General News

After a strong start to the year, share markets have had a few wobbles lately and defensive assets like bonds have rallied again. An obvious concern is that share markets will go down the same path as the last three years that saw the year start off solidly only to see sharp falls in either the June or September quarters led by flare ups in Europe, worries about US growth and fears about China.

From highs around April, global and Australian shares had falls of around 15% in mid 2010, around 20% in 2011 and by around 10% last year.

There are some parallels with the last three years – namely a strong start to the year for shares, followed by a loss of breadth in share market strength both across countries and within markets, renewed Eurozone worries, recent softer jobs data in the US and uncertainty about China.

So its natural to wonder whether markets will follow the same pattern again. And will it be more like 2010 and 2011 which proved to be tough years or 2012 where markets picked up strongly after a milder mid year correction resulting in a strong year?

Oliver’s Insights presented by AMP Chief Economist, Shane Oliver.

Key Points of the article:
1. Shares are overbought and vulnerable to a correction. February is often a soft month and current risks regarding Italy, Spain, the US budget and earnings results in Australia may constrain markets in the very short term.

2. However, the pattern of rising highs and milder lows since late 2011, reasonable valuations, improving global economic news and easy monetary conditions suggests shares have likely entered a new cyclical bull market.

Do you know what the interest rate is on your home loan? How does it compare with what the big banks are offering? If you can’t answer either of these questions then you’re guilty of one of the biggest money mistakes – not looking around for the best deal.

It’s now easier than ever to change home loans and even your regular banking accounts. So shop around for the best interest rate and refinance if necessary.

One of the best

Sometimes it is good to take some time out from our busy lives to enjoy some light humour.

Here’s a funny scenario we thought you would enjoy.

It all began with an iPhone .. my son was celebrating his 16th birthday, so I got him an iPhone. He just loved it. Who wouldn’t?

The RBA board have decided to hold the cash rate for another month.

Despite Australia’s low inflation rate the RBA is clearly concerned that Australia’s forecast economic growth will push inflation higher.

Whilst unemployment and inflation remain low, it is unlikely that we will be seeing a rate cut in the near future.

We will now sit and wait to see what our home loan lenders do with their interest rates. Within the mortgage industry we are hearing every lender complain about the same problem………. the rising cost of funds.

The RBA has decided to leave the cash rate at its current levels. This may leave our home loan lenders in a bit of a quandary. All four majors have recently commented that they need to gain some profit margin due to their rising cost of funds. This move by the RBA may force the banks to increase our current rates despite the RBA’s decision to hold. We will wait and see.

Interestingly, ANZ in an attempt to break away from the media’s expectation that they “always match the RBA decision” have decided to review their rates

International rating agency, Moody’s, have reaffirmed Australia’s top level AAA credit rating.

Treasurer and acting Prime Minister Wayne Swan said this was yet another resounding endorsement of Australia’s sturdy public finances and strong economic fundamentals.

“At a time when other developed economies have had their ratings cut, or put on review for potential downgrade, Australia stands tall in the world with its gold-plated AAA status safe and secure,” he said in a statement.

The US Federal Reserve said consumer spending rose slightly last month and the economy maintained its expansion, even as companies reported more doubt about the strength of the recovery.

“Overall economic activity continued to expand in September, although many districts described the pace of growth as ‘modest’ or ‘slight,’” the Fed said in its Beige Book survey released today in Washington. “Contacts generally noted weaker or less certain outlooks for business conditions.”

The Financial Planning Association of Australia (FPA) are embarking on a campaign to increase consumer awareness of the importance of seeking the right financial advice.

You will soon see the TV advertising campaign on local TV stations aimed at raising the standing of the Financial Planning profession.

In these interesting times of volatile investment markets it is becoming more and more important to get the right financial advice from a trusted professional. The FPA campaign aims to encourage consumers to be mindful of a financial planners qualifications (or lack of) when seeking advice.

The Victorian State Budget 2011-12 implements several initiatives to support first home buyers, pensioners and concession cardholders.

What does this mean for you as a first home buyer?

1. Land transfer (stamp duty) cuts for first home buyers from 1 July 2011. This provides a 20% reduction to the applicable stamp duty for first home buyers.

2. Extending the First Home Bonus for newly constructed homes until 30 June 2012.

3. Broadening the pensioner and concession cardholder land transfer duty concession.