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2.Economic forecasts

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15 Feb 2018 (AFR) – Commercial construction to jump 14.6pc as retail leads, Master Builders says

(15 February 2018, AFR, p35, by Michael Bleby) ‘Commercial construction will surge this year on the back of new retail work, offsetting the weak residential and engineering sectors and halting a three-year decline in total building activity. Non-residential work supporting the arrival of new retail entrants such as Amazon and the expansion of operators Costco … Continue reading

15 Feb 2018 (AFR) – ‘Everything looks expensive’: Morningstar’s Daniel Needham

(15 February 2018, AFR, p29, by Sally Patten) ‘Some investors might be dipping their toes back into the sharemarket after last week’s rout, but Morningstar isn’t one of them. The high-profile manager is sitting on a hefty pile of cash and has not begun to deploy any of it, despite the recent falls. “Valuations are … Continue reading

15 Feb 2018 (AFR) – China’s most powerful weapon in Trump trade war may backfire

(15 February 2018, AFR, p12, by Peter Martin, Niu Shuping and Alan Bjerga) ‘As tensions escalate between the US and China, one crop is emerging as the most powerful weapon in a potential trade war: the soybean. China is the biggest buyer of American soybeans, picking up about a third of the entire US crop, … Continue reading

13 Feb 2018 (AFR) – Markets correction: from overdue to overdone? JPMorgan: ‘It’s not the end of the bull market’

(13 February 2018, AFR, p33, by Patrick Commins) ‘Has the correction moved from overdue to oversold? Sentiment has turned from euphoria to something considerably darker in the blink of an eye over the past 10 days. Wall Street’s S&P 500 index suffered its fastest 10 per cent correction since 1950, speaking to the viciousness of … Continue reading

9 Feb 2018 (AFR) – RBNZ expects to hold interest rates at record low until mid-2019

(9 February 2018, AFR, p16, by Tracy Withers) ‘New Zealand’s central bank held interest rates at a record low and projected they would stay there until mid-2019 as inflation remained subdued amid slower economic growth.’ Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

8 Feb 2018 (AFR) – More market mayhem ahead says Principal’s Bob Baur

(8 February 2018, AFR, p29, by Karen Maley) ‘Investors may be rejoicing after Wall Street’s latest rebound, but Dr Bob Baur, chief economist at giant asset manager Principal Global Investors, which manages more than $US453.5 billion ($574 billion) of assets, warns that they’re not out of the woods yet. “I’m guessing that this correction is over, but … Continue reading

7 Feb 2018 (AFR) – Don’t forget there’s good news behind higher bond yields

(7 February 2018, AFR, p39, by Mohamed El-Erian) ‘For something that supposedly was predicted for so long, the move up in US interest rates has attracted lots of attention. It’s been blamed for a violent sell-off in stocks and fuelled warnings not just of an end to the bull market in bonds but, perhaps, also … Continue reading

7 Feb 2018 (AFR) – Are markets overreacting to real economy signals?

(7 February 2018, AFR, p24, Chris Giles, FT) ‘… An initial correction from the Davos peak 10 days ago has turned into something bigger. By the end of last week, the index had fallen almost 4 per cent and closed down heavily on Monday (Tuesday AEDT). The catalyst for the shift was Friday’s US jobs … Continue reading

3 Feb 2018 (AFR) – NAB tips first Sydney house price fall since 2011 – house price outlook slashed

(3 February 2018, AFR, p3, by Michael Bleby) ‘A faster-than-expected deterioration in Sydney has caused NAB to slash its outlook for house prices this year, as investors and foreign buyers pulled back after years of growth-driving activity. The NAB Residential Property Survey Q4 2017 predicts a 2.4 per cent decline in Sydney detached dwelling prices this year, in contrast to … Continue reading

1 Feb 2018 (AFR) – Disinflation appears to have stabilised – Inflation weakness may be easing, say Reserve Bank of Australia hawks

(1 February 2018, AFR, p1, by Jacob Greber) ‘A four-year stretch of disinflation looks to have stabilised, keeping financial markets betting a 50-50 chance the Reserve Bank of Australia will begin slowly hiking official interest rates later this year. The headline consumer price index for the December quarter was below market expectations on Wednesday, but rose … Continue reading

24 Jan 2018 (AFR) – The share price will get there in the end – Because the share price knows best

[COMMENT: This article provides an interesting insight. Some market participants think like this (described below), while many do not. Some people would even say this line of thinking is speculation – investing on an opinion which might be little more than gut-feeling.] (24 January 2018, AFR, p23, by Elio D’Amato) ‘There is a common belief … Continue reading

24 Jan 2018 (AFR) – Manufacturing and construction sectors set to be winners in 2018

(24 January 2018, AFR, p22, by Paul Taylor) ‘As the benchmark S&P/ASX 200 continues its upward march in 2018, it is worth a brief look back at 2017. Last year the local market delivered strong returns despite considerable headwinds. Global political instability, rising US interest rates, increasing levels of government intervention and subdued GDP growth … Continue reading

24 Jan 2018 (AFR) – Record jobs growth predicted on back of weak wage pressures

(24 January 2018, AFR, p4, by David Marin-Guzman) ‘Businesses are predicting low wage growth to continue in 2018, with chief executives’ concerns over wage pressures dropping to their lowest levels in five years. But they have argued moderate wage growth must continue to allow for another year of record jobs growth as investment plans and … Continue reading

23 Jan 2018 (AFR) – Office market booms: 19pc rise in inquiry points to strong 2018, Colliers says

(23 January 2018, AFR, p31, by Michael Bleby) ‘A 19 per cent increase in office leasing inquiries in the final quarter of last year points to continued strong activity this year, according to Colliers International’s latest Office Demand Index report.  Gains in the country’s largest office market of Sydney, along with surging levels of inquiry in … Continue reading

23 Jan 2018 (TheAge) – Sugar hit from Trump tax cuts to boost world economy

(23 January 2018, The Age, p5, Peter Martin) ‘A sugar hit from the Trump administration’s US tax cuts is expected to propel world economic growth to 3.9 per cent in 2018, the best result in eight years. In an update to its forecasts presented to the World Economic Forum at Davos in Switzerland, the International … Continue reading

17 Jan 2018 (AFR) – China is now too big to ignore for investors – Mark Tinker: This is the fourth industrial revolution and Asia is the heart

(17 January 2018, AFR, p26, by Mark Tinker) ‘The two big thematics for this year seem to be a general bullish consensus on economic growth and an expectation of an end to quantitative easing. Most economists are relatively sanguine on inflation, so avoiding being too bearish on interest rates, although with China now increasing global … Continue reading

16 Jan 2018 (TheAge,SMH) – Banks’ bad debt charges to rise in 2018: Fitch

(16 January 2018, The Age, Business, p20, Clancy Yeates) ‘Australia’s major banks face a tougher grind in the year ahead, as charges for bad loans creep up from record lows and the lenders are put under the microscope of a royal commission, Fitch Ratings warns. After the big four chalked up more than $30 billion … Continue reading

11 Jan 2018 (TheAge,SMH) – Fizzling out: World Bank says global economy is set for a decade of gloom

(11 January 2018, The Age, Business, p22, Tim Wallace) ‘The World Bank has joined a growing chorus predicting an end to the global economy’s strong run. Stock prices are high relative to earnings and volatility is at historic lows, warnings that economists traditionally take as signs of overheating. “There is a sense in which financial … Continue reading

11 Jan 2018 (AFR) – How long can this share market boom last? – It’s all about the psychology

(11 January 2018, AFR, p28, by Karen Maley) ‘As investors try to work out how long this stunning share market rally can possibly last, would they be better off consulting the history books, or even leafing through the annals of psychology, rather than listening to economists? The question occurred to me as I read the … Continue reading

10 Jan 2018 (AFR) – Citi chief economist Willem Buiter warns of overdue correction

(10 January 2018, AFR, p28, by Ambrose Evans-Pritchard) ‘The air is becoming treacherously thin for global asset markets at the peak of the cycle and investors should cut their exposure before central banks shut off emergency stimulus, Citigroup’s star economist has warned. Willem Buiter, the bank’s chief economist and a leading theorist on monetary policy, said: … Continue reading

9 Jan 2018 (AFR) – Is the next financial crisis looming: Ross Barry

(9 January 2018, AFR, p26, by Ross Barry) ‘The strong performance of many share markets around the world has led many to speculate that another major correction may not be too far away. History has shown us, over the past 300 years or so, that major corrections have occurred every nine to 10 years, on … Continue reading

8 Jan 2018 (TheAge,SMH) – 2018 ‘the end’ of resources boom as commodity price drops bite

(8 January 2018, The Age, Business, p20, Jennifer Duke) ‘The government has forecast the end of the mining boom, with 2018 marking the tipping point for when producers will see export earnings heading south. In fiscal 2017, the resources and energy sector is tipped to see record high exports earnings. But this is expected to … Continue reading

5 Jan 2018 (AFR) – Australian dollar outlook in 2018 splits forecasters

(5 January 2018, AFR, p17, by Sarah Turner) ‘Forecasters are split on the outlook for the Australian dollar in 2018, which they believe will be largely driven by the path of interest rates. Respondents surveyed by The Australian Financial Review pencilled in estimates of as low as US65¢ and as high as US84¢ for the Australian dollar … Continue reading

2 Jan 2018 (AFR) – Last year’s losers, this year’s stars? – Why one of 2017’s ASX dogs will howl in 2018

[COMMENT: This is an interesting insight into some real life studies of the “Dogs of the Dow” approach and the Australian share market.] (2 January 2018, AFR, p30, by James Thomson) ‘Could sifting through this year’s ASX 100 dogs unearth next year’s gems? That’s the question posed by Hugh Dive from Atlas Funds Management, who … Continue reading

2 Jan 2018 (AFR) – Back miners, beware inflation: Leading equity strategists talk 2018

[COMMENT: It’s that time of year when the experts trot out their predictions for the year ahead. In this case, the AFR has polled a number of “experts”, and their own opinions are included in this article. They cannot all be correct. Will any of them be close when the end of year arrives?] (2 … Continue reading

2 Jan 2018 (AFR) – Inflation the big risk to ASX in 2018

[COMMENT: I still don’t understand how this sort of information can be useful to retail investors. Perhaps it is interesting reading, or perhaps it is useful to some people.] (2 January 2018, AFR, p13, by:James Thomson, Patrick Commins) ‘Investors may be too complacent about the risks flowing from rising inflation, with Australia’s top equity strategists … Continue reading

20 Dec 2017 (AFR) – Funds (asset managers) clash over whether AUD will drop below US70¢

[COMMENT: Now this is what helps “make the markets” – a healthy disagreement about whether a particular asset’s value should fall or rise. Who to believe? In this case, perhaps this is why many of us don’t trade currencies – because it’s too hard to work out which argument is right.] (20 December 2017, AFR, … Continue reading

20 Dec 2017 (AFR) – Iron ore defies forecasters – surges above $US74 a tonne mark

(20 December 2017, AFR, p24, by Timothy Moore) ‘The spot price of iron ore lifted on continuing demand for higher-grade material amid China’s winter pollution crackdown. Spot surged 3.7 per cent to $US74.15 a tonne, according to Metal Bulletin. It had risen 2.2 per cent on Friday. The advances mark the latest shift in a … Continue reading

13 Dec 2017 (TheAge) – Australia’s housing boom is almost over, says HSBC

(13 December 2017, The Age, Business, p27, AAP) ‘The Aussie property boom is nearing its end, with housing price growth to run in the low single-digits in 2018, a leading economist says. But it will be a soft landing rather than a property market crash. HSBC’s chief economist for Australia, Paul Bloxham, said house prices … Continue reading

12 Dec 2017 (AFR) – Don’t get run out by the bulls in 2018 – Get out of US stocks by mid-2018: Russell Investments’ world outlook

(12 December 2017, AFR, p32, by Philip Baker) ‘A recession next year in the United States is a one-in-four chance, it’s best to be out of US stocks before the second half of 2018, Japan and Europe will be the new hot spots and the Australian dollar looks overvalued. These are just some of the … Continue reading

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