Newsarticles for our Friends, Associates & Clients with kind regards as
follows:- Now is about as good a time as any for a stock take on the economy. And
interestingly many are calling Australia the boom and gloom economy. On the
one hand our economy is still growing – unlike many others, especially in
Europe – and underpinned by a mining boom. In fact the mining boom could be
the biggest in Australia's history, that is, if you judge it in terms of
mining investment as a share of the economy (or GDP). But on the other hand, consumers and businesses are gloomy. So what gives?
It gets down to the fact that the majority of Australians live outside the
areas that are affected by the mining boom. And in those non mining areas,
the news flow has been overwhelmingly negative, not positive. Many have been
focussing on the leadership shenanigans in the Labor Party, questioning the
stability of the minority government. Then there is the uncertainty about
new taxes – mining tax and carbon tax. Add in the other shenanigans in
Europe, the fluky sharemarket, rising petrol prices and a softening economy
and you can understand the downbeat sentiment. What are the positives? Well for consumers the Aussie dollar is still high,
but not everyone is buying goods on the internet or travelling abroad. And
if you are a business owner in manufacturing or retail sectors, you're
probably more likely to be more ambivalent about the currency. And then there is the recent flow of economic data. The economy grew by just
0.4 per cent in the December quarter – hardly awe inspiring. Employment fell
by over 15,000 in February and the unemployment rate rose – admittedly only
from 5.1 per cent to 5.2 per cent. But there have also been a number of high
profile companies shedding jobs. And annual employment growth is close to
the slowest rate recorded in 19 years. Then there is the weak housing market with new home sales at 11-year lows,
dwelling starts slumping almost 7 per cent in the December quarter and home
loans falling in January. And then there is retail spending – up just 0.3
per cent in January with chain store sales up only 2.0 per cent on a year
ago. At this rate, we risk talking ourselves into a growth recession – a period
of sub-trend economic growth which feels in many respects like a recession
but doesn't involve the economy actually going backwards. So what will it take to turn it all around? Better times abroad would help,
lifting our sharemarket, and causing us to re-assess our conservative
attitudes. Aussies need to focus again on the opportunities, not the risks.
And a rate cut from the Reserve Bank wouldn't go astray either. Inflation is
not a threat and the economy is stagnating. So there are few risks about
trimming rates another quarter of a percent. And if conditions started to
lift quicker than expected, a rate cut could always be reversed. The week ahead If it wasn't for the Reserve Bank, investors would face a fairly dull time
over the next week. There are no indicators of note except imports on
Wednesday but there are a number of speeches to be delivered from Reserve
Bank officials. In the US, the housing market takes centre-stage. On Monday the Reserve Bank Governor is in Hong Kong to speak to the Credit
Suisse 15th Asian Investment Conference 2012 on the generic topic "Economic
Conditions and Prospects". This ensures that the Governor has a broad canvas
on which to paint – that is, if there is a subject he wants to raise, this
will be the forum to raise it. On Tuesday, the Reserve Bank issues the minutes of the March 6 Board
meeting, a meeting that elected to leave interest rates on hold. Certainly
no economist had tipped a rate cut at that meeting, but investors will comb
the minutes in an attempt to hone in on the Bank's "hot button" issues. That
may prove fruitless given that the Reserve Bank is in that "happy place" at
present, but it is still a task worth exploring. Also on Tuesday, Reserve Bank Assistant Governor (financial system), Malcolm
Edey, will deliver a speech to the Cards and Payments Australasia 2012
Conference. And on Thursday, the other Assistant Governor at the Reserve Bank (covering
Financial Markets), Guy Debelle, will deliver a speech on Bank Funding to
the Australian DCM Summit 2012. In the US, there is a spattering of key economic statistics to be released
with the housing market very much in the spotlight. On Monday the National Association of Home Builders index is released
alongside the Chicago MidWest regional gauge. And on Tuesday the weekly
reports on chain store sales are issued alongside data on housing starts.
Housing starts broadly bottomed out a year ago and have been slowly
recovering since. Economists tip a flat reading near a 700,000 annual rate. On Wednesday the weekly mortgage market index is released together with data
on existing home sales. Economists tip another modest lift in home sales of
around 2 per cent, continuing the recovery since October 2011. On Thursday the Federal Housing Finance Agency will release its January
index while weekly jobless claims and the leading index are also on the
agenda. The leading index has lifted for four straight months and a 0.4 per
cent increase is tipped for February. And on Friday the February data on new home sales for February is released.
Sales are bumping along the bottom, although the annual rate is tipped to
rise from 321,000 to 327,000 in February. Also of note five Federal Reserve Governors are due to deliver speeches over
the week, providing insights into central bank thinking on a range of
topics. The Federal Reserve Governor delivers two of four lectures to the
George Washington School of Business. Sharemarket, interest rates, currencies & commodities The All Ordinaries index hit cyclical lows of September 26 at 3927.6. In the
5½ months since the All Ordinaries has lifted by 11.4 per cent and is again
bumping up near the 4,400 barrier. This barrier has proven formidable since
August 2011. However you get a sense that if 4,400 breaks, the next test is
4,700 and then 5,000 points. The All Ordinaries Accumulation index has similar issues with the 33,000
mark. The key difference is that the Accumulation index has punctured 33,000
points, but not pushed decisively through the mark. Since the lows in late
September last year, the Accumulation index has lifted by 13.8 per cent. The Accumulation index needs to rise 27 per cent from current levels to hit
the late 2007 all-time highs. Similarly the market capitalisation of the
Australian sharemarket would need to rise 27 per cent to hit the late 2007
highs. The All Ordinaries index needs to rise by around 57 per cent to reach
the November 2007 all-time high. All those figures are in local currency
terms. But a foreign investor, pricing our market is US dollar terms, would see
things far differently. Since the peak in November 2007 the Aussie dollar
has lifted over 14 per cent against the greenback. In other words, for
foreign investors, valuing their Aussie sharemarket investments in US dollar
terms, the All Ordinaries Accumulation index would need to rise by just
11-12 per cent to be at record highs. And while that target appears in reach over the next year, it still is more
challenging than the task in front of the US Dow Jones index. The Dow Jones
is around 1,000 points away from record highs, meaning it would just need to
lift by 7.5 per cent to be back at peak levels. In fact, according to FactSet data, the Australian sharemarket has
under-performed the US market in US dollar, total return, terms over the
past 1, 2 and 4 years but out-performed over the past 3, 5, 7, 10 and 15
years. Given that the US sharemarket was at the epicentre of the global financial
crisis, Australian investors may feel that this represents some injustice.
But the high Aussie dollar has presented a barrier in front of foreign
investors wishing to embrace our market. Around 45 per cent of all
Australian shares are owned by foreigners. Craig James is chief economist at CommSec. Published on: Monday, March 19, 2012 -----Original Message-----
From: Linda [mailto:ljd@ljgrealestate.com.au]
Sent: Sunday, 18 March 2012 3:46 PM
To: 'glenashmore@hn.ozemail.com.au'
Subject: FW: Boom and Gloom? (Quote) to Dear Friends and Associates, Boom and gloom; more housing starts and health beats mining - an action
packed three minutes for this Saturday. 1. Boom & gloom Welcome to the boom and the gloom. Australia has everything going for it
being an ultra-safe country; transparent democracy; a mining boom;
uninterrupted economic growth; limited levels of private and public debt; a
high and rising household savings rate; strong links with Asia and a
currency that generally behaves itself. But the average punter still cannot believe their bad luck. Poor sentiment can be blamed on political wrangling (to put it mildly);
uncertainty about new taxes and then there is of course Europe, a shaky
share market; that scary notion called "structural change" and the bloody
RBA who won't drop the cash rate. Whatever the cause, we need to wake up soon. Paradox of Thrift is what
economists call it - we will talk and save ourselves into a recession. Over half of us believe that the wisest place for savings is in the bank or
paying off debt. Encouragingly real estate is starting to come back into the mix. There are
plenty of good reasons to be looking at property - real prices are stagnant;
the jobless rate low; rental markets extremely tight; rents are rising above
CPI; interest rates are historically low and the amount of resale stock on
the market is now starting to decline. This will lead - sooner hopefully than later - to a wave of new home buyers
entering the market. Investors are likely to lead the charge. 2. More housing starts Further to last weekend's post we anticipate that just 135,000 new dwellings
will be built across Australia this financial year. This is against the
ten-year average of 155,000 new homes built each year. The slowdown is
warranted given the drop in overseas migration during 2009 and 2010 and the
oversupply of new housing in Victoria, South Australia and to some degree in
Western Australia too. But the recent lift in migration is expected to see new housing starts
increase in coming years. Our forecast is for 155,000 new starts across
Australia during fiscal 2013 and up to 175,000 starts during 2013/14. Forget what you read in the press this week, our forecast is contrary to
many other property commentators out there, as we like to drive looking
through the windshield instead of the rear vision mirror. And Queensland looks set to benefit the most. Also despite recent reports
to the contrary, new housing is undersupplied across much of the state. At
present Queensland has a 16% market share of total residential building
across Australia. Our historic average is closer to 25%. We forecast that
new housing starts in Queensland could double (up 46%) over the next two to
three years, rising to 38,000 new starts during 2014. With close to $135 billion worth of new resource projects underway across
the state, coupled with $29 billion worth of new infrastructure projects
being delivered across the south-east corner of the state, the need for new
housing is on the increase. And much of this new supply - close to 70% - will be needed in the triangle
between Noosa, Coolangatta and out to Toowoomba. 3. Health beats mining When it comes to jobs, the health sector has been the boom sector since the
GFC and not mining! Health added close to 235,000 new jobs over the last
four years or 36% of the total jobs created across Australia. By comparison
mining employment lifted by just 110,000, accounting for just 17% of the
650,000 jobs created since 2008 downunder. Yes 650,000 jobs have been created in Australia over the last four years.
Best maybe to reread item one above. The aging population means more workers will be required in health care.
Mining might be booming, but the demand for health-related services will be
bigger, broader and most likely longer lasting. A miner and nurse/doctor
partner household is the way to go! Mining only accounts for a quarter of million jobs or just over 2% of the
workforce. The health sector is five times the size of the mining in terms
of employment.
Best regards,
Linda and Carlos Debello
http://www.ljgrealestate.com.au
http://twitter.com/GillandDebello
http://au.linkedin.com/in/lindajanedebello
http://gillandrealestate.wordpress.com/
http://www.facebook.com/pages/LJ-Gilland-Real-Estate-Pty-Ltd/169194919788253 Confidential email:- The information in this message is intended for the
recipient name on this email. If you are not the recipient please do not
read, copy distribute or act upon the message as the information it contains
may be privileged. If you have received this message in error, please
notify the writer by return email. Thank you very much for your assistance
in this matter and your co-operation.
follows:- Now is about as good a time as any for a stock take on the economy. And
interestingly many are calling Australia the boom and gloom economy. On the
one hand our economy is still growing – unlike many others, especially in
Europe – and underpinned by a mining boom. In fact the mining boom could be
the biggest in Australia's history, that is, if you judge it in terms of
mining investment as a share of the economy (or GDP). But on the other hand, consumers and businesses are gloomy. So what gives?
It gets down to the fact that the majority of Australians live outside the
areas that are affected by the mining boom. And in those non mining areas,
the news flow has been overwhelmingly negative, not positive. Many have been
focussing on the leadership shenanigans in the Labor Party, questioning the
stability of the minority government. Then there is the uncertainty about
new taxes – mining tax and carbon tax. Add in the other shenanigans in
Europe, the fluky sharemarket, rising petrol prices and a softening economy
and you can understand the downbeat sentiment. What are the positives? Well for consumers the Aussie dollar is still high,
but not everyone is buying goods on the internet or travelling abroad. And
if you are a business owner in manufacturing or retail sectors, you're
probably more likely to be more ambivalent about the currency. And then there is the recent flow of economic data. The economy grew by just
0.4 per cent in the December quarter – hardly awe inspiring. Employment fell
by over 15,000 in February and the unemployment rate rose – admittedly only
from 5.1 per cent to 5.2 per cent. But there have also been a number of high
profile companies shedding jobs. And annual employment growth is close to
the slowest rate recorded in 19 years. Then there is the weak housing market with new home sales at 11-year lows,
dwelling starts slumping almost 7 per cent in the December quarter and home
loans falling in January. And then there is retail spending – up just 0.3
per cent in January with chain store sales up only 2.0 per cent on a year
ago. At this rate, we risk talking ourselves into a growth recession – a period
of sub-trend economic growth which feels in many respects like a recession
but doesn't involve the economy actually going backwards. So what will it take to turn it all around? Better times abroad would help,
lifting our sharemarket, and causing us to re-assess our conservative
attitudes. Aussies need to focus again on the opportunities, not the risks.
And a rate cut from the Reserve Bank wouldn't go astray either. Inflation is
not a threat and the economy is stagnating. So there are few risks about
trimming rates another quarter of a percent. And if conditions started to
lift quicker than expected, a rate cut could always be reversed. The week ahead If it wasn't for the Reserve Bank, investors would face a fairly dull time
over the next week. There are no indicators of note except imports on
Wednesday but there are a number of speeches to be delivered from Reserve
Bank officials. In the US, the housing market takes centre-stage. On Monday the Reserve Bank Governor is in Hong Kong to speak to the Credit
Suisse 15th Asian Investment Conference 2012 on the generic topic "Economic
Conditions and Prospects". This ensures that the Governor has a broad canvas
on which to paint – that is, if there is a subject he wants to raise, this
will be the forum to raise it. On Tuesday, the Reserve Bank issues the minutes of the March 6 Board
meeting, a meeting that elected to leave interest rates on hold. Certainly
no economist had tipped a rate cut at that meeting, but investors will comb
the minutes in an attempt to hone in on the Bank's "hot button" issues. That
may prove fruitless given that the Reserve Bank is in that "happy place" at
present, but it is still a task worth exploring. Also on Tuesday, Reserve Bank Assistant Governor (financial system), Malcolm
Edey, will deliver a speech to the Cards and Payments Australasia 2012
Conference. And on Thursday, the other Assistant Governor at the Reserve Bank (covering
Financial Markets), Guy Debelle, will deliver a speech on Bank Funding to
the Australian DCM Summit 2012. In the US, there is a spattering of key economic statistics to be released
with the housing market very much in the spotlight. On Monday the National Association of Home Builders index is released
alongside the Chicago MidWest regional gauge. And on Tuesday the weekly
reports on chain store sales are issued alongside data on housing starts.
Housing starts broadly bottomed out a year ago and have been slowly
recovering since. Economists tip a flat reading near a 700,000 annual rate. On Wednesday the weekly mortgage market index is released together with data
on existing home sales. Economists tip another modest lift in home sales of
around 2 per cent, continuing the recovery since October 2011. On Thursday the Federal Housing Finance Agency will release its January
index while weekly jobless claims and the leading index are also on the
agenda. The leading index has lifted for four straight months and a 0.4 per
cent increase is tipped for February. And on Friday the February data on new home sales for February is released.
Sales are bumping along the bottom, although the annual rate is tipped to
rise from 321,000 to 327,000 in February. Also of note five Federal Reserve Governors are due to deliver speeches over
the week, providing insights into central bank thinking on a range of
topics. The Federal Reserve Governor delivers two of four lectures to the
George Washington School of Business. Sharemarket, interest rates, currencies & commodities The All Ordinaries index hit cyclical lows of September 26 at 3927.6. In the
5½ months since the All Ordinaries has lifted by 11.4 per cent and is again
bumping up near the 4,400 barrier. This barrier has proven formidable since
August 2011. However you get a sense that if 4,400 breaks, the next test is
4,700 and then 5,000 points. The All Ordinaries Accumulation index has similar issues with the 33,000
mark. The key difference is that the Accumulation index has punctured 33,000
points, but not pushed decisively through the mark. Since the lows in late
September last year, the Accumulation index has lifted by 13.8 per cent. The Accumulation index needs to rise 27 per cent from current levels to hit
the late 2007 all-time highs. Similarly the market capitalisation of the
Australian sharemarket would need to rise 27 per cent to hit the late 2007
highs. The All Ordinaries index needs to rise by around 57 per cent to reach
the November 2007 all-time high. All those figures are in local currency
terms. But a foreign investor, pricing our market is US dollar terms, would see
things far differently. Since the peak in November 2007 the Aussie dollar
has lifted over 14 per cent against the greenback. In other words, for
foreign investors, valuing their Aussie sharemarket investments in US dollar
terms, the All Ordinaries Accumulation index would need to rise by just
11-12 per cent to be at record highs. And while that target appears in reach over the next year, it still is more
challenging than the task in front of the US Dow Jones index. The Dow Jones
is around 1,000 points away from record highs, meaning it would just need to
lift by 7.5 per cent to be back at peak levels. In fact, according to FactSet data, the Australian sharemarket has
under-performed the US market in US dollar, total return, terms over the
past 1, 2 and 4 years but out-performed over the past 3, 5, 7, 10 and 15
years. Given that the US sharemarket was at the epicentre of the global financial
crisis, Australian investors may feel that this represents some injustice.
But the high Aussie dollar has presented a barrier in front of foreign
investors wishing to embrace our market. Around 45 per cent of all
Australian shares are owned by foreigners. Craig James is chief economist at CommSec. Published on: Monday, March 19, 2012 -----Original Message-----
From: Linda [mailto:ljd@ljgrealestate.com.au]
Sent: Sunday, 18 March 2012 3:46 PM
To: 'glenashmore@hn.ozemail.com.au'
Subject: FW: Boom and Gloom? (Quote) to Dear Friends and Associates, Boom and gloom; more housing starts and health beats mining - an action
packed three minutes for this Saturday. 1. Boom & gloom Welcome to the boom and the gloom. Australia has everything going for it
being an ultra-safe country; transparent democracy; a mining boom;
uninterrupted economic growth; limited levels of private and public debt; a
high and rising household savings rate; strong links with Asia and a
currency that generally behaves itself. But the average punter still cannot believe their bad luck. Poor sentiment can be blamed on political wrangling (to put it mildly);
uncertainty about new taxes and then there is of course Europe, a shaky
share market; that scary notion called "structural change" and the bloody
RBA who won't drop the cash rate. Whatever the cause, we need to wake up soon. Paradox of Thrift is what
economists call it - we will talk and save ourselves into a recession. Over half of us believe that the wisest place for savings is in the bank or
paying off debt. Encouragingly real estate is starting to come back into the mix. There are
plenty of good reasons to be looking at property - real prices are stagnant;
the jobless rate low; rental markets extremely tight; rents are rising above
CPI; interest rates are historically low and the amount of resale stock on
the market is now starting to decline. This will lead - sooner hopefully than later - to a wave of new home buyers
entering the market. Investors are likely to lead the charge. 2. More housing starts Further to last weekend's post we anticipate that just 135,000 new dwellings
will be built across Australia this financial year. This is against the
ten-year average of 155,000 new homes built each year. The slowdown is
warranted given the drop in overseas migration during 2009 and 2010 and the
oversupply of new housing in Victoria, South Australia and to some degree in
Western Australia too. But the recent lift in migration is expected to see new housing starts
increase in coming years. Our forecast is for 155,000 new starts across
Australia during fiscal 2013 and up to 175,000 starts during 2013/14. Forget what you read in the press this week, our forecast is contrary to
many other property commentators out there, as we like to drive looking
through the windshield instead of the rear vision mirror. And Queensland looks set to benefit the most. Also despite recent reports
to the contrary, new housing is undersupplied across much of the state. At
present Queensland has a 16% market share of total residential building
across Australia. Our historic average is closer to 25%. We forecast that
new housing starts in Queensland could double (up 46%) over the next two to
three years, rising to 38,000 new starts during 2014. With close to $135 billion worth of new resource projects underway across
the state, coupled with $29 billion worth of new infrastructure projects
being delivered across the south-east corner of the state, the need for new
housing is on the increase. And much of this new supply - close to 70% - will be needed in the triangle
between Noosa, Coolangatta and out to Toowoomba. 3. Health beats mining When it comes to jobs, the health sector has been the boom sector since the
GFC and not mining! Health added close to 235,000 new jobs over the last
four years or 36% of the total jobs created across Australia. By comparison
mining employment lifted by just 110,000, accounting for just 17% of the
650,000 jobs created since 2008 downunder. Yes 650,000 jobs have been created in Australia over the last four years.
Best maybe to reread item one above. The aging population means more workers will be required in health care.
Mining might be booming, but the demand for health-related services will be
bigger, broader and most likely longer lasting. A miner and nurse/doctor
partner household is the way to go! Mining only accounts for a quarter of million jobs or just over 2% of the
workforce. The health sector is five times the size of the mining in terms
of employment.
Best regards,
Linda and Carlos Debello
http://www.ljgrealestate.com.au
http://twitter.com/GillandDebello
http://au.linkedin.com/in/lindajanedebello
http://gillandrealestate.wordpress.com/
http://www.facebook.com/pages/LJ-Gilland-Real-Estate-Pty-Ltd/169194919788253 Confidential email:- The information in this message is intended for the
recipient name on this email. If you are not the recipient please do not
read, copy distribute or act upon the message as the information it contains
may be privileged. If you have received this message in error, please
notify the writer by return email. Thank you very much for your assistance
in this matter and your co-operation.
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