Another Rate Cut in December 2011

[sash]

Hi All,

I am going to be bold and say there is another rate cut on the way in December.

The RBA seems to be concerned that the Greeks are going to tip Europe over the edge.....Greece has not option but to accept the EU package including austerity cuts. The Germans, French, and Brits are furious!

Seriously believe that Southern Europe - i.e. Spain, Italy, Greece, and Portugal are real liabilities...I see these as the next Third World Economies as countries like Malaysia, Thailand, China, India, Indonesia, and Vietnam industrialize they will have a burgeoning middle class that will be bigger than the entire Southern European nations.

http://www.smh.com.au/business/global-woes-rba-cuts-growth-outlook-20111104-1myz6.html

Back to the rate cut....happy days are here again.....

Also...another tip ....dump any shares companies which invested in Europe now! There is a certain investment bank which is going to go down the toilet as they made silly decisions around investing in Europe, UK, and USA in infrastructure. Couldn't happen to a nicer bank of b(err w)ankers. The Euro/Anglo centric view of world is stupid....watch the companies which invested in Asia, Chine, and Indian sub-continent now mushroom!

 

[Nth Brisbanite]

That's a bold prediction but I hope you are right. If Greece goes belly up then a rate is a certainty.

 

[Aaron Sice]

The RBA seems to be concerned that the Greeks are going to tip Europe over the edge.....Greece has not option but to accept the EU package including austerity cuts. The Germans, French, and Brits are furious!

At least the money is making it's way back to Germany, even if indirectly.

 

[slingshot]

Hi Sash,

Interesting thread.

Ironically I had a conversation with a family member just this morning re that particular bank. He was instrumental in a lot of those infrastructure deals.
He is of the same opinion about the future of that bank. He no longer works for that bank, now works for which bank, but he did mention that many within that bank are trying to get out.

Sling

 

[sash]

Yes..that is what I am hearing.

The CEO was instrumental in the Eurocentrica and American push. Profits and poor performing businesses continue. But the CEO is not willing to make the large scale cuts and make the tough decisions.

One Analyst at another bank suggested that there would need to be about 3000 jobs to make organization profitable again.

Hi Sash,

Interesting thread.

Ironically I had a conversation with a family member just this morning re that particular bank. He was instrumental in a lot of those infrastructure deals.
He is of the same opinion about the future of that bank. He no longer works for that bank, now works for which bank, but he did mention that many within that bank are trying to get out.

Sling

 

[Sticky Fingers]

How do you see things playing out with respect to IR's and property val's, Sash? Do you see this event having a similar characteristic to GFC1?

When IR's bottomed out last time we had a rush of buyer competition in our area which created a CG spike and was followed by the current slump which has taken values back to (and in some cases below) where they were. It has been a strange 5 years - characterised by several spurts and slumps.

 

[Deltaberry]

Go falling rates!!

 

[Nathan]

Call December or Call next year. I am predicting a little larger and wider.

March - May 75bp off from the current rates, meaning 100bp in total removed.

Just wait until US goes belly up in the not too distant future, then we will see interesting times.

 

[joeExpat]

Hi All,

I am going to be bold and say there is another rate cut on the way in December.

The RBA seems to be concerned that the Greeks are going to tip Europe over the edge.....Greece has not option but to accept the EU package including austerity cuts. The Germans, French, and Brits are furious!

Seriously believe that Southern Europe - i.e. Spain, Italy, Greece, and Portugal are real liabilities...I see these as the next Third World Economies as countries like Malaysia, Thailand, China, India, Indonesia, and Vietnam industrialize they will have a burgeoning middle class that will be bigger than the entire Southern European nations.

You're greatly underestimating Spain and overestimating the UK.
Spanish banks pulled through the financial crisis much better than their UK counterparts and have been buying up UK (and other European and US) assets. The British pound and USD have crashed against the Euro. Apart from already buying numerous UK banks Spain almost bought Heathrow Airport.

Spain has a problem now following the real estate crash but long term I believe they will be one of the stronger countries of Europe. Southern Europeans are used to working harder and longer for less, and their economies could feed themselves in the event of a major meltdown, something their northern neighbours could not do. In 2011 Spain is one of the few European countries boasting Export growth.

 

[Aaron_C]

Southern Europeans are used to working harder and longer for less, and their economies could feed themselves in the event of a major meltdown, something their northern neighbours could not do.

When you say Southern Europreans, are you talking about Greeks too?

 

[sash]

I see IR down by 1-1.25% from the current rates.....whilst property might not crash some isolated areas particulary in the more expensive sector - i.e. 850k plus drop 10%. The other areas of the market will probably do 5% growth per annum in cities like Perth, Sydney, and Canberra where there is a pronounced shortage.

Due to the cost of living ...and the spending patterns of Gen Y buyers who have less savings...this will also constrain growth. As the BB retire they won't be as generous to fund deposits for Gen Y buyers. The Gen Xs are to the hock in debt.

How do you see things playing out with respect to IR's and property val's, Sash? Do you see this event having a similar characteristic to GFC1?

When IR's bottomed out last time we had a rush of buyer competition in our area which created a CG spike and was followed by the current slump which has taken values back to (and in some cases below) where they were. It has been a strange 5 years - characterised by several spurts and slumps.

Nathan...I beg to differ here...whilst the US property market might not go anywhere for a while. I think they will be okay. As a matter of fact due to the falling wages ...there is a thought that manufacturing on certain items will return to the USA. Particularly due to their cheap business costs. Labour is now available for 11-12/hr. When oyu include shipping costs, insurance, etc. that makes it viable for some goods.

Call December or Call next year. I am predicting a little larger and wider.

March - May 75bp off from the current rates, meaning 100bp in total removed.

Just wait until US goes belly up in the not too distant future, then we will see interesting times.

Joe....the issue is not the Spanish private sector rather their work practices, government debt, and the need to change their generous welfare system. Countries like Greece, Italy, Spain, Portugal will be become third world countries if they don't make structural changes. These countries have dropping fertility rates and have high percentage of people employed in govt jobs. These are the real issues.

A bit of warning for Australia also as we need to ensure that we are sufficiently diversified when the next commodities downturn hits. I personally think we should have a resources tax.

You're greatly underestimating Spain and overestimating the UK.
Spanish banks pulled through the financial crisis much better than their UK counterparts and have been buying up UK (and other European and US) assets. The British pound and USD have crashed against the Euro. Apart from already buying numerous UK banks Spain almost bought Heathrow Airport.

Spain has a problem now following the real estate crash but long term I believe they will be one of the stronger countries of Europe. Southern Europeans are used to working harder and longer for less, and their economies could feed themselves in the event of a major meltdown, something their northern neighbours could not do. In 2011 Spain is one of the few European countries boasting Export growth.

 

[MarkandTina]

Less than a year until the US elections now, from now on all I'm expecting from them is rainbows and buttercups.

If the Republicans get in they will immediately announce how the Democrats broke everything and make massive cuts, but thats early 2013.

If the Democrats get back in they will introduce austerity messages and we will have 2 years of belt tightening before the porkbarrelling starts for the next democrat candidate.

Either way 2012 should be fine from a US perspective, 2013 not so much.

 

[Aaron_C]

Just goes to show you that Obama is just all rhetoric, talk, and some more rhetoric about how he can. What a fool. He should just go back to writing books - he's much better at doing that.

 

[Nathan]

I think the usd will lose all its value. Prices will be as usual but the actual usd. I know I open myself for backlash from this but people talk us property but no one at all has looked at the fact they are buying usd basically with extra risk.

Everytime they expand the monetary supply thats watering down their ecconomy. I been thinking this since 2007 and watched very closely but never publically said it before.

Its just an opinion and I am not saying us property is bad, i am wary of the usd.

 

[Nathan]

Interesting about manufacturing. This could be only forseeable saviour for them, but they need to work hard and fast. Labour is cheap there, thats the amusing thing now days about usa.

 

[sash]

Actually it is the Republicans doing to darndest to block everything to make Obama look bad.

Just goes to show you that Obama is just all rhetoric, talk, and some more rhetoric about how he can. What a fool. He should just go back to writing books - he's much better at doing that.

Agree the USD is quite volatile...but if rates drop here then the USD will gain ground.

I think the usd will lose all its value. Prices will be as usual but the actual usd. I know I open myself for backlash from this but people talk us property but no one at all has looked at the fact they are buying usd basically with extra risk.

Everytime they expand the monetary supply thats watering down their ecconomy. I been thinking this since 2007 and watched very closely but never publically said it before.

Its just an opinion and I am not saying us property is bad, i am wary of the usd.

 

[joeExpat]

When you say Southern Europeans, are you talking about Greeks too?

Yes... Greeks work the longest hours in Europe, 42 hour standard week. Germany, France & Netherlands have the shortest working weeks but have the current advantage of better technology and infrastructure. That gap will close & the "lazier" north will find themselves falling behind.

 

[mystery]

We sold a couple of IP's earlier this year to build up cash reserves and lower holding costs, .... Looking at what is happening I'm glad we did. We now have funds to ride the debt crisis out and should be in a position to take advantage if opportunities present themselves in the future.

What a mess

Mystery ...

PS ... If fixed rates come down to more attractive levels I will look to fix some IP's as well, currently all of our's are variable.

 

[Tebby]

For what is worth, I'm predicting another 0.25% cut in Dec

 

[sammmeee]

Hi All,

I am going to be bold and say there is another rate cut on the way in December.

The RBA seems to be concerned that the Greeks are going to tip Europe over the edge.....Greece has not option but to accept the EU package including austerity cuts. The Germans, French, and Brits are furious!

Seriously believe that Southern Europe - i.e. Spain, Italy, Greece, and Portugal are real liabilities...I see these as the next Third World Economies as countries like Malaysia, Thailand, China, India, Indonesia, and Vietnam industrialize they will have a burgeoning middle class that will be bigger than the entire Southern European nations.

http://www.smh.com.au/business/global-woes-rba-cuts-growth-outlook-20111104-1myz6.html

Back to the rate cut....happy days are here again.....

Also...another tip ....dump any shares companies which invested in Europe now! There is a certain investment bank which is going to go down the toilet as they made silly decisions around investing in Europe, UK, and USA in infrastructure. Couldn't happen to a nicer bank of b(err w)ankers. The Euro/Anglo centric view of world is stupid....watch the companies which invested in Asia, Chine, and Indian sub-continent now mushroom!

Call me stupid but I don't get which bank is referenced here wesuck?