The way home ownership relates to retirement income is rated a 'D', as in Distortion, Decumulation and Denial. For many, their home is their largest asset but it's least likely to be used for retirement income.
We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.
Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.
There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'. Four key materials are required for battery production as we head towards 30X the number of electric cars. It opens exciting opportunities for Australian companies as the country aims to become a regional hub. RBA Governor, Philip Lowe, says that surging house prices are not as important as full employment, but a previous Governor, Glenn Stevens, had other priorities, putting the "elevated level of house prices" first.
Australia appears to be slipping from the pantheon of global superstar pension systems, with a recent report placing us sixth. A review of an earlier report, which had Australia in bronze position, points to some reasons why, and what might need to happen to regain our former glory. Super funds will soon be required to offer retirement income strategies for members in decumulation.
The prospect of Australia's superannuation industry becoming larger than the domestic equity market, and expected merger activity among super funds, has raised concerns about common ownership and capital concentration. With investors focusing on sustainability more than ever before, we look at the increasing role ESG is playing in private markets and provide some insights into how to factor sustainability into investment decisions.
You could be forgiven for ignoring the spectacle that was COP26, but decarbonisation is a theme investors cannot ignore when it comes to portfolio positioning for the long term. The Industrial and Logistics sector, via the ongoing rise of e-commerce, has demonstrated resilience through the global pandemic and has become a hot topic amongst both domestic and global investors.
When it comes to doing your homework on Exchange Traded Funds, understanding index construction is indispensable and the ideal way to find best-of-breed funds for your portfolio.
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First Name required. Email invalid Email required. Saturday, 13 November Recently trending. Stop treating the family home as a retirement sacred cow House prices surge but falls are common and coming Aussies: five charts on who earns, pays and owns Two strong themes and companies that will benefit 4 key materials for batteries and 9 companies that will benefit.
Sponsors About Register for free. Interest rates. Financial planning Insurance. Reader: "An island of professionalism in an ocean of shallow self-interest. Well done! QE is not money printing, but what is it? How does this happen, and who 'creates money'? Back to the impact on inflation QE is indeed an inflationary tool, but increasing the monetary base does not guarantee inflation. Money is not necessarily circulating and therefore has little, if any, effect on inflation.
John Pracy March 22, Still confused! Warren Bird March 22, John, just focus on the fact that monetary policy is all about setting interest rates. Dane March 11, I've read several finance text books from well regarded academics on monetary policy and QE and this is as good of an explanation as I have come across.
Phil March 11, still don't quite understand, if bond yields have nearly doubled in the last 3 months, the market signalling inflation expectation and growth, and that is what the RBA wants, why does it continue with QE, to supress the rate? Tony Dillon March 11, Phil, I mentioned in the article that bonds price in expected inflation, not actual. Jack March 11, Thanks, Tony. Leave a Comment: Comment is required Name is required Email is required.
Sam Churchill 27 March Policy pincers in Australia and the US Unemployment and inflation seem to be heading in different directions in Australia and the United States, but the outcomes for interest rates and equity markets might be the same. Ashley Owen 29 August Craig Swanger 27 November Firstlinks is sponsored by:. Most viewed in recent weeks. Stop treating the family home as a retirement sacred cow The way home ownership relates to retirement income is rated a 'D', as in Distortion, Decumulation and Denial.
Susan Thorp 27 October House prices surge but falls are common and coming We tend to forget that house prices often fall.
Ashley Owen 6 October Graham Hand 6 October Two strong themes and companies that will benefit There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'. Roger Montgomery 20 October Dawn Kanelleas 13 October Global layout of supply chains made the allocation of resources globally more efficient, hence global output increased accordingly.
So certain amount of M increases in this equation does not necessarily lead to an increase in P. The last factor is the fall in oil prices. More crude oil production from U. With the falling of oil price from the beginning of to February , oil price changes accounted for most of the change in US inflation.
The correlation between US import price and crude oil price exceeded 0. The negative impact of the epidemic on the global supply chain and industrial production capacity, together with QE, will create inflation pressure. The biggest difference between economic recession caused by the coronavirus epidemic and the financial crisis is the impact on the supply side:. First, compared with the financial crisis, the integration of the global supply chain has upgraded.
China's importance in the global supply chain is increasing. Since the outbreak of the epidemic in China, the global supply chain has been severely impacted.
As the epidemic spreads, its negative impact on the global supply chain has become more obvious. Taking the automotive industry as an example, the initial impact of the epidemic on China hindered the supply of auto parts. In this epidemic, the return of workers to the factory and the resumption of the production have been delayed, causing many manufacturers to suspend the production of some vehicle factories.
Although China's epidemic prevention and control has controlled the situation for now and the supply of auto parts has gradually recovered, global auto production is still facing difficulties due to the epidemic in Europe. By purchasing these securities from banks, the central bank hopes to stimulate economic growth by empowering the banks to lend or invest more freely.
Critics have argued that quantitative easing is effectively a form of money printing. These critics often point to examples in history where money printing has led to hyperinflation, such as in the case of Zimbabwe in the early s, or Germany in the s. However, proponents of quantitative easing will point out that, because it uses banks as intermediaries rather than placing cash directly in the hands of individuals and businesses, quantitative easing carries less risk of producing runaway inflation.
There is disagreement about whether quantitative easing causes inflation, and to what extent it might do so. For example, the BoJ has repeatedly engaged in quantitative easing as a way of deliberately increasing inflation within their economy. However, these attempts have so far failed, with inflation remaining at extremely low levels since the late s.
But so far, this rise in inflation has yet to materialize. Federal Reserve Bank of New York. Board of Governors of the Federal Reserve System. Congressional Research Service.
Accessed Sept. Federal Reserve Bank of St. International Monetary Fund. Federal Reserve Bank of San Francisco. The World Bank. Swiss Society of Economics and Statistics. Bank of England. Office for National Statistics. Fiscal Policy. Federal Reserve.
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These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Haldane believes the long-term effects of the pandemic recession are likely to be towards the top end of expectations. Economists, and more specifically monetarists, fear that the Bank is underestimating the effects of inflation. These people are likely to be correct, since increasing M2 has always led to inflationary pressure in the past.
By then, the government may be helping to curb it by reining in spending and raising taxes, both of which would reduce the money supply. But mainly it would fall to the Bank to raise interest rates to stop consumers from spending to the same extent while presumably also insisting the extra inflation was outwith its control and not due to QE or the fiscal stimulus. This would cause economic contraction and cause businesses and consumers to struggle with debts that are already at very high levels.
In other words, we could be looking at an old-fashioned boom and bust phase of expansion and contraction within the next 18 months, and more challenging times ahead as a result. Much may depend on coronavirus in Europe and whether a new wave arrives, since this could potentially choke off the recovery and keep inflation under wraps.
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