All things Finance!

[Anthony Violi]

http://theage.domain.com.au/real-estate ... -woh9.html

Expect a correction, and still holding firm on the dollar to the mid 70s, with a GFC MK II somewhere around the corner.

[Blackee]

RBA announce this afternoon that interest rates are being kept on hold.

[Onetahuti]

The Federal Government and Telstra finally reach agreement for NBN to have access to Telstra infrastructure for the roll out of the fast national broadband. Expect this will be positive for Telstra shareholders, word of deal / rumour may have been reflected in the 7 cent rise in TLS on Friday.

[Blackee]

A win/win for Telstra.
A huge cash flow injection which will allow them to invest. Still got concerns with their interests in Asia. I believe the return on investment will be terrible.

Hopefully the NBN means cheaper internet and better speed and reliablity, especially outside of the Capital Cities

[Blackee]

The dollar is very close to parity with the US dollar.
A good time to be travelling to the US or buying things like shoes etc.

My sister picked up three pairs of Asics for $250 delivered from the US last week. As compared to $169 per pair here.

[Blackee]

It appears that the US are going down the track of Zimbabwe, and print money!

This will have catastophic consequences should it be mis-managed.

I still believe that GFC wasn't the root of this problem, but the war in Iraq and Afghanistan, which allowed the GFC to hit them for six!

I expect interest rates in Australia to increase by 2% by this time next year. The levels of inflation and cost of lending by banks will see a pretty quick jump.

I love property, but I think if the price is right now, it would be a good time to sell.

[Blackee]

An unexpected rise in interest rates by China has seen the market become spooked by the future outlook of China' economy. Their GDP increased by 10% in the last year, a sign that hyperinflation may not be far away.

[Blackee]

Unless you've been living under a rock, the Aussie dollar is now trading at better than parity against the US Dollar.

I find this very unhealthy for the local economy as we cannot compete with the shear size of the US. Our dollar should be around the 75c mark to ensure that locals purchase goods locally and not through overseas websites. If the dollar continues its strong push against the US I expect an increase in unemployment, especially throughout the retail and tourism industries.

It is a very fine juggling act.

I still shake my head as to why we are paying close to $1.30 a litre for petrol despite all of this. I would send a letter to Graeme Samuel about this, but realise he is a yes man and the ACCC are a toothless tiger. I don't expect the Govt stepping in either as they rake in billions from taxes (similar to their stance on banks and interest rates).

[Blackee]

Which leads me to Interest Rates.

The property bubble is finally releasing some air! I didn't mentioned the word "popped" as the supply/demand ratio is still around 60/40 and not 90/10. I read with interest and had it confirmed by a leading real estate agent that "passed in" auction results aren't being reported to the REIV from all agents. This obviously increases the clearance rate, falsely I might add. This put pressure on buyers that the market is still strong, where in fact, the market has flattened. My sources tell me that clearance rates are well under 60%, not the mid 60% range recently published.

The RBA have a tough time controlling the countries economy, along with the fact that the Big4 banks go above their heads to raise rates. IMO, the RBA has acted responsibly before, during and after the GFC and am satisfied with their actions and statements. The Economy was over heating before the GFC and rates were at high levels. Action was taken swiftly on the back of the GFC, but once the nation had escaped the brunt of the downturn, they have been proactive in curbing inflation. Unemployment remains steady against budget, job ads strong (despite the fact that more part-time jobs are being advertised that full time jobs) and the local economy is strong in most areas (with the exception of retail). Wage pressure will rise as will interest rates in the short term. Another 0.50% between now and May should really tighten the screws. In this time, overseas economies will have seen the effect of recent stimulus packages and give the RBA a very good direction for the second half of 2011.

I expect to see housing prices flatten and even dip by Feb'11. Apartments/Units will remain fairly solid (3-5% increase), whilst the big focus will be on vacant land. Governments are now looking at their own housing stock in an attempt to change density levels and thus fit more people in one area.

EG. 3 bedroom house in Boronia on 800m2 currently occupied by 4 people. The house gets demolished and 3 2Br units are built on the same site and occupied by 9 people.

Interesting times await, locally, nationally and internationally!

[Anthony Violi]

In my opinion, theres only one way we can go from here, until wages catch up with house prices. And its not in the up direction.

Wages up by 50% since 1996, real estate up 420%...tipping point has come.

[Jake Smethurst]

The Australian Dollar being at above parity level also has many farmers worried.

I'm not sure of how many people that know, but when the dollar is high, farmers are paid a lot less than what they should be, still despite the fact of higher level people being paid more money on a daily basis, such as executives to companies. It is just utterly wrong in my opinion. Generally, countries that are importing farmers' products produced by the companies of Australia, are buying them a lot cheaper. In turn, the income of farmers becomes lower per litre of milk produced. Farmers generally like the dollar at around 75 cents as Wes mentioned, which would suit a lot of people, but for farmers, the lower the better.

[Blackee]

http://www.heraldsun.com.au/business/re ... 5964449723

Surprise surprise!!