60

Coalition $2.30

Allowing for the bookies margin, the odds show that Labor are a 60 per cent chance to win, with the Coalition 40 per cent. 

Tue, 04 Jul 2017  |  

Click on the link below to see an interview I did with Bloomberg TV - discussing RBA interest rates, the RBA, consumer spending household debt and other things.

Cheers, Stephen

https://www.bloomberg.com/news/videos/2017-07-03/market-economics-crosscurrents-in-aussie-economy-video  

 

 

Thu, 29 Jun 2017  |  

This article first appeared on The Adelaide Review website at this link: https://adelaidereview.com.au/opinion/politics/honourable-loss-still-loss/ 

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An honorable loss is still a loss

There has been a significant misreading of the UK election and Labour’s achievement under Jeremy Corbyn, much like there was for Australian Labor’s election defeat under Bill Shorten.

Political parties need to win government to implement their policy agenda. This obvious statement seems to have been forgotten or ignored in the wake of the British election result where a significant Labour loss was heralded as “a win for Corbyn”, “the death of neo-liberalism” and had a lesson in that politicians “need to start listening” to the people.

This is a significant misreading of winning and losing an election.

UK Labour lost.

The Conservatives won and have formed government. Specifically, the Conservatives won 318 seats, Labour have 262 seats, some 56 fewer than its main opponent. To be sure, there are a range of smaller parties holding the rest of the seats and a coalition is needed for a government to be formed, given that 326 seats are needed for an absolute majority. It is clear that the Conservatives have easily cobbled together such a coalition that will see it remain in government, able to pursue its agenda with very little in the way of compromise.

Jeremy Corbyn and Labour, on the other hand, will remain in opposition and will implement none of its agenda. Zero. Not one part of Labour’s socially progressive platform on health, welfare, tax or anything else will become law despite Corbyn’s mythical “win” and the “death of neo-liberalism”.

Wed, 28 Jun 2017  |  

This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/1395593-072653325.html 

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Yes, we’re rich! Well, sort of

In 2017, Australia’s annual GDP will top $1.8 trillion.

This is $1.8 trillion of goods and services consumed, exported, invested in or otherwise spent in the economy in a 12 month period.

This is an impressive figure for a country of around 24.5 million people, which means annual per capita GDP is approximately $73,500.

When converted into US dollar terms, Australia’s GDP is bigger than Spain (over 46 million people), Mexico (129 million people) and Indonesia (261 million). Australia’s GDP will be little below Russia (144 million people), South Korea (51 million) and then there is a bit of a gap up to Canada (36 million). Of course, after that are the mega-economies that dominate world trade and markets.

But the data goes to show that in per capita terms, Australians are on average, very well off. Rich, in other words.

Sat, 24 Jun 2017  |  

This article first appeared on the Yahoo7 web page at this link: https://au.finance.yahoo.com/news/1381246-234254873.html 

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The Australian stock market is a global dog.

At a time when stock markets in the big, industrialised countries are zooming to record high after record high, the ASX200 index is going no where. So poor has the performance been that the ASX is around 20 per cent below the level prevailing in 2008.

It is a picture most evident in the last few years. Since the middle of 2013, the ASX 200 has risen by just 10 per cent. The US stock market, by contrast, has risen by 50 per cent, in Germany the rise has been 55 per cent, in Canada the rise has been 20 per cent, in Japan the rise has been 45 per cent while in the UK, with all its troubles, the rise has been 15 per cent.

So what has gone wrong?

Fri, 16 Jun 2017  |  

With Tony Abbott and governemnt debt hot news topics at the moment, I thought I would repost this artricle which I wrote in April 2013:

Enjoy, SK

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Here’s a true story. It’s about a man called Tony.

Tony is a hard working Aussie, doing his best to provide for his family. He has a good job, but such is the nature of his work that his income is subject to unpredictable, sharp and sudden changes.

Tony’s much loved and wonderful children go to a private school and wow, those fees that he choses to pay are high. He used to have a moderate mortgage, especially given he was doing well with an income well over $200,000 per annum.

Then things on the income side turned sour.

Tony had a change in work status that resulted in his annual income dropping by around $90,000 – a big loss in anyone’s language.

How did Tony respond to this 40 per cent drop in income?

Well, rather than selling the house and moving into smaller, more affordable premises, or taking his children out of the private school system and saving tens of thousands of after tax dollars, Tony called up his friendly mortgage provider and refinanced his mortgage.

In other words, Tony took on a huge chunk of extra debt so that he could maintain his family’s lifestyle. No belt tightening, no attempt to live within his means, just more debt.

Thu, 15 Jun 2017  |  

This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/article-231056138.html 

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Aussie debt is about to top half a trillion dollars

Australia’s government debt is poised to break through half a trillion dollars. As of last week, it stood at $0.4992 trillion.

Half a trillion dollars, is $500,000,000,000.00 of gross debt on which the government will be paying interest of around $15 billion each year – and that assumes that interest rates remain at the current record lows.

Government debt has been on an upward path since the global financial crisis hit the economy in 2008. The GFC saw a significant fiscal stimulus where government spending increased substantially as it delivered enough support so that Australia avoided a recession. It was text book economics but the price of avoiding recession was a rise in government debt.

More recently, structural changes in the economy have seen chronically weak wages growth and below target inflation locked into the landscape. These trends have undermined government revenue at a time when government spending is still running well above the levels prevailing before the GFC. Efforts of the government to cut its spending is recent budgets have not only failed, but spending is actually rising at a strong rate.

As a result of all of this and some reckless pre-GFC policies that wastefully sprayed money around the economy, the budget has been in deficit since 2008-09 and is set to remain in deficit until at least 2019-20. And while ever the budget is in deficit, gross government debt keeps rising.

THE LATEST FROM THE KOUK

illion: Business forecasts bumper profits in 2018

Mon, 11 Dec 2017

The illion Business Expectations Survey presented a positive outlook for the economy.

Business profits expectations for 2018 are the highest they’ve been since 2011, with companies set to boost employee numbers in the first quarter on the back of the positive outlook, according to illion’s latest Business Expectations Survey.

Data from the survey indicated businesses operating in the Finance, Insurance and Real estate sector had the highest profit expectations approaching the new year, followed by the Transport, Communications and Utilities sector.  The survey shows that overall, the Business Expectations Index is up 25.7 percent on the same period last year and the actual performance of businesses across all sectors is at a 13 year high.

Stephen Koukoulas, illion Economic Adviser, said there were a number of factors driving the positive outlook for 2018. “Corporate profits are getting a boost from lower costs, which are being driven by record low interest rates and on-going low wages growth – which is all occurring at a time of solid gains in the ASX”.

Oz economy: The good, the bad and the ugly

Fri, 08 Dec 2017

This article first appeared on the Yahoo 7 Finance website at this link: https://au.finance.yahoo.com/news/2138618-050543271.html 

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Oz economy: The good, the bad and the ugly

The Australian economy continues to grow, but the pace of expansion remains moderate, being constrained by ongoing weakness in household spending and a slide in housing construction. The good news is further evidence of an upturn in private business investment and stronger growth in public sector infrastructure spending which is providing support for the economy.

At face value, 2.8 per cent annual GDP growth rate is quite good, but the devil in the detail on how that growth has been registered is why there are some concerns about the sustainability of the expansion as 2018 looms.

Household spending remains mired with growth of just 0.1 per cent in the September quarter. It seems the very low wage growth evident in recent years, plus data showing a small rise in the household saving rate, is keeping consumer spending in check.

Making up well over half of GDP, household spending will be the vital element of the economy into 2018. If wages growth remains weak, there seems little prospect of a pick up in household spending. And if household spending remains weak, bottom line GDP growth will be relying on a strong expansion in business investment and public sector demand.