Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, 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'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

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Wednesday, 3 July 2013

Retail trade, construction too soft-- RBA needs to cut

A veritable data-fest today. 

Let's start with the retail trade data, which came in very weak at only 0.1% growth seasonally adjusted.

"The seasonally adjusted estimate rose 0.1% in May 2013. This follows a fall of 0.1% in April 2013 and a fall of 0.6% in March 2013."

Hmm, not good.

So when the RBA was "bricking itself" in November about accelerating consumer activity (if indeed any bricking actually took place) it needn't have done.

Graph: Monthly Turnover, Current Prices, Trend Estimate

Source: ABS

Meanwhile, engineering construction activity fell by a seasonally adjusted 3.0% in the quarter. 

It's likely to be all downhill from here on in (with one exception: Queensland) as the capex boom unwinds. More central bank stimulus needed.

Graph: Value of work done, Chain volume measures

Source: ABS

Very little traction evident here, and that's just not good enough. 

The RBA needs to cut interest rates again, and soon.

Absent another collapse in the Aussie dollar in the next month or a seemingly unlikely spike in inflation this quarter, you can factor in another interest rate cut in August.

Today's data has seen futures markets pricing in a 57% chance of a cut on August 6, a leap from the 47% chance factored in yesterday.

As if to underscore the point, RBA Guv'nor Glenn Stevens stated that the RBA "deliberated for a very long time" about its last interest rate decision, implying that the decision to keep rates on hold was a close-run affair.

Was this just 'jawboning' or was he being fair dinkum? 

Hard to say, but it's amazing what just six simple words can do to the markets! 

The share markets shed a thumping 1.9% and the Aussie dollar plummeted to just 90.7 cents, a world away from the 106 cents plus of not so long ago.

Interest rate cut coming...