Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

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.

Wednesday, 2 July 2014

Low interest rates for-evuhhh...

No surprises that the Reserve Bank left its official interest rates on hold at 2.50% yesterday.

Rates have been steady since August 2013, the longest period of rate stability in almost a decade.


Source: HIA

You can read the Reserve Bank's Minutes here.

But in short:

-Growth in China has slowed a little but remains broadly in line with targets (aye...well, for now at least)

-Firmer growth in the Aussie economy around the turn of the year (yes, but it was nearly all exports driven, and commodity prices have been sliding...)

-A "strong expansion" in housing construction is underway (yep, but building approvals do look suspiciously as they they already may have peaked)

-Some improvement in the labour market (indeed, but not that much, and wages growth is soft)

All in all there are some positives in the economy, but as noted earlier, mining and resources investment is set to decline which will be a drag on economic growth.

With inflation not appearing to be a risk, the RBA sees a "period of stability of rates" ahead which is wonderful for mortgaged homeowners, of course (and not so good for pensioners and net savers). 

In any case, the RBA meeting came before today's trade data, which revealed a very ugly looking balance on goods and services in May, following a deficit in April.

Graph: This graph shows the Balance on Goods and Services for the Trend and Seasonally adjusted series

Only a week or so ago, all were merrily bandying around solid growth forecasts for the second quarter to follow on from a good result in Q1.

Not looking quite so smart now, it has to be said.

Indeed, if tomorrow's retail figures are weak, it may be time to pencil in another rate cut to just 2.25%.

Futures markets are beginning to price in that very possibility.

Not considered 'likely' yet, but July cash rate futures contracts are trading at 97.515 i.e. there's ~7% chance of a cut as soon as next month (click chart).