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2.Economic forecasts

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7 Dec 2017 (AFR) – Kenneth Rogoff sees global economy entering ‘catch up’ growth phase

(7 December 2017, p1, by John Kehoe) ‘Eminent US economist Kenneth Rogoff says the global economy is entering a “catch-up” growth phase and that countries including Australia should benefit, as technology advancement kicks in and the lingering devastation of the 2008 global financial crisis finally fades. Rogoff, a professor at Harvard University and a keynote … Continue reading

7 Dec 2017 (AFR) – Why the ASX will beat Wall St in 2018: Macquarie

[COMMENT: Here is another forecast – some people would call this guess-work.] (7 December 2017, AFR, p27, by Patrick Commins) ‘The ASX’s “sweet spot” of reasonable underlying economic growth, persistently low rates, and relatively attractive valuation will make Australian shares a better investment in 2018 than their more fancied US counterparts. That’s the view of … Continue reading

7 Dec 2017 (AFR) – Recovery has taken hold across the global economy, so it’s time to cut debt

(7 December 2017, AFR, p26, by Martin Wolf, Financial Times) ‘The world economy is enjoying a synchronised recovery. But it will prove unsustainable if investment does not pick up, especially in high-income economies. Debt mountains also threaten the recovery’s sustainability, as the OECD, the Paris-based group of mostly rich nations, argues in its latest Economic … Continue reading

6 Dec 2017 (AFR) – Why Australia can stay recession-free for longer: BIS Oxford Economics

(6 December 2017, AFR, p28, by Patrick Commins) ‘Australia is likely to lag the current global economic uplift, but strong population growth and a fundamentally resilient economy should see the country outperform other developed economies over the longer term, BIS Oxford Economics head of Australian economics Sarah Hunter says. The relative underperformance of the local … Continue reading

5 Dec 2017 (AFR) – House prices have more to fall, economists say

(5 December 2017, AFR, p6, by Su-Lin Tan) ‘House prices are set to ease as the growth in mortgage lending, which fuels price rises, finally starts to unwind, two economists have warned. Sydney house prices have fallen 1.3 per cent in the three months to November and will likely keep doing so, particularly as the … Continue reading

3 Nov 2017 (AFR) – Mortgage stress soars to record highs as borrowers struggle with jumbo loans

[COMMENT: I know that we tend to see more bearish news stories than bullish ones, because the readers sit up and take note of bad news. But is it possible that this story is indicating some weakness in our overall economy?] (3 November 2017, AFR, p5, by Duncan Hughes) ‘The number of Australian families facing … Continue reading

1 Nov 2017 (AFR) – IMF warns that volatility bets loom as next big financial shock

(1 November 2017, AFR, p29, by Miles Johnson) ‘The International Monetary Fund has warned the increasing use of exotic financial products tied to equity volatility by investors such as pension funds is creating unknown risks that could result in a severe shock to financial markets. In an interview with the Financial Times Tobias Adrian, director of … Continue reading

13 Oct 2017 (AFR) – Nobel prize winner Richard Thaler’s wake up call for bull markets

(13 October 2017, AFR, p13, by John Kehoe) ‘Almost every asset class in the world seems expensive at present compared to historical valuations, so the awarding of the Nobel Prize in economics to Richard Thaler is a timely reminder that financial markets can sometimes price things awfully wrong. Thaler has previously pointed to the US … Continue reading

13 Oct 2017 (TheAge) – Scott Morrison moves to reassure investors Australia’s housing market isn’t heading for a crash

(13 October 2017, The Age, p10, James Massola) ‘Treasurer Scott Morrison has moved to reassure US investors – and Australian mums and dads – that Australia is not headed towards a housing market crash, arguing house prices are high but their value is still “real”. And in a speech in New York to investors overnight, … Continue reading

23 Sept 2017 (AFR) – Australia’s next boom has barely started

(23 September 2017, AFR, p8, by Jacob Greber) ‘Australia is on the cusp of the biggest wave of public infrastructure spending in at least three decades and has already ensured a record proportion of construction workers have found jobs. In a shift that has been overlooked amid the focus on negatives such as high household … Continue reading

21 Sept 2017 (AFR) – OECD predicts best global growth in six years

(21 September 2017, AFR, p3, by Geoff Winestock) ‘A major forecaster has predicted next year will produce the strongest rate of world economic growth since 2011, as the Reserve Bank of Australia said the global recovery is “no flash in the pan”. The Organisation for Economic Cooperation and Development forecast growth of 3.7 per cent … Continue reading

21 Sept 2017 (TheAge,SMH) – ANZ Bank tips two RBA interest rate hikes in 2018

(21 September 2017, The Age, BusinessDay, p21, Clancy Yeates) ‘ANZ Bank predicts the Reserve Bank will raise official interest rates by 0.5 percentage points next year as the economy gradually improves, with the first hike tipped for May. Australia’s cash rate has been at a record low of…’ Read more at SMH.com.au

20 Sept 2017 (AFR) – Iron ore has peaked and so has China production, says RBA in minutes with ‘slight hawkish tilt’

(20 September 2017, AFR, p7, by Jacob Greber) ‘Reserve Bank of Australia officials have called the top of the current iron ore price boom, saying China’s production of steel was likely to ease from here on while supply of the raw material would keep increasing. The warning was delivered alongside another upbeat review by the … Continue reading

16 Sept 2017 (AFR) – Investors, prepare for higher rates – Global interest rates are poised to head higher including in Australia

(16 September 2017, AFR, p32, by Philip Baker) ‘There have been plenty of false starts on this one over the past couple of years but signs are emerging – again – that global interest rates are poised to head higher. If they do, it will signal the end of one of the most powerful investment … Continue reading

4 Sept 2017 (AFR) – The key to global reflation lies in emerging markets

(4 September 2017, AFR, p22, by Christopher Probyn) ‘Despite slightly weaker than expected oil prices, the threat of broad-based deflation has continued to recede. That’s made central bankers more optimistic, particularly in Europe. However, inflation (especially core inflation) will likely remain comfortably below target in both the eurozone and Japan for the second half of this year. … Continue reading

2 Sept 2017 (AFR) – Economy gathering steam on global pick-up

(2 September 2017, AFR, p1, by Jacob Greber) ‘Australia’s economy is set for a bumper second half of 2017, spurred by the best manufacturing sector conditions in 15 years, falling unemployment and a widespread global upswing that is raising demand for exports from iron ore to tourism, say some economists. The strengthening data runs counter … Continue reading

18 Aug 2017 (AFR) – Prominent China debt bear warns of $6.8trn in hidden losses

(18 August 2017, AFR, p29, by Gabriel Wildau) ‘One of the most influential analysts of China’s financial system believes that bad debt is $US6.8trn above official figures and warns that the government’s ability to enforce stability has allowed underlying problems to go unchecked. Charlene Chu built her reputation as China banking analyst at credit rating … Continue reading

17 Aug 2017 (AFR) – Fund managers say equities are too expensive as profit hopes take ‘ominous turn’

(17 August 2017, AFR, p26, by Jessica Sier) ‘Despite encouraging signs the global economy is picking up, two surveys of fund managers indicate that caution is the prevailing sentiment in the industry, with a record number of professional investors saying equities are overvalued. Of the 174 fund managers surveyed by Bank of America Merrill Lynch, … Continue reading

17 Aug 2017 (AFR) – When missed guidance is a buying opportunity – This is when close enough should be good enough for investors

(17 August 2017, AFR, p25,by Philip Baker) ‘Investors these days can be a hard lot to please and it’s not hard to work out why. But is it right? CSL and Seek are two companies that on Wednesday paid severely for not quite meeting analyst forecasts. Despite good profit results from both companies, investors took an … Continue reading

17 Aug 2017 (TheAge) – Dexus says office markets entering a “golden period”

(17 August 2017, The Age, BusinessDay, p23, Carolyn Cummins) ‘Dexus Property has made the call that the Sydney and Melbourne office markets are entering a golden period of high demand, low vacancy and few new developments, for at least another three years. This will lead to net rental growth, where incentives in contracts will be … Continue reading

16 Aug 2017 (TheAge) – RBA warns construction activity could start to decline

(16 August 2017, The Age, BusinessDay, p21, Eryk Bagshaw) ‘The Reserve Bank has warned construction activity could begin to decline as the number of residential building approvals falls from its peak in 2016.  The message, released in the minutes of the central bank’s August meeting on Tuesday, comes a week after BIS Oxford Economics forecast a 31 … Continue reading

28 July 2017 (TheAge) – ANZ says power bill shock to drag retail sector lower – Power bill shock to hit cash registers

(28 July 2017, The Age, BusinessDay, p16, AAP) ‘Soaring electricity prices are becoming a drag for Australia’s weakened retail sector, with the latest round of increases likely to further crimp consumer spending, an ANZ report says. The sharp increase in energy prices from July 1 will lead to the average Australian household facing a 10 … Continue reading

25 July 2017 (TheAge) – IMF sees US fading as growth engine as China picks up slack

(25 July 2017, The Age, BusinessDay, p23, Bloomberg) ‘The world is leaning less on its biggest economy to sustain the global recovery, according to the International Monetary Fund. The fund left its forecast for global growth unchanged in the latest quarterly update to its World Economic Outlook, released in Kuala Lumpur on Monday.’ Read more … Continue reading

22 July 2017 (AFR) – NSW to undergo biggest decline in apartment construction, Master Builders says

(22 July 2017, AFR, p3, by Michael Bleby) ‘Apartment construction in NSW will fall by almost 40 per cent over the next four years as banks rein in lending and restrictions rise on foreign property investment, new figures from the country’s largest building industry group show. The fall in housing starts of units, townhouses and … Continue reading

21 July 2017 (TheAge) – Earnings expansion spreads to all Australian sectors: Credit Suisse (‘Expect more bull’ in equities as global profits are inflated)

(21 July 2017, The Age, BusinessDay, p25, Jessica Sier) ‘The pick-up in inflation across developed economies has led to a boost in global profits, giving investors cause to cheer the third and final phase of the Australian equity earnings expansion, says Credit Suisse.  Initially sparked by a recovery in commodity prices that have boosted resources stocks, … Continue reading

17 July 2017 (AFR) – Deloitte says rates won’t rise until 2018 amid ‘powder keg’ property market

(17 July 2017, AFR, p3, by Joanna Mather) ‘Interest rates won’t rise until 2018 and even then increases will be slow and moderate because the Reserve Bank of Australia fears igniting the housing “powder keg”, Deloitte Access Economics says. The firm’s latest business outlook acknowledges global momentum to lift rates but insists it will be … Continue reading

17 July 2017 (TheAge) – House price growth to slow further but no crash: UBS

(17 July 2017, The Age, BusinessDay, p21, Clancy Yeates) ‘Economists at investment bank UBS are increasingly confident a “correction” is taking place in residential construction, led by a slowdown in the apartment sector. But they argue house prices are set to grow more slowly, rather than drop, due to very low interest rates and growth … Continue reading

21 June 2017 (AFR) – Morgan Stanley sees ASX200 falling 10pc: how to trade an economic downturn

(21 June 2017, AFR, p31, by Myriam Robin) ‘The S&P/ASX200 will shed 10 per cent of its value over the next year, according to Morgan Stanley. But a falling market needn’t spell disaster. Morgan Stanley has one of the most bearish views of the Australian sharemarket, having significantly downgraded its 12-month index forecast earlier this month … Continue reading

15 June 2017 (AFR) – Commodity prices likely to be softer, due to China

(15 June 2017, AFR, p40, by Alexandra Cain) ‘Mining commodity prices are expected to decline over the next 12 months, largely as a result of slowing demand from China. But supply dynamics in markets such as iron ore and oil will also play a role in moving prices. “Our negative outlook is driven by end-user … Continue reading

14 June 2017 (AFR) – NAB survey shows business conditions best since pre-GFC

(14 June 2017, AFR, p6, by Jacob Greber) ‘An influential survey – watched closely by the Reserve Bank of Australia – which showed businesses have just enjoyed the best month since the 2008 global financial crisis may be giving a more accurate reading of how the economy is doing than last week’s weather-blighted GDP report. … Continue reading