Pete Wargent blogspot
Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.
4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.
"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.
"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.
"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.
"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.
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Thursday, 26 January 2012
So what happens on February 7 then?
OK, now the dust has settled from the inflation data, what’s going to happen on February 7?
Economic forecasters are split right down the middle: half think that the interest rates will be cut by 0.25% and half think they will stay on hold.
It’s interesting because a result of a trimmed mean of 0.6% for the quarter if annualised out implies an annual inflation rate of right in the middle of the 2-3% target range.
Even if the result had been just 0.1% lower the odds would be much more in favour of a cut – for 0.5% annualised is only 2% and allows more scope for easing rates.
This is noteworthy to my mind because it is highly questionable that the ABS figures are that accurate that they can be sure to within 0.1%. How do I know that? Because they keep revising the historic figures, and not always by one ’tick’ either!
(it is worth noting that the revisions so far have tended to be upwards in nature, though).
My main argument for a rate cut (apart from the straightforward fact that I’m an inflation dove) would be based on the high value of the Aussie dollar.
Today the AUD was buying more than $1.065 US dollars again, and that is way, way too high. Our exporters are in pain (though it’s good for overseas holidays and Olympics attendees, as previously noted). Heck, commentators were citing the high Aussie dollar as a reason for rate cuts before it even reached parity.
The problem for the Reserve Bank if they do cut is what happens if the next inflation print is back up at 0.8%? Do they then have to start raising rates and look foolish? I strongly suspect that ‘not looking foolish’ is one of the prime motivations of such a committee, also know as "the path of least regret".
Anyway, a lot can happen between 26 Jan and Feb 7, and rest assured that all eyes will be carefully focussed on Europe until then. My eyes will be watching the Aussie dollar, because, frankly, I’m hoping for another rate cut.
After a few days in Hobart, moving on towards the Strahan after a snout up Mt Wellington tomorrow morning.
Australia Day today and it has been a lovely day in Tasmania, but it’s been pretty windy and cold.
In the absence of any better movies on in Hobart watched A Few Best Men – one very funny moment being the best man’s speech. Two stars, ‘nuff said.