RBA says rate cut still a possibility

The Reserve Bank of Australia is holding fire on interest rates, but says another cut is possible.

Most forecasters, including economists from all four of Australia’s major banks, are now saying that a rate cut is not likely to happen until early 2014.

Most have changed their predictions in the past two weeks.

The RBA’s willingness to wait was made clear in the minutes of its October 1 board meeting which repeated a line, word for word, from the September minutes.

‘Members agreed that the bank should neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them,’ the RBA said on Tuesday.

NAB senior economist Spiros Papadopoulos said the central bank would be hopeful that its recent cash rate reductions were enough to support long term economic growth.

‘The effect of lower interest rates still has further to run, but the impact in the housing market is already evident, with gains in prices, auction clearance rates, loan approvals and credit growth,’ he said.

The RBA last reduced the cash rate in August by quarter of a percentage point to a record low of 2.5 per cent.

It said international economic conditions had improved recently, with Chinese growth getting stronger, and signs the US economy was continuing to grow at moderate pace.

The minutes made only brief mention of the stalled US budget negotiations, which resulted in the US government shutting down on the day of the October 1 board meeting.

Australian economic growth remains a little below average, with investment in both the mining and non-mining sectors staying subdued, the bank said.

‘Consumer confidence was above average levels and business confidence had increased, although it remained to be seen if this would be sustained,’ the RBA said.

An important aspect of the RBA’s statement was that it made little mention of the high exchange rate, RBC Capital Markets senior economist Su-Lin Ong said.

http://www.skynews.com.au/businessnews/article.aspx?id=915265

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Big four banks stronger than ever

At the same time as some financial planners worry about the dominance of the major banks, a new Morningstar analysis claims the big four banks are stronger now than they were before the Global Financial Crisis and more than capable of seeing off any competitive assaults.

The Morningstar analysis, which included an upgrading of the so-called “moat rating” to “wide”, made clear that Australia’s four major banks now joined only one other bank awarded a wide moat across Morningstar’s global bank coverage universe.

In its analysis of the banks, Morningstar noted that the four major banks “have consistently and successfully fought off the threat of competition from foreign banks, regional banks and non-bank lenders”.

“Shadow banking in the commercial and retail sectors in Australia and New Zealand is immaterial. Potential competitors have tried many times to break the stranglehold enjoyed by the major banks, but to no avail,” the analysis said.

“In our opinion, the major banks are considerably stronger now than before the financial crisis and, even in the depths of the crisis, ROEs were still impressive (Commonwealth Bank fell to 15.8 per cent, Westpac Bank 13.8 per cent, ANZ Bank 13.3 per cent and National Australia Bank 11.8 per cent).”

http://www.moneymanagement.com.au/news/financial-services/2013/big-four-banks-stronger-than-ever

Do Your Stocks Know Their Place?

Technology is wonderful. But it can be mightily cruel too.
We remember the launch of the early BlackBerry [NASDAQ: BBRY] phone models in the late 1990s and early 2000s.
It was so different to everything that went before.
The shape, the screen, what you could do with it.
As we recall, it was more of a data device than a phone because you couldn’t hold it to your mouth and ear to talk. You had to use a handsfree headset.
But now, barely more than a decade after BlackBerry revolutionised the world of mobile communications, the company is about to die.
It’s a worthy reminder to investors that just because something has always ‘been around’ doesn’t mean it will always be around in the future…
As Bloomberg News reported yesterday:

‘BlackBerry Ltd., once valued at $83 billion, may be stuck with the cheapest valuation ever for a North American technology or telecommunications takeover.

‘The smartphone maker said yesterday it reached a tentative agreement for a $4.7 billion buyout by a group led by Fairfax Financial Holdings Ltd., its biggest shareholder. Including net cash, the proposal values the Waterloo, Ontario-based company at an 80 percent discount to its book value and just 0.17 times its sales, the cheapest revenue multiple on record among similar-sized North American telecommunications or technology acquisitions…‘

Read More: http://www.moneymorning.com.au/20130925/do-your-stocks-know-their-place.html

Housing lending up but not enough

Lenders are pumping an extra $3.7 billion a month into the housing market compared with a year ago, but the economy probably needs more than that.

Figures from the Australian Bureau of Statistics on Monday showed the value of housing loans, including loans to both home-byers and investors, rose by a bit over one per cent in July, to be up by 18 per cent from July 2012.

In annual terms that would work out to about $44 billion.

It sounds like a heck of a lot of money and it’s one reason the Reserve Bank of Australia and others with their eye on the economy think the long series of interest rate cuts to record lows is having an effect.

But will it be enough?

The economy, as last week’s national accounts confirmed, is growing at about three quarters of its normal pace – not enough to stop unemployment from edging higher.

That annual rise in lending, $44 billion, works out to about three per cent of gross domestic product (GDP).

Most of it represents just a transfer of wealth from one owner to another, one mortgage debt racked up as another is paid off.

Loans that can be identified as lending for new housing – either newly constructed or yet to be built – were up by 17 per cent from a year earlier in July.

But that rise, if annualised, represents only a little over $5 billion a year, or 0.3 per cent of GDP.

READ MORE HERE: http://au.news.yahoo.com/thewest/business/a/-/national/18852262/housing-lending-up-but-not-enough/

Essential money advice for every age

Gen Y are in the drivers seat, because time is on their side, so here are three easy ways to make a big difference to your financial health:

Invest in yourself: A recent AMP. NATSEM report found someone with a bachelor degree can expect to earn an average of $2.9 million over their lifetime – almost $1 million more than someone who stops studying at year 12. A postgraduate qualification should see you earn about $3.17 million. But the benefits are most marked once you hit your forties, so Gen Y can fall into the trap of comparing themselves to their peers at a young age and not realising how significantly their earnings paths will diverge later on. Get qualified!

Pay yourself first: We all work hard for our money so when your pay hits your bank account, make sure that you’re the first one to benefit. Before you pay your rent, mortgage or bills – pay yourself. Preferably 10 per cent of your income. It doesn’t matter whether you put it into your super, your mortgage or a savings account – just get in the habit of doing it.

Read more: http://www.news.com.au/money/generations/three-ways-to-be-smarter-with-your-money/story-fn7ki9pl-1226709035850#ixzz2doRbZaA2

How to get rich in the next ten years

THERE’S great Warren Buffett quote: “I buy (shares) on the assumption that they could close the market and not reopen it for five years”.

It’s good advice, evidenced by Vanguard’s 30-year index chart, released earlier this month. The chart tracks the growth over a 30-year time frame of a $10,000 investment. So had you invested $10,000 30 years ago and reinvested all income, you could now have:

$268,733 if invested in Australian shares;
$190,702 if invested in US shares;
$168,900 if invested in listed property;
$105,786 if invested in cash.
While the chart demonstrates the value of long-term investing, it also shows the value of following a broad trend rather than focusing specifically on any one fad.

What do I mean? Well the Australian shares result above is calculated on the S &P/ASX All Ordinaries Accumulation index. This index represents the 500 largest companies listed on the ASX – but over the past 30 years the top five hundred companies have changed. Some examples are the float of the Commonwealth Bank, of Woolworths, of Telstra and the various airlines.

Full article here: http://www.dailytelegraph.com.au/money/investing/the-biggest-trend-in-the-decade-ahead/story-fni0csm3-1226703916255

Content is King and Time is Your Queen

Wealth Online Blog

In your business, you must focus on two things: content and time. They are both equally important and inextricably intertwined.

Great content will never go out of style. Seriously, there’s a reason why they call the payments to actors, producers, writers, and other artists “royalties”. Create enough great content and you can live like a king, too.

While you may not be in the business of creating pure entertainment, your e-commerce store should still be glittering with your amazing content. If it isn’t, get to work right away! Your product descriptions, images, and videos (yes, you should be making videos) should all be your original content.

Creating your own content provides benefits to both search engines and your audience.

Search engines are becoming smarter every day. Don’t think for a second that Google isn’t working on technology to decipher the content and meaning of images. If you’re using the same…

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