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).

5 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 finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete 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'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - & author of Things That Make You Go of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Saturday, 28 February 2015

US outlook remains favourable

US Q4 result more sustainable

As the most influential economy, in terms of global  growth, if the US sneezes the rest of the world still catches a cold.

I'm not sure what the opposite of sneezing is - but that's what the US has been doing through 2014.

As looked at here recently, the "JOLTS" index showed job openings at their highest level since 2001.

And the Job Openings Rate is also now at its highest level since before the financial crisis.

Meanwhile US jobs growth has been becoming stronger, recording its strongest quarterly growth in 17 years as detailed in my chart packs here.

The US unemployment rate has fallen to just 5.6 percent.

The big question is when the Fed might start to look at hiking interest rates.

Q4 revised

Overnight the US released its revised GDP growth figures for Q4 2014, which showed the economy growing at a more sustainable 2.2 percent annualised pace in the final quarter of the year.

The Q3 figures had shown the economy expanding at a rip-snorting 5 percent annualised pace.

Consumer spending was strong recording annualised growth of 4.2 percent in Q4, though final GDP was weaker amid indicators of stock accumulation.

Growth is expected to pick up again in Q1 2015 to around 2.4 to 3 percent in annualised terms as the threat of an inventory overhang recedes, while consumer spending should remain elevated in 2015, in part thanks to cheaper gasoline prices.

The revised real GDP figures charted below in 2009 chained dollars terms affirm the US economic recovery.

Policy implications

Despite this apparent strength in the labour market, inflationary pressures in the US have remained soft to date.

As such there has been little urgency for the Federal Reserve to look at hiking its interest rates from near zero.

All of this indirectly impacts Australia's own interest rate policies, particularly via movements in the currency.

The Reserve Bank of Australia (RBA) meets on Tuesday to decide whether to leave interest rates on hold at 2.25 percent or cut them to 2 percent.

At the close yesterday markets were pricing a 62 percent chance of a cut, with implied yields on cash rate futures contracts for November 2015 plumbing new depths at below 1.7 percent.

However, the March interest rate decision very much hangs in the balance.

I will look at the likely path of Australian interest rates in 2015 in more detail tomorrow.