Each week, I jot down interesting bits and pieces as I come across them, like a scrapbook I guess, and I use it to build a picture of what I think is going on.
In recent months I’ve started forwarding it around to friends and mentoring students. Friends started forwarding it to friends, and I’m getting more requests to join the distribution list, even though I haven’t officially set one up.
So anyway, I thought, why not just share it with everyone. It doesn’t cost me anything since I’m doing it anyway. And the more knowledge we have, the better off we all are, right?
So welcome to The Giaan Investor Review Report. This is just a hodge-podge of whatever data and news I find interesting. Sometimes I’ll give a little commentary on what I think it means. Sometimes I won’t.
Give it three mins. Read the stuff that interests you, and you’ll be as well-informed as any analyst out there.
Auction Clearances still pumping
Holding around record levels. 87% in Sydney. 83% in Melbourne. Tubthumping. The market has never seen anything like it.
(I’m starting to wonder if there’s been a cultural shift towards auctions… Is the market really this strong?)
House prices strong, but increasingly Sydney-centric
Latest RP Data shows Ozzie houses growing at 8.1% y/y. But Sydney is the main story, growing at 14.4%. Melbourne gets silver at 7%. Bris gets bronze on a barely also-ran 2.5%. Perth was flat. Darwin fell.
City narratives are dominating national stories.
May rate-cut is on
The odds are shortening for a rate-cut in May, with renowned bank-watcher (and some say the RBA’s leak distribution channel of choice) Peter Martin writing in the SMH:
Concern about a deteriorating economic outlook and a resurgent Australian dollar will force the Reserve Bank to cut interest rates on Tuesday…
Among the concerns driving the bank is a realisation that unless it cuts its cash rate on Tuesday, financial markets will stop believing that it is prepared to cut and push the dollar even higher.
Of most concern to the bank is new data on business investment plans, which shows that not only is mining investment set to fall sharply in 2015-16 but that non-mining investment is expected to fall as well, despite the talk about new economic drivers emerging to take the place of mining.
Although the Bank is concerned about the effect of another cut on Sydney house prices, it is prepared to rely on its sister regulator, the Australian Prudential Regulation Authority to ensure banks do not cut their lending standards…
The RBA is acutely aware that the upcoming federal budget will do little to boost the economy…
The RBA is playing chicken with the markets. If they don’t move, the dollar pumps higher, and no one believes anything they say. At the same time, Canberra is in Austerity mode, so no help there.
(Martin has picked the last two cuts.)
Prices give them lots of room to cut if they want to:
The ABS says the cost of living is up a piffling 0.9%. Inflation and rumours of inflation seem banished from the earth. At the same time, wages are up 1.3%, so Aussies are (technically at least) better off.
Iron Ore Prices Jump… a little.
Iron ore prices ended the week up 20% on their recent trough. It’s enough to put some high-cost miners (like Atlas and FMG) back in the black, but in the scheme of things isn’t much to write home about.
Here’s a sobering thought: Deloitte Access Economics reckon that falls in the iron ore price in the past 6 months (which feeds into profits and therefore taxation revenue) have left such a gaping hole in the budget, that even if you extended the GST to all fresh food, it wouldn’t cover the shortfall. Ouch.
Negative Gearing Aussies approach critical mass
According to the ATO, there are now 1,967,260 negative gearing property investors across Australia.
Whatever you think about neg gearing, 2 million voters is a political force to be reckoned with.
Govt get serious about foreign purchases
Abbott has announced plans for legislation to crack down on illegal foreign buying, including the potential of jail time. Not a moment too soon. Should be before parliament by June, and taking effect from December. I’ll cover the details later this week.
White-sex sells property
Here’s something cute. What do you do when you’re having trouble moving apartments in China? Get foreigners to stand around in their underpants for no good reason. Looks like it works.
There you go. What do you think? Is that useful to you?
Have a great week