Bad news for Interest Rate Hawks - RBA Cash rates unchanged

[Aaron Sice]

So last time we had countries being bailed out, the US facing a rating downgrade, trillions in stimulus spending globally to keep economies afloat?? There is no comparison to last-time because last time was completely different.
"the comparisons are almost identical."

If you want to compare to "last-time" then you'll have to do better. Maybe the 1930's.

no, but we did have the largest (at the time) stock market crash, one of the biggest terrorist attacks still in the history of the planet that spurred on two wars, interest rates falling from 17% to 4.5%, minor oil crisis......

*edit* gold going from $250 to $750 an oz as well.

you can paint it how you want, but there was still

1) crap sentiment and
2) crap economy and
3) crap stockmarket and
4) crap housing and
5) crap jobs.

any tech company that made it through 2001-2004 afloat,found themselves worthless - compounding the effect into 2006 in the states, but not here.

we were reasonably insulated from that event and i fail to see why we won't be reasonably insulated from this one. we have more debt than then - great - but we also have more serviceability to match - that's the bit you're missing.

 

[buzzlightyear]

The problem is everyone is focusing on interest rates alone. Cost of living has gone up, which reduces peoples disposable income.

Yet we are saving more than ever! Figure that out.

And when haven't you heard at any time, now, five years, ten years or twenty years ago, that cost of living has increased and people complaining about it.

 

[buzzlightyear]

And now we have the markets betting on a probably interest rate reduction here. And literally two IR reductions by December here.

 

[Aaron Sice]

And now we have the markets betting on a probably interest rate reduction here. And literally two IR reductions by December here.

since 2007 i've found sash to be wrong once.

compared to economics students abound telling us to run and hide.

you can't beat the system - you can only profit from it, or be a victim of it. whether following a trend is good or bad or whatever, you can only invest with the system you currently have.

telling everyone it's broken and they're damn fools for doing anything doesn't make you smart, it makes you belligerent and pretty much nothing else.

 

[pieman]

I still think rates will go up in Sept.

Mate, you dont work for Steve Keen do you?
http://www.theage.com.au/business/m...d-global-economic-jitters-20110803-1iabt.html

 

[bluestorm]

Mate, you dont work for Steve Keen do you?
http://www.theage.com.au/business/m...d-global-economic-jitters-20110803-1iabt.html

Mate, a few days of market falls and you guys are already calling a interest rate drop. The market will rally for a bit, and then dip again.
The fact is inflation is rising (and not due to banana's as Swanny would have you believe), so the RBA will have no option but to move rates up.

Economists, IMF say rates likely to rise, as Morgan Stanley raises question of 2012 recession

You guys have quoted the expected rate curve many time here, but you only need to follow that graph for a while to see how ofter the boffins change their mind. That graph is completely unreliable.

 

[Aaron Sice]

the IMF call our dollar overvalued - fine, because it is. asian investors see our ability to repay our debts and the bond yields attached with that and it's win-win. only a small shift away from US treasury bonds is needed to create a bubble here.

house prices are a reflection of local and international sentiment. FIRB is making a difference there - i'm in syndicates whereby the pty ltd meets the criteria for permanent residency investment - and generates enough return to pay the uni fees on top of getting their cash back. that's a triple win - wait until those beijing, seoul, jakarta and bangkok seminars start on the back of that.....

you seem to have a very narrow field of vision insofar as what constitutes acceptable economic theory, yet here i am telling you, proving to you with historicl precedent that fundamentals and sentiment dont necessarily go hand in hand.

just liek the stock market, really. a stock can be shot fundamentally but it's price is still high because of sentiment and the technical analysis, conversely the stock can be fundamentally perfectly set for gorwth, but the technicals are shot so sentiment is poor and the stock falters. find me economic theory for that one.

you can't even write the algorithm for it. it's chaos theory come home to roost in the very fabric of the bio-entanglment particle physics of it all.

sentiment rules the day. not numbers made up by financial organisations and cartels that missed the best currency trade in the last 150 years (37c - 110c) and are trying to sell the market down so they can get a better bite.

 

[atsim]

I still think rates will go up in Sept.
But a drop either way is good, as it means the economy is in a mess, and hence property prices will continue their downward trend. Win-win.

geezzz, I hope your right. But let me tell you now . If i make 1 more dollar out of property, im pulling out and flushing my cash down the toilet. at least ill be able to sleep at night

 

[JohnHenry]

the IMF call our dollar overvalued - fine, because it is. asian investors see our ability to repay our debts and the bond yields attached with that and it's win-win. only a small shift away from US treasury bonds is needed to create a bubble here..........

sentiment rules the day. not numbers made up by financial organisations and cartels that missed the best currency trade in the last 150 years (37c - 110c) and are trying to sell the market down so they can get a better bite.

Hi Aaron, based on your pattern analysis does that means we are now heading downwards after reaching the ever high point of USD $1.10 ?

I wonder what would happens next especially tomorrow when the US announced their payroll / Unemployment data. Hopefully this week crash is just a fear driven trade which only last few months before our AUD $ get back stronger again.

 

[Aaron_C]

Hi Aaron, based on your pattern analysis does that means we are now heading downwards after reaching the ever high point of USD $1.10 ?

I wonder what would happens next especially tomorrow when the US announced their payroll / Unemployment data. Hopefully this week crash is just a fear driven trade which only last few months before our AUD $ get back stronger again.

It's actually a very strange situation. The USA is in deep crap. Usually in GFC-like proportions the Yen, Swiss Franc and the USD go up while sub-standard currencies like AUD, EUR, GBP et al are dumped. But now even the USD can't really be seen as a 'safe haven' because they are just as bad as everyone else...I don't know what will happen but it will be unforeseen

 

[Propertunity]

I still think rates will go up in Sept.
But a drop either way is good, as it means the economy is in a mess, and hence property prices will continue their downward trend. Win-win.

Yeah, we'll see. The weight of history is against you. When the economy is a mess and the share market tanks like it did today, once people get over the initial shock, money starts flowing into the perceived security of bricks & mortar. Lower IRs just makes it even more attractive for RE.

Saw it in 1987, saw it in the GFC......just saying, is all.

 

[zed_kid]

if IRs are lowered and the market picks up I'll be definitely selling an IP... this year has been rough on yer olde ticker...

also i vote aaron sice for PM

 

[bluestorm]

Yeah, we'll see. The weight of history is against you. When the economy is a mess and the share market tanks like it did today, once people get over the initial shock, money starts flowing into the perceived security of bricks & mortar. Lower IRs just makes it even more attractive for RE.

Saw it in 1987, saw it in the GFC......just saying, is all.

That's if you assume that the RBA will lower rates. I don't think they will. You won't have the emergency lowering of rates like during the GFC as unlike the GFC which was a global financial crisis largely unpredicted, this next double dip is more expected.

Anyway, the RBA still expects inflation to be a problem.

RBA lowers growth outlook, raises inflation view

Consumer prices will rise 3.5 per cent in the year through to the final quarter of 2011, from a previous prediction of 3.25 per cent, and core inflation will quicken to 3.25 per cent from 3 per cent, it said. The RBA said underlying inflation will remain “relatively high” in 2012 and 2013.

So core inflation is expected to go out of the RBA comfort zone. Interest rates are heading up.

 

[turk]

That's if you assume that the RBA will lower rates. I don't think they will. You won't have the emergency lowering of rates like during the GFC as unlike the GFC which was a global financial crisis largely unpredicted, this next double dip is more expected.

Bluestorm

As I go from thread to thread that I have an interest in I find the incredible flip flopping inconsistency in posts by you, in this thread at 6:15pm we have

"as unlike the GFC which was a global financial crisis largely unpredicted, this next double dip is more expected"

Thus you have the GFC over with a double dip happening.

Whereas on this thread 7 minutes later at 6:22 you had the original GFC continuing

http://www.somersoft.com/forums/showthread.php?p=819959#post819959

"There really is no GFC2, because GFC1 never really ended."


and in this thread on the 3rd august 2011 we have us heading into GFC2 again

http://www.somersoft.com/forums/showthread.php?t=73024

"we head into GFC2"

But you had already had us entering GFC2 in May/June 2010 here

"I expect we'll see the start of GFC2 in May/June, 2010"


So Bluestorm in chronological order which one actually happened?


a) May/June 2010 We entered GFC2.

b) 3rd August 2011 We are now heading into GFC2.

c) 6:15 5th August 2011 The GFC was unexpected and we are now heading into a double dip.

d) 6:22 5th August 2011 There really is no GFC2, because GFC1 never really ended.

Sh8t I feel like Eddy on The Million Dollar Question"

Mate I'm the amateur here help me out

 

[MangoMadness]

Bluestorm

As I go from thread to thread that I have an interest in I find the incredible flip flopping inconsistency in posts by you,

Turk,

I am pretty new to this forum and so I dont have a clue what your history is with bluestorm but as I go from thread to thread all i see is you acting like a dick and attacking him for changing his mind.

Big Whoop! Get over it!

You are just making yourself look like an opposition leader, and noone wants to have that image

 

[bluestorm]

As I go from thread to thread that I have an interest in I find the incredible flip flopping inconsistency in posts by you, in this thread at 6:15pm we have

Hey Turk, one think you may learn from life, and from investing, is to be successful, you need to be adaptable.

Whether you want to pick me up on GFC1, GFC2, an ongoing GFC1, etc, etc, the fact is the world is in trouble. I don't want to play your silly games.

My position on this forum has been consistent. I believe that all the government stimulus spending has only delayed the inevitable, and that the world is heading for a double dip, and this time Australia property will correct 30%.

Yes, I did call May/June 2010, and since then Greece has been bailed out twice, Portugal and Ireland, and as I prediction Spain in Dec 2011/Jan 2012, and then Italy. The US avoided default barely, and is still likely to be downgraded from AAA. Australian property has started to fall, and will continue to do so. I changed by super to conservative, and since then the share market has dropped from 5000 to 4150.

 

[turk]

Turk,

I am pretty new to this forum and so I dont have a clue what your history is with bluestorm but as I go from thread to thread all i see is you acting like a dick and attacking him for changing his mind.

Big Whoop! Get over it!

You are just making yourself look like an opposition leader, and noone wants to have that image

No history.

I think you will find that we have had discussions on only 2 threads.

Read his posts, he is busy rubbishing investors for doing the same that he is doing.

He is happy to make a prediction then consistently rewrites history when it doesn't
eventuate.

When it does occur it becomes "I told you so, I told you so"

It became a standing joke that after posters disagreed with him they were stupid and that he was leaving this Forum until he was proven correct.

 

[bluestorm]

He is happy to make a prediction then consistently rewrites history when it doesn't
eventuate.

Who's rewriting history. Maybe you don't see European countries being bailed out as a "crisis", or the US heading into a double dip as a "crisis".
I have not rewritten anything. My next prediction is a Spain bailout in Dec 2011/Jan 2012, and then an Italy bailout. As these countries are many times bigger than the 3 bailed out to-date, this will put pressure on France and Germany, and Europe will head into another crisis.

I also have said that global inflation is a big problem, and that interest rates will be heading up, despite the overwhelming opinion against this on Somersoft.

 

[MangoMadness]

When it does occur it becomes "I told you so, I told you so"

It became a standing joke that after posters disagreed with him they were stupid and that he was leaving this Forum until he was proven correct.

Fair enough mate and maybe he is a 20/20 hindsight predictor, i dont know, im not making judgement

But reading your replies just made you come across as someone who is hitting a bee hive with a cricket bat just to try and prove that there are bees inside

 

[turk]

Fair enough mate and maybe he is a 20/20 hindsight predictor, i dont know, im not making judgement

But reading your replies just made you come across as someone who is hitting a bee hive with a cricket bat just to try and prove that there are bees inside

Love the analogy