Money Minute – May 30 2017 “Our World Turns Gloomy”
Ross Greenwood: Karl, everybody.
Australia, next week, equals a world record – the longest time a modern economy is gone without being in official recession.
It seems it’ll over take Holland’s record, broken by the Global Financial Crisis, but for Australia it could be a pretty close thing.
Here’s track record, over 26 years unbroken by recession or two consecutive quarters where the economy shrinks.
Now, there have been blips along the way, I’ve got to tell you.
Like around the time of the Tech Wreck in 2000, the Global Financial Crisis where one quarter was seriously underwater, another blip in 2011, and in the September quarter last year when commodity prices and our economy stalled.
But, right now with the aftermath of Cyclone Debbie, the slowing of home construction, flat retail sales, and this – iron ore price is dropping more than 30 per cent in the past two months…the drivers of our economy have sort of stopped driving.
One of the reasons, Shane Oliver at the AMP thinks the dollar is hezded for 68 US cents.
Anne Beacher, chief economists of TD Securities thinks it’s falling further to 62 US cents.
Time will tell.
With all this, there are other things back on the radar.
Interest rates cuts. The ASX has an interest rate predictor which recently increased the odds of a rate cut this year.
Now, those odds, almost nothing short time ago, are now out to 25 percent.
It’s not enormous, but it is rising.
Some though, are taking no risks at all.
Like this bloke, Philip Parker, chairman and chief investment officer at Altair Asset Management, who’s taken the most pessimistic step a fund manager can.
He’s liquidating his share portfolios, and handing back hundreds of millions of dollars to his investors.
Remember, it takes all views to make a market.
But this is a brave step – if a fund’s manager can’t find value in the stock market to make money, why should they hang on to it?
But it’s also incredibly gloomy – he’s worried about housing, the economy, and the share market.
In short, he can’t find anything to buy.
Question is though, if got your money back from Phil, what would you do with it?
Stick it under the mattress? Maybe go to Holland?
Dow Jones down 44 points.