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Austalian shares tipped to bounce December 21

2011-12-21T09:25:00.001+11:00

The Australian share market is tipped to bounce this morning after global stocks posted solid gains in light trading volume. Wall Street rose on improved housing figures. European markets lifted on an upbeat read of business confidence in Germany and strong demand for Spanish debt. The Australian dollar has returned to parity with the US currency. Germany's Ifo economic institute showed an unexpected rise in business sentiment overnight while a separate survey showed consumer confidence was holding up in European largest economic, despite the ongoing debt crisis.
US data released overnight, showed new home starts in November rose 9.3 per cent to their highest level since April 2010.

At 0711 AEDT on Wednesday, the March 2012 share price index futures contract was 71 points or 1.76 per cent higher at 4,110.
In economic news on Wednesday, the Westpac-Melbourne Institute will release its leading Indexes of economic activity for December.
On Tuesday, the benchmark S&P/ASX200 index was down 7.3 points, or 0.2 per cent, at 4,053.1, while the broader All Ordinaries index fell 6.8 points, also 0.2 per cent, to 4,107.1, the lowest since November 25.
US economic news
US housing starts and building permits increased more than expected to 1.5 year high last month. The Commerce Department reported housing starts gained 9.3 per cent in November from the month before and were 24.3 per cent higher from the year before to a seasonally adjusted annual rate of 685,000 units. New permits for future construction rose 5.7 per cent to a 681,000-unit pace in November.
Figures:
Wall Street advanced on Tuesday: The Dow Jones Industrial Average gained 337 points to close at 12,104, the S&P500 added 36 points to close at 1,241 and the Nasdaq put on 81 points to close at 2,604.

European markets closed higher Tuesday: London’s FTSE was up 55 points, Paris was up 81 points and Frankfurt was up 176 points.
Asian markets finished mixed: Hong Kong’s Hang Seng was up 10 points, Tokyo Nikkei was up 40 and China’s Shanghai Composite eased 2 points.

The Australian share market finished 0.2 per cent down after choppy trade on Tuesday. The S&P/ASX 200 Index lost 7 points to finish at 4,053. On the futures market the SPI is 74 points stronger.

Currencies:
The Australian Dollar at 8:20AM was buying $US1.0078 cents, 64.37 Pence Sterling, 78.49 Yen and 77.06 Euro cents.

Please contact Amazon Financial Group if you require further information or advice, (03) 9866 2400 or email admin@amazon.net.au

Why aren’t my super contributions tax-free?

2011-12-21T09:13:00.001+11:00

This is a common question from a number of my clients;

Q: I checked my statement and I put an extra $10 per week into my super and each time an amount is put in, it has been taxed. Is this right? I thought that my contributions were tax-free?
Stephen's response: I’m not certain if you’re asking:

whether you pay any tax at all when you use your income to make super contributions,
whether you pay tax on super contributions when they enter a super fund, or
whether you pay tax on your income before you make super contributions

In any case, I will ensure that I answer all of these questions.
The deal with super contributions is that tax is usually paid on that money at some stage (by you or your super fund account), unless you don’t pay tax on your personal income and you make an after-tax contribution. For example, an individual who may not pay income tax on personal income is someone who has a taxable income of less than $16,000 (for the 2011/2012 year).
If you make a non-concessional contribution, that is, an after-tax contribution, you are making a contribution from your after-tax money. If you’re an employee, then typically your employer deducts PAYG tax instalments, and then your pay goes into your bank account, and then a contribution is made from that bank account, or your employer makes that payment for you. In these circumstances, no additional tax should be deducted upon entry into the super fund because such contributions are treated as non-concessional contributions. For a contribution to be treated as a non-concessional contribution however, the super fund must be aware that it is a non-concessional contribution.

If you choose to make a concessional (before-tax) contribution, then the super fund deducts a 15% ‘contributions’ tax from the contribution upon entry into the fund. If you’re paying less than 15 cents in the dollar tax on your personal income, then concessional contributions are not considered a tax-effective option.
Concessional contributions include your employer’s Superannuation Guarantee payments, any salary sacrificed contributions and tax-deductible super contributions (if eligible).
Note: If you intended to make after-tax contributions, and the super fund has treated them as concessional (before-tax), then you need to chat to your super fund to resolve this matter.

Please contact Amazon Financial Group if you require further information or advice, (03) 9866 2400 or email admin@amazon.net.au

Dividend a reason to invest

2011-12-14T11:43:00.002+11:00

What a disappointing year it has been for investors, particularly for shareholders.
A recovery of sorts appeared to be under way when the market almost touched 5000 points, as measured by the S&P/ASX 200 index in April.
But in the second half of the year, trading was constrained to a range of between 4000 points and 4500 points. The market is about 5 per cent lower than where it started the year.
Any prospect of a sustained recovery in shares has likely been put off for even longer now that the euro zone is almost certainly in recession. That is bad news not just for those holding shares directly.
A poorly performing sharemarket leads to poorly performing superannuation funds because shares are the biggest investment of default funds, where most people have their super.
It is hard to see how share returns can improve next year when so much uncertainty surrounds the euro zone debt crisis. Speculation on recession in Europe could unsettle markets, even if the Europeans come up with a credible plan to get government debt under control.

Now the turmoil in Europe has been compounded by the spectre of recession, speculation over the consequences for global economic growth will intensify. The Australian sharemarket is regarded by global investors, such as pension funds, as a resources play, so lower global growth and commodities prices will force them to reduce their exposure. That is already happening to some extent because the high Australian dollar makes our shares expensive for foreign investors.
All this is swamping the relatively good news on economic growth and corporate profits.
Big companies such as Telstra and the banks are paying cash dividends of 6 per cent to 9 per cent, even more with their franking credits. Some sectors, such as retailing, are struggling but by most measures share valuations are low.

Do not assume the recovery, when it eventually comes, will be a rerun of the bull market in shares between the early 1980s and 2007.
The trend towards low inflation and interest rates that was mostly behind the bull market (as well as companies and individuals loading up on debt) was a one-off.
Investors focused on the rising prices of their shares. The income the shares paid became immaterial. In all likelihood, the game has changed. Investors will be much more focused on the income that is generated as they expect only fairly modest capital gains over the longer term. The swelling ranks of retirees in developed countries can be expected to help drive this trend as they favour investments with good income streams.

Market slightly down on Fed disappointment

2011-12-14T11:38:00.002+11:00

AUSTRALIAN stocks opened slightly lower after the US Federal Reserve disappointed markets by holding off with further monetary easing.
The Fed also held interest rates near zero and warned that, despite some improvement in the job market, unemployment remained high and the housing market in the doldrums.
"Strains in global financial markets continue to pose significant downside risks to the economic outlook," the Fed said.
Still, Cameron Securities' client advisor Adrian Leppinus said that the lack of action by the Fed shows improving health of the world's largest economy.
"We're seeing signs of the US recovering and positive growth so far this year," he said.
"I think most people are just waiting for Christmas."
At 10.37am AEDT today, the benchmark S&P/ASX200 index was down 13.5 points, or 0.3 per cent, at 4179.9, while the broader All Ordinaries index lost 13.6 points to 4238.1.
On the ASX 24, the December share price index futures contract fell four points to 4106, with 31,271 contracts traded.
The Fed's decision also followed some surprisingly positive news out of Europe overnight.
German data showed a pickup in investor confidence after the debt pact thrashed out by European leaders last week buoyed hopes for economic recovery.
In heavily-indebted Spain, strong demand saw yields in an auction of 12- and 18-month Treasury bills slip from November's 14-year high.
Leading the market lower were resources stocks, which fell 0.9 per cent despite a pick up in the gold price. BHP Billiton shed 41 cents, or 1.1 per cent, to $35.41, while Rio Tinto fell six cents, or 0.1 per cent to $62.70.
Consumer staples and discretionary shares posted marginal gains while, telecoms and financials slipped slightly.
Mr Leppinus said the market will be watching to see what headlines come out of Westpac's annual general meeting today, the first of three by the big four banks this week.
"They're expected to say that the European situation is still affecting credit availability," he said.
"Everyone's still pretty cautious right now."
Westpac shares were down 18 cents, at $20.65, Commonwealth Bank of Australia was down 12 cents, or 0.2 per cent at $49.23, National Australia Bank was down two cents at $23.73 and ANZ Bank was up three cents, or 0.1 per cent, at $20.78.
In economic news today, Westpac/Melbourne Institute showed December consumer sentiment survey was down from November.

Australian Market Update

2011-12-06T07:50:00.001+11:00

Australian shares are set for a modestly stronger start after France and Germany called for a new EU treaty with tougher budgetary rules to deal with the eurozone debt crisis.
Stocks markets rose on the proposal, but Wall Street pulled back on reports later in the day that ratings agency Standard & Poor's has warned Germany, France and four other eurozone nations they risk losing their triple A ratings.

At 0713 AEDT on Tuesday, the December share price index futures contract was up six points at 4,324.
In economic news, the Reserve Bank of Australia (RBA) holds its December board meeting and announces its interest rate decision at 1430 AEDT.

On Monday, the benchmark S&P/ASX200 index gained 33.3 points, or 0.8 per cent, to 4,321.3, while the broader All Ordinaries index gained 33.2 points, or 0.8 per cent, to 4,379.5.

Want 11.3% from a bank?

2011-11-29T09:25:00.001+11:00

Greed’s having a minor triumph over fear on the Australian market today, a reversal of Friday’s outcome, as investors are tempted into betting that Europe won’t commit financial suicide.
The temptation is considerable. On Friday’s closing price of $19.50, Westpac shares dividend of $1.56 over the past year represents a yield of 8 per cent. Add on the franking credits and it’s the pre-tax equivalent of about 11.3 per cent.

The other Big Four banks weren’t far behind, the NAB yielding 7.9 per cent, ANZ 7.5 per cent and CBA 7 per cent. As a rule of thumb, risk warning bells should ring when you see the offer of double-digit returns in Sunday fish-wrapper advertisements alongside plugs for miracles with vinegar and magnet cures for arthritis. Yet on Friday afternoon all our big banks were offering just that.
Back in May, when Europe was a serious problem rather than a crisis, the banks required their franking credits to get up to that sort of yield, and were still a very competitive investment. Europe’s threat to the global banking system has whacked the local banks’ share prices, but in the process pushed their yields to dizzying heights.
The catch of course is that the dividend payments have to be maintained, which they weren’t in 2009 despite Gail Kelly claiming they would be. The market was screaming that dividends would be cut and the Westpac board either didn’t know what was happening with their bank, or worse.

The banks’ dividend payments did recover though and the Big Four are now stronger institutions than they were when the GFC first struck, relying less on overseas funding and having painfully tidied up their books.
The likes of ABC Learning, Babcock & Brown, Allco, Citi Pacific, MFS et al have been dealt with. The surviving property trusts have been massively recapitalised and numerous property developers cut off from funding.
The risk of global contagion remains, reflected in the banks’ pricing, but so are those enticing yields. Must be time to ask Gail about her dividend sustainability…

Thanks to The Age

Superannuation: it's not all doom and gloom

2011-11-29T07:42:00.001+11:00

IT'S not all doom and gloom for superannuation balances, despite the massive plunge super funds have taken during the latest share market falls.
Long-term financial modelling estimates most people will not be as greatly affected as they fear by the time they retire, while even those close to retirement now still have decades to make up the losses.
Financial services company Provisio Technologies says "short-termism" in super fund performance reports can create unnecessary fear and worry in some people.
"Market falls such as that experienced by the Australian Securities Exchange in the new financial year have far less affect on long-term retirement income than most investors realise," Provisio director Cameron O'Sullivan says.
"If the market falls 20 per cent in four months, which happened this year, then it feels like Armageddon.
"Even in the case of a significant drop, if you look ahead to projected retirement income you'll see a much less dramatic picture," O'Sullivan says. "By highlighting the long-term view and reducing the focus on short-term volatility, investors are less inclined to react in potentially disadvantageous ways."
The company which undertakes financial modelling has produced two scenarios showing how the latest share market falls may impact on someone's eventual retirement income.
The forecasts are based on research from independent company SuperRatings that estimated the average balanced super fund was down 5 per cent at June 30.
In the first case study of a 45-year-old with a super balance of $100,000 which has slumped to $95,000, the difference in retirement income at age 65 was less than $10 a week.
In the second case a 65-year-old with super of $200,000 which has fallen to $190,00, the difference in retirement income was less than $20 a week.
In both cases, O'Sullivan says, neither would hit the worst-case scenario of running out of super income (after including top-up payments from Centrelink benefits) during their life expectancy.
"A common fear among investors is that their retirement income will not last and a drop in markets can exacerbate that fear," he says.
O'Sullivan says while the $20-a-week slug to the 65-year-old could hurt some retirees, share market slumps have still not been dramatic enough to cause the super fund to run out of money before the average life expectancy.
One of the country's largest funds, AustralianSuper, has set up an online service that calculates how long members' super will last in retirement.
Every time a member logs on to their account they receive a pop-up message showing how long their super should last.
Although perhaps confronting, the pop-ups encourage people to think about their balance and retirement income goal, says AustralianSuper chief executive Ian Silk.
"It's entirely natural to be spooked when people hear that their super has lost money," Silk says.
"However, people don't go out and sell their house when they read the value has fallen because they know their house is for the long term.
"It's not guaranteed to rise every year but over the long term, investing in equities will make a greater amount than investing in risk-free assets such as cash."

Thanks to Herald Sun

Australian market preview

2011-11-29T07:35:00.001+11:00

THE Australian share market is set to continue its rally as world markets rose overnight on hopes of progress on Europe's debt crisis. At 0656 AEDT on Monday, the December share price index futures contract was 19 points higher at 4,097.
The market on Monday ended a six-trading-day losing streak.
The benchmark S&P/ASX200 index rebounded to close up 73.9 points, or 1.85 per cent, at 4,058.2.
The broader All Ordinaries index was up 68.2 points, or 1.68 per cent, at 4,125.8.
In economic news on Tuesday, the federal government hands down its Mid Year Financial and Economic Outlook. The Housing Industry Association (HIA) releases new home sales figures for October.

THE Australian dollar has opened higher on the possibility of developments on a euro-zone debt crisis solution.
At 0700 AEDT today, the Australian dollar was trading at 98.87 US cents, up from 98.57 US cents on Monday afternoon.
HiFX trading director Mike Hollows said the local currency had been pushed higher after a good night for international equities, on the back of varied bailout news in Europe.
"We saw European equities surge quite strongly, and that followed onto the US ones - the Dow's currently up two and a half per cent,'' he said.
"There were rumours that the IMF was potentially looking at structuring a 600-billion euro loan to Italy - that's been denied, but it was certainly encouraging.
"Anything which gives us hope from a European perspective is going to be a huge positive, at least in the short term.''
After four weeks of declines, the Australian dollar was showing some signs of rallying, Mr Hollows said.
"There's been a lot of negativity in recent weeks, and we've seen at least a short recovery,'' he said.
"The Aussie did actually go up considerably higher (last night) than where it currently is - around the 99.75 level, so not far off parity.

Clearance rates fall across all major capitals

2011-11-21T11:27:00.001+11:00

Despite a slight increase to home buyer confidence in recent weeks, auction clearance rates fell across all major capital cities over the weekend.
Auction figures released by Australian Property Monitors found clearance rates in Brisbane fell by 35.5 per cent over the weekend, with the capital city recording a clearance rate of just 12.5 per cent.
The story was much the same in Melbourne, with auction clearance rates falling 10.3 per cent to 47.4 per cent.
The Real Estate Intitute of Victoria (REIV) reported a 53 per cent clearance rate in Melbourne on the weekend.
Enzo Raimondo, REIV's CEO, said the auction market "has been typified by consistently moderate levels of demand this year and this weekend [was] no different."
"There have been a total of 668 auctions this weekend of which 352 sold and 316 were passed in, 204 of those on a vendor's bid.
"Next weekend the REIV expects around 1045 auctions next weekend."
Despite the sharp falls in both Brisbane and Melbourne, clearance rates in Sydney and Adelaide remained relatively stable with 52.4 per cent and 34.5 per cent of properties selling, respectively, over the weekend.
A three bedroom house located in Annandale, in Sydney's inner west, took the title as most expensive property sold over the weekend, selling for in excess of $2.4 million. The most affordable home was three bedroom villa in St Marys, in Sydney's outer west, which sold for $241,000.
The Real Estate Institute of NSW (REINSW) reported a Sydney clearance rate of 58 per cent for the weekend, with 372 properties selling and 268 passing in (33 of those on a vendor bid).
"Clearance rates over the previous six weeks have been steady between 55 and 60 per cent, a stronger result than the same period last year when rates were between 45 and 55 per cent," said REINSW CEO Tim McKibbin.

The Real Debt Crisis in Europe - Read On

2011-11-21T09:13:00.001+11:00

SO MUCH has been written about the debt crisis in Europe that it can send your head into a confusing spin. The easiest thing is to just tune out.
But don't. Europe is on the brink of tearing itself apart and the ripple effect around the world, and on your life, could be significant.
Spend a week in Italy, Greece and Germany, and you will get a sense of how serious it is. A dismantling of the European Union could send the region into a serious recession.
For Australians, a serious European recession could see our commodity prices fall; spark a global banking crisis that pushes up interest rates and makes credit harder to get; and cause share markets to fall, which affects our superannuation returns and hits consumer and business confidence.
To understand how this could have happened to Europe, Italy and Greece are great case studies. They've been brought to their knees by widespread tax evasion, rampant corruption and a lack of competition. Here's a simple guide to what's happening in Italy and Greece.
This is Greece:
* Economy contracted 5.2 per cent in past year.
* Government debt is 145 per cent of GDP (Italy is 115 per cent, Ireland 95 per cent).
* Unemployment to 18.75 per cent but closer to 25 per cent because 115-a-week benefits stop after a year.
* Budget deficit 15.4 per cent of GDP, well above eurozone limit of 3 per cent.
* Public service employs 20 per cent of the population.
What has dragged Greece to its knees?
* Tax evasion amounts to 22 billion ($29 billion) a year or 10 per cent of GDP.
* Corruption is worth 20 billion a year or 8 per cent of GDP.
* Black economy accounts for 25 per cent of GDP.
* Protected industries mean no competition. For example, there hasn't been a new trucking licence issued since 1970.
* The big interest bill on government debt is killing the economy.
How are they fixing it?
* Social security payments to be slashed by 5 billion over four years.
* Public service wages cut by 20 per cent.
* Pensions above 1000 a month cut by 20 per cent.
* Retirement age raised to 65. It's currently 50 years for public servants.
* Deregulate industry to promote competition.
The key to all of this is convincing Greeks to pay their fair share of tax. Would you believe 900,000 Greek people or businesses owe 41.1 billion in back taxes and 14,700 of them owe 3.7 billion, or an average 150,000 each?
They have a tax on swimming pools in Greece and in one of the rich Athens suburbs only 324 households admitted to having a pool and paying the tax. So the Finance Ministry sent up a helicopter and photographed 16,974 pools in that area. One of the hottest items for sale in Athens is camouflage pool covers.
A good reflection of how nervous Greeks are about the future of the country is 9000 people sent 4.9 billion overseas last year. But 5000 of those people declared a taxable income of under 20,000 a year.
This is Italy:
* Eighth largest economy in world and fourth largest economy in Europe.
* Government debt of $2.6 trillion, which is 120 per cent of GDP.
* French banks have $400 billion exposure to Italian bonds, while German banks have $150 billion.
* European Stability Fund to save debt-ridden countries is $1.3 trillion, which is not enough to save Italy.
* Nightmare to do business. Italy is ranked 87th in an Ease of Doing Business index, which puts it behind Sudan.
* Lots of corruption. It's ranked 67th in the Corruption Perceptions Index, behind Rwanda and several other African countries.
* Over past 10 years, economic growth has gone backwards. Italy's economic growth over the past 10 years is ranked 179th in world, behind Zimbabwe.
Italian austerity measures:
* Public servant wage freeze until 2014 and pubic service headcount slashed. For every five people who leave, they'll only be replaced by one.
* Freezing aged pension and making it tougher to get.
* Increase healthcare fees and cut family tax benefits.
* Increase value-added tax from 20 per cent to 21 per cent.
* Tax surcharge on high-income earners.
* Limit cash transactions to under 2500.
* Crackdown on black economy and tax evasion.
* Cut government red tape.
* Deregulation of labour laws.
* Implement privatisation of government enterprises.
What will save Italy?
* Government debt high but private debt low.
* It makes a budget surplus before interest. The interest on government debt is the killer.
* Has a strong industrial base.
* Italians are traditionally good savers.
--

DEBT CRISIS

WHILE the European debt crisis seems to be getting worse, one of the bright spots is the encouraging signs coming out of the US.
Stronger retail sales figures, an upturn in the jobs market and improving economic growth could see the US recover at just the right time to offset any European downturn.
Some forecasters are saying the US economy is improving faster than they expected, which will hopefully improve consumer confidence and bring stability to the ailing property market.
--

BANK CRUNCH

ONE of the consequences of an ailing Europe is the pressure it could put on European banks.
With the amount they have invested in European government bonds, any defaults will trigger big losses.Big banks making big investment losses means they will go into the bunker and not lend us as much.
So credit will be harder to get and it will cost more if you're successful. Interest rates will rise.
So it might be worthwhile cherishing those lines of credit that you already have approved. Even if you pay down the line of credit, think of keeping it open in case you need it later.
Some analysts are even saying it's better to apply for a line of credit now while it's still available and just have it sitting there unused as a safeguard.

thanks to news.com.au

Australian market preview

2011-11-21T09:08:00.001+11:00

The Australian market looks set to open flat.
At 0641 AEDT on Monday, the December share price index futures contract was UP one points at 4,182.
In economic news on Monday, Reserve Bank of Australia (RBA) assistant governor (financial markets) Guy Debelle is to deliver a speach to the Australian Securitisation Forum Conference.

The Australian sharemarket is expected to begin the week flat after mixed trading in the US and European markets ended last week in the red.
The effects of positive economic data from the US was being outweighed by worries about the eurozone debt crisis, CommSec chief economist Craig James said.

In Australia, the share market on Friday closed firmly in the red at its weakest level so far for the month as concern about the eurozone debt crisis continued to weigh on investors.
The benchmark S&P/ASX200 index was down 81.2 points, or 1.91 per cent, at 4,177 points, while the broader All Ordinaries index shed 77.4 points, or 1.79 per cent, to 4,246.7 points.

The Australian sharemarket ended last week firmly in the red and is at its weakest level so far for the month as the borrowing and debt problems of Greece, Italy and others continued to weigh on investors.
With six weeks left in 2011, the Australian All Ordinaries was down by 11 per cent for the year and the ASX 200 was 10.5 per cent lower, Mr James said.

Shares close lower on Europe concerns

2011-11-16T17:33:00.000+11:00

THE Australian share market closed lower on Wednesday after a positive lead from United States markets was outweighed by continued concerns about Europe's debt problems.
At the close, the benchmark S&P/ASX200 index was 38.2 points, or 0.89 per cent, lower at 4,247.4 points, while the broader All Ordinaries index lost 37.7 points, or 0.87 per cent, to 4,313.8 points.
The December share price index futures contract was down 41 points at 4,266 points, on a volume of 36,444 contracts.
Positive data on the US economy boosted Wall Street on Tuesday, with the Dow Jones Industrial Average gaining 17.18 points, or 0.14 per cent, at 12,096.16.
But in Europe, markets moved mostly lower, with investors keeping a wary eye on the eurozone debt crisis as Italian, Spanish and French borrowing costs spiked worryingly higher.
"We had a pretty strong lead coming from the US overnight but at the same time it did look like we were in for a tough session," IG Markets market strategist Stan Shamu said.

Selling Uranium to India?

2011-11-16T17:28:00.001+11:00

In a few short words advocating selling uranium to India, Prime Minister Julia Gillard heralded the beginning of a new phase of the minerals boom in Australia. Because Indian demand for our uranium (and coal) is going to be big – very big. She also transformed the economics of the development of the world’s richest mineral deposit – BHP Billiton’s Olympic Dam. With BHP dominating Australian investment portfolios, Australian superannuation savers have every reason to cheer Julia Gillard, who now understands that the Indian uranium declaration means she faces a gruelling time from anti-uranium forces in her party and among the Greens. Gillard has also ushered in a new wave of Indian investment in Australia and confirmed the hopes of the Australian mineral bulls who say that when China starts to flatten out India will take up the growth curve.When you look what is happening in Indian power generation, you suddenly see why India is desperate for our coal as well as our uranium.Electricity demand in India is increasing rapidly, and the 830 billion kilowatt hours produced in 2008 was triple the 1990 output. But the Indian electricity industry has problems. There are huge losses in transmitting power over long distances. Coal provides around 68 per cent of Indian electricity but reserves are limited and can’t support the planned enormous power expansion projects.Gas provides about 8 per of Indian power and hydro 14 per cent, while nuclear is currently around 4 per cent, because India has had problems accessing world nuclear technology. In the longer-term that technology freeze looks like being a blessing for India, because when the Western world turned its back on nuclear, India did extensive research work developing nuclear power technology. But that’s all changing. Not only does India expect to double per capita electricity consumption by 2020, but huge rises in power generation are expected in the following decades. While there is considerable community debate in India, the 2050 broad plan is to generate 25 per cent of this greatly expanded electricity requirement via nuclear power.At the same time, China has also decided that nuclear is a key mechanism to reduce its carbon footprint. You can see why China is looking around the world at buying companies with uranium reserves.The global community has extensive debates over nuclear energy but India and China can see no other way to lift the standard of living of their people and contain carbon. Students of history know what happens to countries that have vast resources and refuse to sell them. Thanks to the Gillard policy, Australia is not in that situation. 15 Nov 2011 10:35 AM

Government introduces legislation to increase compulsory super to 12%

2011-11-03T15:32:00.000+11:00

Today the Assistant Treasurer and Minister for Superannuation, Bill Shorten introduced legislation to raise the Superannuation Guarantee contribution from 9% to 12% on an incremental basis from 1 July 2013 as follows:

      •     1 July 2013        9.25%
      •     1 July 2014        9.5%
      •     1 July 2015        10%
      •     1 July 2016        10.5%
      •     1 July 2017        11%
      •     1 July 2018        11.5%
      •     1 July 2019        12%

The amendments also increase the Super Guarantee age from 70 to 75 commencing 1 July 2013.

The amendments to the Superannuation Guarantee (Administration) Act were introduced along with a package of bills that also introduced the Minerals Resources Rent Tax (MRRT). The changes to the superannuation guarantee are contingent on the passing of the MRRT bills.

In his speech to Minister Shorten noted that the proposed legislation was in line with to the original Keating plan for a 12% compulsory superannuation contributions and accords with the Government’s intention that Australians should be able to retire on a 70% income replacement rate.

Other tax and superannuation reforms

The Government also introduced a Bill providing for other tax and superannuation reforms. These reforms are also contingent of the passing of the MRRT bills.

Low income superannuation contribution

This is a contribution to superannuation of 15% for concessional contributions made, up to a maximum of $500 for low income earners. The payment is in addition to any co-contributions which the person is entitles to.

Low income earners are those on adjusted taxable incomes of $37,000 or less where at least 10% of income comes from employment or business income.

Adjusted taxable income includes:
      •     taxable income
      •     adjusted fringe benefits
      •     target foreign income
      •     net investment loss
      •     tax-free pension/benefit
      •     reportable super contributions less child maintenance.

Increase to the small business instant asset write off threshold from
$1000 to $6,500

The increase should commence 1 July 2012 and is contingent on the passing of the MRRT bills (from $1,000 to $5000) and the Clean Energy Bills ($5000 to $6,500). Also depreciating assets costing more than $6,500 can be pooled together and depreciated at 15% in the year of allocation and 30% in later years.

Small business accelerated deduction for motor vehicles

Small business will be able to immediately write off up to $5,000 of a vehicle purchased from 1 July 2012 and depreciate the remainder at 15% in the first year and 30% thereafter.

The Entrepreneurs tax offset will be abolished but this is not contingent on the passing of the MRRT bills.

Greece causing more problems in Europe, Stock Market set to open Lower

2011-11-02T09:37:00.001+11:00

THE Australian market looks set to open lower after overseas markets went into a tailspin overnight, following Greece's unexpected announcement of a referendum on its latest EU bailout program. At 6.21am (AEDT) today, the December share price index futures contract was down 51 points at 4180.
Greece's latest bailout deal was only agreed upon last week, and the referendum puts the hard won accord in jeopardy and Europe in uncharted waters.
Dealers said the announcement yesterday by Greek Prime Minister George Papandreou completely trumped any idea the Greek debt issue could be resolved gradually.
The news was even more troubling as it followed weak Asian manufacturing growth data, especially in China, the world's number two economy, which further clouded an already very uncertain outlook.
"The wheels look set to fall off the European bailout effort as the Greek prime minister's call for a referendum sent the market into a tail spin," said ETX Capital trader Manoj Ladwa in London.
The markets have tumbled as investors begin "to factor in an ever increasingly likelihood of a Greek default", Mr Ladwa said.

In London, the benchmark FTSE-100 index of top companies lost 2.21 per cent to 5421.57 points, but even this sharp loss was better than most others.
In Paris, the CAC-40 slumped 5.38 per cent to 3068.33 points and in Frankfurt, the DAX-30 was down 5.0 per cent to 5,834.51 points.
Milan tumbled 6.8 per cent and Madrid fell 4.19 per cent while Athens, the epicentre of the latest crisis, dropped 6.82 per cent.
In Australia, the market yesterday closed before Greece's announcement, falling 1.5 per cent as weakness among the nation's major miners dragged the broader market lower on weaker Chinese manufacturing data and concerns about Europe.
The benchmark S&P/ASX200 index closed down 65.2 points, or 1.52 per cent, at 4232.9, while the broader All Ordinaries index fell 63.3 points, or 1.45 per cent, to 4297.2.

Thanks to AFP

ASX 200 rises 2.66 % at 3 pm today

2011-10-24T15:49:00.003+11:00

The Australian share market has held on to its gains in early afternoon trade after a strong opening on positive Wall Street leads from Friday.

The benchmark S&P/ASX200 index was up 2.66 per cent, to 4252 points, while the broader All Ordinaries index was 83.3 points stronger at 4286.7 points.There had been concerns the mood of investors would be subdued due to European leaders' inability to finalise measures to boost Europe's bailout fund and resolve the Greek debt crisis. "We managed to hold on to the positive leads and actually took it in stride," he said. IG Markets strategist Stan Shamu said he thought the mood might be dampened by news the European Union would not ask the European Central Bank for further funding for the bond market.

"It's very difficult to know what's going to happen from here." Investors' spirits had also been boosted by Australia's lower producer price index numbers on Monday, of an 0.6 per cent rise, raising hopes of an interest rate cut, Mr Shamu said.

The rises on the Australian bourse were led by materials and energy stocks, which were both up by more than 2.5 per cent.

Woodside Petroleum had lifted 99 cents, or 2.97 per cent, to $34.37, Oil Search rose 14 cents, or 2.38 per cent, to $6.02, while Santos was 29 cents firmer at $12.41. Among the mining giants, BHP Billiton gained 83 cents to $36.53, while Rio Tinto improved $2.51, or, 4.01 per cent, to $65.08 and Fortescue Metals increased 18 cents, or 4.24 per cent, to $4.43.

Australia's big banks, three of which report their latest earnings results in the next two weeks, were all up. ANZ climbed 41 cents to $21.62 and NAB was 49 cents at $24.81. Commonwealth Bank advanced 88 cents to $48.43 and Westpac was the best performed so far on Monday, climbing 48 cents, or 2.23 per cent, to $21.98.

National turnover was 374.7 million securities worth $627 million, with 517 stocks up, 152 down and 237 unchanged.

Key Info:
The $A was trading lower at $US1.0323
In the US, the S&P 500 rose22.8 pts, or 1.9%, to 1238.2
In Europe, the FTSE added 103.9 pts, or 2%, to 5488.6
Gold rose 1.2% to $US1637.39 an ounce

Thanks to SMH

Overnight Australian Stock Report

2011-10-22T08:45:00.001+11:00

The Dow closed up 37 points or 0.3% while the S&P gained 0.4% to 1215 and the Nasdaq fell 0.2%.
Beijing has spent the last two years tightening monetary policy and lending conditions, and as result it has become increasingly difficult for smaller players in the Chinese Miracle to secure renminbi loans. To overcome this difficulty a popular strategy has been to borrow money outside of China and with the proceeds buy copper. A copper stockpile then becomes physical collateral against a previously unavailable renminbi loan.
This black or "grey" lending market has developed to the point a lot of Chinese are sitting on a lot of copper. But yesterday Beijing announced it would crack down on such activity. One assumes those holding a loan against their copper will now have to sell the copper to pay back the loan.

The market snapped a two-week winning streak to drop 1.5percent for the week as weaker metal prices and euro-zoneconcerns hit miners and financials.
"We have seen a bit of a sell off this afternoon, it doeslook as if we are seeing some position squaring ahead of thesummit on Sunday and essentially the markets, not only here inAustralia but across the Asian region, are on hold ahead ofpotential announcements," said Michael McCarthy, chief marketstrategist CMC Markets.
France and Germany said in a joint statement that Europeanleaders would discuss a global solution to the crisis on Sundaybut no decisions would be adopted before a second meeting to beheld by Wednesday at the latest.
The major sticking point is over how to scale up theEuropean Financial Stability Facility, a 440 billion euro ($600billion) fund so far used to bail out Portugal and Ireland.

The Australian dollar is up almost one US cent as currency traders await the outcome of the European leaders' debt summit on Sunday. At 1700 AEDT on Friday the Australian dollar was trading at 102.43 US cents up from 101.55 cents on Thursday.

Wall Street Jumps on Europe hopes

2011-10-22T08:27:00.000+11:00

US stocks closed sharply higher as investors ended the week with high hopes that European leaders will spend the weekend forging a plan to tackle the region's debt crisis, while strong earnings also buoyed shares.
The Dow Jones industrial average rose 267.01 points, or 2.31 per cent, to close at 11,808.79 points. The Standard & Poor's 500 index rose 22.86 points, or 1.88 per cent, to close at 1,238.25 points. The Nasdaq Composite Index gained 38.84 points, or 1.49 per cent, to 2,637.46 points.
"The major averages all hold gains in excess of one per cent as markets see a strong opening surge in anticipation that this weekend's European Union Summit will provide some answers as to how Europe plans to combat its debt crisis," said analysts at Briefing.com.
Talks on beefing up the eurozone bailout fund are expected to revolve around two options - a system of partially insuring debt and a bigger role for the International Monetary Fund, a German government source said on Friday.
Bond prices fell. The yield on the 10-year Treasury rose to 2.20 per cent from 2.19 per cent the day before, while the 30-year Treasury climbed to 3.24 per cent from 3.22.
Bond yields and prices move in opposite directions.

Stocks set for small gains from mixed leads

2011-10-21T09:15:00.000+11:00

Australian shares are poised to make modest gains when the market opens after US stocks fluctuated on developments in Europe where leaders sought to reassure investors that a deal to resolve the euro-zone debt crisis was closer.
This morning, the SPI 200 futures index was up 13 points to 4161.
Oil markets felt little impact from the death of Libyan strongman Muammar Gaddafi, though it could lead to an earlier-than-expected full restoration of Libya's oil exports.
What you need to know

The Australian $ was trading lower at $US1.0124
In the US, the S&P500 rose 6.98pts to 1216.86
In Europe, the FTSE100 fell 65.81pts to 5384.68
Gold lost 1.8% to $US1611 an ounce
WTI crude oil fell 81 cents to $US85.30 a barrel

Europe (This is where the problem currently lies)
European stocks fell and the euro slipped as Brussels urged leaders to seek compromise ahead of a key EU summit amid reports that a vital rescue fund decision will be put off to another day.
Traders were anxious with the weekend summit fast approaching, hoping that European leaders will finally come up with a concrete plan to stick to but fully prepared for disappointment after so many false starts.

How we fared yesterday
The Australian share-market closed firmly in the red today after a fall in commodities prices and as it became apparent a full resolution to the European debt crisis was not imminent.
At the close, the benchmark S&P/ASX200 index was down 68.8 points, or 1.6 per cent, at 4144.9, the lowest close in two weeks, while the broader All Ordinaries index was 68 points, or 1.6 per cent, weaker at 4206.8.

Many benefits from setting up your own Super Fund

2011-10-18T08:12:00.000+11:00

THERE are many reasons, apart from cost savings, that people set up self-managed super funds (SMSF). Being in control of your financial destiny, not having to deal with a slow-moving bureaucracy and having direct investments in a super fund are three other big reasons.
Q. Is it possible to set up a SMSF so I can reduce the management costs I now pay, and shift the money I have in my present super fund, even after retirement? If so, what is involved?
A. An SMSF can be set up at any time and funds held in another super fund rolled into the SMSF, no matter what the age or retirement status of the member. The main restriction applies to a member's age and their ability to make further concessional or non-concessional contributions. Once a person turns 65, they must pass the work test to make further contributions.
To set up your SMSF, you will either need to have another person join the fund as a member and trustee, or you will need to incorporate a company that will be the trustee of the fund, with you acting as the sole director shareholder. You will then need to have a superannuation trust deed done.
Costs for drawing up a trust deed can vary widely, from as little as $110 up to more than $1000, depending on who you use. It pays to shop around and make sure you are not paying too much.
After the deed has been finalised and signed, you must then apply for an ABN and tax file number for the fund. Then the SMSF's bank account must be set up to receive the funds from your existing super fund as a rollover and any new contributions.

Shares rally on debt crisis hopes

2011-10-18T08:04:00.004+11:00

Australian shares rallied to a six-week high today, driven by hopes euro zone policymakers will finally come up with a plan to resolve the region's debt woes and recapitalise its banks.
At the close, the benchmark S&P/ASX200 index was up 69.8 points, or 1.7 per cent, at 4275.4, while the All Ords gained 68.9 points, or 1.6 per cent, to 4337.9.
By sector, today's biggest advance came among the materials, which rose 2.2 per cent, while financials added a hefty 1.8 per cent.
The Australian dollar lost a bit of ground today, but held on to most of last week's hefty gains on optimism that Europe will soon come up with a concrete plan to tackle its debt crisis.
The Aussie last traded at $US1.0301, down from $US1.0341 late in New York on Friday, where it scaled a one-month peak of $US1.0347.
Last week's near 6 per cent rally, which was the Aussie's biggest weekly move in over two years, has lifted it towards key resistance at $US1.0380, the 200-day moving average and then $US1.0399, the September 16 high.
Thanks to SMH

Happy Days (well for the moment anyway)...

2011-10-07T13:15:00.000+11:00

Australian shares rose by almost two per cent, boosted by investors' confidence that a Greek default would not extend beyond Europe.

The local market opened more than one per cent firmer on Friday, following strong European and US leads after a tranche of details about the Europeans' plans for the debt crisis were released overnight.
By 1200 AEDT, both major local indices had moved higher, with the benchmark S&P/ASX200 index up 79.9 points, or 1.96 per cent, at 4,149.8 and the broader All Ordinaries index gained 78.6 points, or 1.9 per cent, to 4,210.7.
Australia's isn't the only market in the region trading in positive territory today:

Japan's Nikkei is 1.2% higher to 8623.1
Hong Kong's Hang Seng 2.6% higher to 17623.3

Australian stocks gain almost 4%

2011-10-06T13:41:00.003+11:00

Australian stocks are rallying as investors take comfort by stronger-than expected US data and news that European finance ministers agreed to safeguard struggling banks.
Around midday, the benchmark S&P/ASX200 index was up 113.7 points, or 2.9 per cent, at 4040.2, after rising 1.4 per cent yesterday, while the broader All Ordinaries index gained 110.8 points, or 2.8 per cent, to 4103.3.
Materials led the gains, jumping 3.6 per cent, while energy stocks rose 3.5 per cent and financials gained 2.9 per cent.
The Australian dollar is holding steady at 96.37 US cents, up from 95.50 yesterday. Since 7am the local unit has traded between 95.49 US cents and 96.44 cents. It's also buying 73.9 Japanese yen, 72.26 euro cents and 62.38 British pence.
Thanks to SMH for the above extract.

Strong Rebound on ASX 200

2011-10-05T10:43:00.000+11:00

A late rally on Wall Street has helped cast off some of the gloom from Europe's debt crisis - but how long can it last?
So what's causing the rebound today? Wilson HTM Investment manager Derek Growns said the rally has been sparked in part by a Financial Times article that suggested EU ministers are looking at new bank aid plans and recapitalisations. Still as Mr Growns notes:

"How many times have we read that in the last few weeks?’’
"I still think we have a hell of a lot of volatility ahead in coming months."

Mr Growns said that when the market does turn because the right action has been taken, a strong rally could follow, fuelled by the substantial amounts of money that has been sitting on the sidelines.

Shares look higher on Wall Street bounce

2011-10-05T08:45:00.000+11:00

After a roller-coaster week of ups and downs on both the international and Australian share market, it is hoped that things will start to settle down and we will hopefully get some stability.

The Australian market looks set to open higher after Wall Street bounced back from early lows to finish in positive territory following a report that European Union officials were examining ways to coordinate the recapitalization of banks. At 7.20am AEDT, the December share price index futures contract was up 43 points at 3,939. The Aussie dollar was trading at 95.7 US cents, but fell as low as 93.8 US cents overnight.
What you need to know

The SPI was 43 points higher at 3939
The $A was trading higher at $US95.78
In the US, the S&P500 24.7pts, or 2.25%, to 1123.9
In Europe, the FTSE100 lost 131pts, or 2.6%, to 4944.4
Gold fell $US41.70 to $US1616 an ounce

The Australian dollar hit a fresh one year low overnight after the Reserve Bank yesterday indicated it was open to an interest rate cut in November if inflation pressures ease. The local unit slid to a low of 93.88 US cents at about 1am (local time), a level not seen since September 22, 2010. At 8.20am, it hsa climbed back to 95.81 US cents.
How we fared yesterday
The market closed 0.6 per cent lower, with investors starting to hope that the central bank would cut interest rates for the first time in a year next month.

The benchmark S&P/ASX200 index down 24.9 points, or 0.64 per cent, at 3,872.1 and the broader All Ordinaries index dropped 25.1 points, or 0.63 per cent, to 3,935.6.

Next Update Will Be Friday 29th September 2011

2011-09-25T18:19:00.004+10:00

Stephen will be in Sydney on a Financial Planning Seminar therefore unable to update this Blog until Friday at the earliest.

Aussie isn't weak, it's just the Greenback on Viagra

2011-09-25T18:13:00.003+10:00

SPARE me stories about a weak Australian dollar: it's not. Trading around US98¢, the Aussie is 3 per cent higher than it was a year ago and 63 per cent higher than when the GFC smashed it in 2008.
So we're off 11 per cent from our brief August high of US$1.10 - big deal. The Reserve Bank's trade-weighted index at 72.3 is exactly the same as September 23, 2010, and down just 6.8 per cent from its peak. With any sort of perspective on the Aussie's journey, trading a few cents either side of parity is strong. Doing it when most of the developed world is having conniptions about the possibility of the financial equivalent of a nuclear winter is absolutely amazing.
Headlines about a ''weak'' or crashing Aussie just demonstrate that it's human nature to have the attention span of a gnat. Or do gnats accuse each other of having the attention span of a human?

Also, as usual, we tend to think it's all about us. Part of the Aussie's rally came from our economic credentials - our terms of trade, status as a China proxy, a strong, growing economy with relatively high interest rates. But a large part was just the flip side of the US dollar's weakness - a faltering economy, very low interest rates, massive and growing government debt, the government wanting a weaker currency, the Federal Reserve printing money, political paralysis and a bleak decade or so ahead.
None of those fundamentals has changed, so before thinking the Aussie has gone flaccid, consider that maybe the greenback has slipped a half tab of Viagra.
What has happened is another panicked flight to the supposed safety of US government bonds. With the International Monetary Fund, World Bank and pet shop parrots all talking up the danger of another financial crisis, big institutional money has been scared into remembering what happened when financial markets froze: the only asset with deep liquidity, the only thing that could be reliably turned into cash, was a US treasury.
So off the herd has trotted to buy T-bonds, pushing up the greenback in the process and, to the extent that they have had to sell other assets to buy the bonds, pushing down the price of everything else. Never mind the Aussie, gold last week dropped 10.7 per cent and silver plunged 35.7 per cent.
The corollary is that, should the Europeans vaguely get their act together, as markets began to hope on Friday night, the panic buying of T-bonds can reverse. There's not much fun holding a US-dollar asset paying very little interest.
Sourced from Sydney Morning Herald

How Low Can The $$$ Dollar Go?

2011-09-25T18:08:00.002+10:00

The Australian dollar fell to a 10-month low this week after the US central bank told us what we already knew - that the US economy is faltering.
But how low could the Aussie go if we got some news that is not only bad but also unexpected?
At the height of the global financial crisis in early November 2008, the Australian dollar lost almost 40 US cents in a matter of just over four months.
OZForex senior foreign exchange manager Jim Vrondas thinks we could be on the verge of something similar.
He said investors were worried that the US could soon end up in a recession, reminiscent of what Japan experienced in the early 1990s.
This could drag the Australian dollar to 80 US cents by the end of the year, he said.
'The dream run could be over,' Mr Vrondas said.
'We're getting a sense that what's going on in the market in the last 24 to 48 hours does very much feel as it did back in 2008.
'There's a chance that we could see that happen where we have a long period of very slow or negative economic growth out of the US.'
Commonwealth Bank currency strategist Joseph Capurso is tipping the Australian dollar will recover towards parity by the end of the year.
He said it was unlikely that the Australian dollar would lose 40 pips, as it did in 2008.
'In 2008, in periods, there was no volume because people were not taking a position - they were not trading,' he said.
'That's simply not the case this time around and I think that's a much better situation.'

Busting income protection myths

2011-09-19T08:07:00.000+10:00

ARE you rich enough to cover all your expenses if you hurt yourself and could not work for a while?

Suncorp executive general manager David Carter says few Australians adequately protect their pay packet, yet most wouldn't be without car and home insurance.
"The majority of people depend on a regular wage to get them through each week, yet without income protection the typical Australian family risks losing half or more of their income if a parent becomes seriously ill or injured," Carter says.
Suncorp wants to bust some myths about income protection insurance.
MYTH ONE: It's only worth it if you earn a six-figure salary.
FACT: If you rely on your pay packet to provide for you and your family's lifestyle, there is a dependency that requires protection.
MYTH TWO: My car and house are priorities.
FACT: It's a good idea to protect your most valuable asset, your income. A quick calculation of what you could earn over the course of your career should show you the real priority in terms of protection is your current and future income.
MYTH THREE: I have cover through super.
FACT: Some super funds provide automatic income protection or life insurance, but the cover may not be sufficient. It's important to know how much cover you have and potentially top it up if necessary.
MYTH FOUR: It's too expensive for me.
FACT: For most, income protection is no more than 3 per cent of your annual income, can be as little as 1.5 per cent, and is usually tax-deductible.

Every employee should have some form of Income Protection in place to protect their most valuable asset, YOUR SALARY. Please contact our office for further information, it costs you nothing to inquire, we can let you have an idea of cost and exactly the type of cover you need. +613 9866 2400 or email admin@amazon.net.au .

Are the days of the US dollar as a reserve currency numbered?

2011-09-15T13:50:00.002+10:00

Many economic commentators questioned whether the Australian dollar would ever reach parity with the US. As we have exceeded all expectations, the strength of the US dollar as the global reserve currency has been brought into question. Subsequently, some countries such as China have called for a review of the position of the US dollar as a global reserve. However, there is pressure on financial markets globally – not just the US – and other currencies that could be considered alternatives to the US dollar are struggling as well.

What are the options?

“In the next five to ten years, there really is no alternative to the US dollar,” says Matthew Drennan, Executive General Manager – Zurich Investments. The Chinese RMB (Yuan) is the most likely single alternative, but this would require a floating currency and open capital account, which is not in China’s interests at present.
“The Chinese RMB (Yuan) has a closed capital account and is pegged to the US dollar in any case, so until Beijing changes the ground rules, the Yuan is not an option.” Drennan says.
The Yen is also in serious decline along with the Japanese economy, so he says the Yen is an unlikely contender as “no one wants to hold too much of that currency”.
The Swiss Franc is also another possibility, however, he says the depth of trade in the Franc is insufficient to cover global trading, hedging and/or speculative activity.

The Euro

This leaves the Euro as the real contender, says Drennan. “But at present there are serious questions over its survival, at least in its current form,” he says.
“Will Greece and Ireland be forced out eventually? Will the German public be prepared to stomach ongoing bailout packages, or will they revolt against the politicians who support these?”
While central banks around the world are diversifying their holdings away from the US dollar and US Treasury and towards the Euro and gold, Drennan says the Euro is light years away from replacing the US dollar as the world’s reserve currency for tradeable goods.
In light of the weakness of other world currencies, the US dollar seems set to hold its place – at least for the coming five to ten years – as the major global reserve currency.
Ultimately, however, with US growth severely constricted by debt problems, Drennan says it is likely in the longer term that another currency could take the place of the US dollar as the world’s reserve currency.
While the US dollar’s share of reserve has fallen over the last ten years, Ben Kilmartin, Director of currency advice and management firm BK Consulting, also believes that it’s unlikely that the US dollar will be superseded by another currency as a global reserve. “I don’t see that changing, certainly not in the next five to ten years,” he says.

Implications for Australia

While the Australian market is impacted by changes in the US economy and global market volatility, Kilmartin says the Australian dollar has held up remarkably well.
“The other thing that has held up the market well is growth outside the Western developed world, the emerging markets and Asian economies, which still seem to be ticking along nicely,” he says.

Forecasts for the global economy currently stand at about four per cent, and while there is market volatility, Kilmartin notes that global growth continues to march along at a reasonable pace.

“With that backdrop, I think the Australian economy should continue to do okay, on the back of strong Asian economic growth,” he says.

Aust shares open up almost 1.5%

2011-09-15T10:26:00.002+10:00

September 15 2011, 10:17AM

The Australian share market has opened nearly one-and-a-half per cent higher on Thursday.
At 1014 AEST on Thursday, the benchmark S&P/ASX200 index was up 59.1 points, or 1.4754 per cent, at 4,064.9, while the broader All Ordinaries index was up 57.4 points, or 1.4 per cent, at 4,147.8.
On the ASX 24, the September share price index futures contract was up 82 points at 4,098, with 14,621 contracts traded.

Rates on hold til 2012

2011-09-15T10:04:00.001+10:00

The Reserve Bank of Australia is now expected to keep rates on hold until mid-2012, when it will lift the cash rate by 25 basis points.
According to National Australia Bank’s chief economist Alan Oster, the RBA will keep the official cash rate at 4.75 per cent for the next six to nine months in a bid to balance the weakness overseas with Australia’s robust economy.
“The global economic outlook has been clouded by a series of disappointing US and Western Europe economic indicators, big falls in equity prices and political obstacles in the US and Euro-zone,” Mr Oster said.
Australia’s outlook, on the other hand, remains relatively unchanged, with GDP growth expected to sit at 1.9 per cent by year’s end.
“Australian growth forecasts little changed, but unemployment rate marginally higher – as restructuring hurts near term employment. Core inflation will exceed 3 per cent by mid-2013,” he said.
“As such, the RBA will keep rates on hold for a considerable period – with a final 25 basis point rise in current cash rate cycle expected in mid-2012.”

Weekly Wrap Up

2011-09-11T15:52:00.001+10:00

Good news is a scarce commodity at the moment in both the political and investment worlds.So it is hardly surprising that the federal treasurer, Wayne Swan, was delighted to spread the message about our better than expected gross domestic product (GDP) growth figures for the June quarter.The icing on the cake was that the March quarter was not as bad as initially reported and was duly revised up, but the headline grabbing number was the 1.2% rebound in GDP growth for the June quarter and the sharemarket responded positively to the news as might be expected.Could this be the signal that the worst – for the Australian economy at least – is behind us?Given the strong long-term relationship between the sharemarket and the economy it is not surprising that analysts and media coverage focuses on expectations for an economy’s near-term performance.However, analysis of a range of economic indicators over 50 years in the US and 25 years in Australia by Vanguard suggests we should treat macroeconomic indicators with caution when it comes to their forecasting ability.The research looked at the returns for the subsequent 12 months for equities and government bonds following a change in economic signal and found that the likely return outcomes did not alter significantly.This reinforces the challenge that comes with trying to forecast future market returns – attempting to time markets, particularly in periods of strong volatility, is fraught with risk.An oft-quoted expression is that no-one rings a bell at the top or bottom of a market and that rings true here. Yet in periods of market volatility, it is not surprising that investors are cautious – and perhaps inclined to sit on the sidelines waiting for a sign that better times are here.Yet that is not a risk free option either. Market studies tell us that missing the first three months of a sharemarket rally can be costly. Between 1956 and November 2008, when there were 11 significant market declines of varying length, the average return for the first three months of the subsequent market rally as measured by the broad US S&P500 market index was 15.6%. The average return for the first year of the recovery was 34.5%.That is the risk of being out of the market during the first leg up of the recovery phase.Of course you can also be “wrong” by investing too early. This is the argument for dollar cost averaging or investing into markets over time. It mitigates against the timing risk of making a one-off investment decision and diversifies the investment over time.It also can provide the framework that allows investors to tune out the short-term market noise – both good and bad.

ASX 200 opens slightly higher on US weak lead

2011-09-09T11:05:00.002+10:00

The Australian share market opened higher despite a weak lead from Wall Street, after US President Barack Obama delivered a $US447 billion ($A423.06 billion) plan to Congress to stimulate the American economy and jobs growth.
At 1017 AEST the benchmark S&P/ASX200 index was up 19.5 points, or 0.47 per cent, at 4,207.5 points, while the broader All Ordinaries index rose 17.9 points, or 0.42 per cent, to 4,287.7 points.

Australian shares 2.35% higher at 2pm today

2011-09-07T14:14:00.004+10:00

Australian shares were higher at noon, building on gains from early trade, with the materials and financials sectors leading the market.
At 1200 AEST, the benchmark S&P/ASX200 index was up 96 points, or 2.35 per cent, at 4,171.30. Australian stocks extended early gains, bouncing off a one-month low, as investors snatched up cheap miners and banks after Wall Street fell less than feared.

Despite momentary relief that the Australian economy had returned to growth, with gross domestic product (GDP) up 1.2 per cent in the June quarter, after suffering a downturn in the previous quarter because of the floods and cyclones over the summer, investors were still relying on news from offshore markets.

Dividends and Profit

2011-09-06T13:13:00.002+10:00

Higher dividends and more share buybacks suggest the market environment is not as dire as some chief executives would have you believe - though it is still not ideal, writes David Potts.

In fact, analysts are predicting earnings-a-share will grow faster this financial year than in 2010-11. That's right. For all the financial gloom and market volatility, they're saying things will get better, not worse. But then, they can always lower their estimates and probably will.
Although profits of the top 200 might have soared 32 per cent, take out BHP Billiton and they were up just 9.3 per cent, according to the chief economist at CommSec, Craig James.
Then again, as he points out, take out two of the worst performers, BlueScope Steel and Leighton, and profits would have been up 17.3 per cent. ''Where do you stop in that process?'' he asks.

Perhaps it's better to start with BHP Billiton, indisputably a stunning result. Its profit jumped more than 80 per cent to just over $22 billion. Despite having another $12 billion of cash to play around with, it proved the exception to the rule of cashed-up companies in not buying back some of its shares, though it did last year.
Yes, it had challenges, too, but at least ''we remain positive on the longer-term outlook for the global economy'', BHP told the market.
The wonder is its share price, hovering under $40, is well off its peak despite the greatest mineral boom Australia has ever known.
It is trading at just 10 times its earnings, which is about 40 per cent below its norm of the past 10 years.
And did I mention the record profit, dividend, and fewer shares on issue?
''I don't normally advocate buying a stock and holding it forever but this could be one to save for the grandchild,'' the CEO of Lincoln Indicators, Elio d'Amato, says.

CMC predicts the market will ''range trade'' at about 4500 for the next year. It was 4243 on Friday.
In any case, bit by bit analysts have been revising down their forecasts of earnings a share for 2011-12. The trouble is, they look at specific companies and so can miss the big picture, as the GFC showed.
That big picture, unfortunately, isn't looking so good for profits.
A good indicator is the banks. The only one to report was the Commonwealth, which suggested slowing growth and, incidentally, was exceptionally generous with its dividend.
Thanks to the fact that their share prices have been marked down, bank stocks bought today are returning almost double digits from dividends alone after the 30 per cent tax credit from franking.
You can just about hang your hat on this since the banks are especially loath to cut a dividend. The CBA wouldn't be lifting its this year, and the others are bound to follow suit, if it thought there was even the slightest possibility of that.

The upside of an economic downturn

2011-09-06T08:08:00.001+10:00

THE oddity of blue-chip stocks is that while sentiment towards them has rarely been poorer, their balance sheets have rarely been healthier.

Given most companies are increasing their earnings - albeit at subdued rates in the industrial sector - that makes for healthy dividend payouts.
And given diminished share prices, that also makes for highly attractive yields that put bank accounts to shame.
According to Patersons Securities quantitative analyst Kien Trinh, average second-half dividend growth came in at 5 per cent for the industrials (including the banks), 2 per cent better than expected. "This was on par with earnings-per-share growth," Trinh says of the figure, based on 170 companies.
"For resources companies, dividends grew 10 per cent on average over the half, while EPS growth came in at 32 per cent," Trinh says.

Stocks dive on recession fears as investor confidence plunges

2011-09-06T08:06:00.000+10:00

THE Australian sharemarket plunged 2.38 per cent yesterday amidfears the US economy was heading for a fresh recession and a survey revealedinvestor confidence in Australia has hit its lowest point since the firstquarter of 2009.
About $30 billion was wiped from the value of Australian shares and Asianmarkets were also sold down heavily as the impact from the shock jobs numbersin the US that spooked Wall Street at the weekend was felt throughout theregion.
The major European markets all opened more than 2 per cent lower last night.The Reserve Bank meets in Perth today to set interest rates for September. Theinterbank futures market tips there is a 22 per cent chance the board couldorder a 25 basis-point cut to the 4.75 per cent official cash rate. It alsopredicts that interest rates could be 127 basis points lower by this time nextyear.
The majority of economists have forecast that the RBA will leave rates onhold for the next few months.

2011-08-29T08:23:00.000+10:00

A GOOD START TO THE WEEK???

The Australian market looks set to open higher if it follows Friday's international lead, despite closing lower on Friday.
At 0736 AEST on Monday, the September share price index futures contract was up 21 points at 4,200.
In economic news on Monday, the Housing Industry Association releases its data for new home sales in May.
In equities news, QR National, Australian Worldwide Exploration, Goodman Fielder, Kingsgate Consolidated, all announce full year results.
Macquarie Atlas Roads and Resolute Mining announce their first half results.
In Australia, the market on Friday closed down, ending a flat day of trading ahead of a speech by US Federal Reserve chairman Ben Bernanke, which was scheduled for after the local market closed.
S&P/ASX200 index was down 12.8 points, or 0.30 per cent, at 4,200, while the broader All Ordinaries index was 9.5 points, or 0.22 per cent, lower at 4,271.

RETIREMENT PLANNING

Planning makes all the difference when it comes to achieving a comfortable retirement.

A couple wanting a ''comfortable'' retirement - where they can afford to have some fun, not just pay the bills - now needs more than $1000 a week, by one estimate. A ''modest'' lifestyle requires $600 a week, according to the super industry's retirement benchmarks.

But what is comfortable and what is modest - and how much do you need to save for one or the other? The Association of Superannuation Funds of Australia (ASFA) releases a Retirement Standard every three months and its most recent calculation is that a couple now needs $54,562 a year for a comfortable retirement and $31,263 for a modest one - an increase of 2 per cent to 3 per cent on the annual income required a year earlier.

Source: Super Ratings.

ASFA describes a modest lifestyle in retirement as being something ''better than the age pension but still only able to afford fairly basic activities''.

A comfortable lifestyle means an older, healthy retiree can take part in a broad range of leisure activities and can afford to buy such things as household goods, private health insurance, a reasonable car, good clothes and a range of electronic equipment, it says. They should be able to afford holidays in Australia and, occasionally, overseas.

WEEKLY BUDGETS

ASFA's latest weekly budget for a couple enjoying a comfortable lifestyle includes just less than $200 for food, $135 to own and run a car, $120 for health insurance and health care, $30 for phones and the internet, $44 for power, about $75 for housing (including insurance and maintenance), $57 towards clothing and about $85 for services such as cleaning and haircuts.

In the $300-odd budgeted for leisure, there is $80 to dine out, $40 to have a drink, plus the equivalent of one movie a week. About $130 of that amount is set aside for holidays, including $50 earmarked for overseas travel.

The budget for a modest lifestyle steps things down a bit, at $155 for food, $88 to own and run a car and $55 for housing costs. And it halves the amount for health care, communications, clothing and services. Power stays about the same.

A couple, with each partner aged 60, would need to retire with a nest egg of about $535,000 to have only a modest lifestyle lasting as long as the official life expectancy of the partner likely to live longest - that is, 26 years (to 86) for the woman. If the couple wanted a comfortable lifestyle, they'd need to retire with about $940,000 in capital.

''That's after paying off your mortgage,'' Dale says. These figures assume the couple uses their super to start a pension, providing them with tax-free income, and that they don't qualify for the age pension. It also assumes their money earns 7 per cent a year and that they're prepared to use up their super over those 26 years.

They would need even more if they wanted to build in a ''buffer'' in case one or both of them lived longer than expected, or to provide an inheritance.

The earlier you would like to retire and the higher the annual income you'd like in retirement, the more super you'll need. If the couple retires at 55, rather than 60, they'll need $1.05 million for a comfortable retirement to age 86, or $590,000 for a modest lifestyle, by MLC's calculations. In contrast, if they keep working until 65, the nest egg they'll require drops to $850,000 and $480,000 respectively, because of the shorter period to cover to age 86.

Investment options also play a key role and members should take advice, compare investment options and risks when planning ahead for their eventual retirement. Some options, such as ''growth'' are slightly more aggressive than ''balanced'' options.

Market Improvement Overnight

2011-08-24T08:50:00.000+10:00

Confidence returns in market

THE share market closed sharply higher buoyed by a return to confidence from overseas investors and solid earnings results.

The benchmark S&P/ASX 200 Index was up 91.1 points, or 2.23 per cent, at 4173.4, while the broader All Ordinaries index was 89.1 points, 2.15 per cent, higher at 4239.9.

RBS Morgans director of equities Bill Chatterton said confidence was creeping into the market from investors in Asia and from a positive reporting season that had generally met expectations.

The best-performing stock was Caltex Australia, which rose 42¢, or 4.3 per cent, to $10.26 after it almost doubled its first-half profit to $270 million.

''It's just a vindication that the quality businesses in the market are doing what they said they'd do,'' Mr Chatterton said.

''They haven't all delivered but a lot of them have delivered on expectation. With that, the market and the fund managers are a little more comfortable to spend.''

Brewer Foster's Group was 9¢ higher at $4.99 after saying a pick-up in consumer confidence and a return to normal weather should return the sector to flat to moderate growth, even though it reported a full-year loss of $89 million.

Origin Energy closed 68¢ higher at $14.16 after its full-year profit fell by 70 per cent. It said underlying profit was expected to lift by 30 per cent in the current year.

Sonic Healthcare dropped 23¢, or 2 per cent, to $11.29 after the company forecast 15 per cent earnings growth after a flat full-year profit in 2010-11.

The big four banks all moved ahead, Commonwealth rising $1.11, or 2.4 per cent, to $47.01,

The Australian market's gains followed a mild rally on US markets overnight, which also improved sentiment in Asia. Last night in Europe, indices on leading exchanges were up 1.5 per cent or more after the first 2½ hours of trading. AAP

Shares rise as investors hunt bargains

2011-08-23T11:25:00.000+10:00

Shares rise as investors hunt bargains

The Australian sharemarket has opened higher after a firmer finish on Wall Street encouraged investors to cherry pick some beaten-down stocks.

Commsec market analyst Steven Daghlian said there was little movement in early trade and the market was likely to be taking a slightly positive lead from the US. ‘‘US markets gained slightly, but nothing really significant (happened overnight), European markets were mixed,’’ Daghlian said. ‘‘In early trade, anyway, the market’s slightly stronger.
But keep in mind that over the past week or so it’s been very, very volatile.’’
Brewer Foster’s shares were 3 cents higher at $4.92 after it announced a share buyback in an effort to ramp up its defences against a hostile takeover by SABMiller. Foster's also reported a full year net loss of $89 million and said it expects the rate of decline in Australia’s beer market to moderate in the coming months.
The major banks opened stronger, with ANZ up 4 cents at $19.34 and Westpac 8 cents higher at $19.44. National Australia Bank was 13 cents up at $22.34, while Commonwealth Bank gained 27 cents to $46.17.
Among the miners, BHP Billiton was up 21 cents at $37.74 and Rio Tinto was 84 cents, or 1.2 per cent, higher at $69.42.
The price of gold in Sydney opened at $US1906.2 per fine ounce, up $US13.75 from Monday’s local close at $US1892.45. Shares in gold miner Newcrest Mining were up 93 cents, or 2.3 per cent, at $41.13.

Market Update - Tuesday 23rd August

2011-08-23T09:56:00.000+10:00

How we fared yesterday
At the close, the benchmark S&P/ASX200 index was down 19.6 points, or 0.5 per cent, at 4082.3, after earlier rising as much as 1.3 per cent, while the broader All Ordinaries index fell 21.1 points, or 0.5 per cent, to 4150.8.

Soft leads point to flat start for local shares

Local stocks are expected to open flat today despite markets in the US and Europe posting modest gains overnight on news that Libyan dictator Moamer Gaddafi was about to be deposed.
On the ASX24 this morning, the SPI was trading 1 point lower a 4075. Yesterday, Australian stocks ended a choppy session at a two-week low, with concerns over European and US economic challenges continuing to undermine sentiment.

2011-08-22T07:52:00.000+10:00

The share market panic– what happened to the global economic recovery?

The fall in share markets over recent weeks reflects increasing worries about US and European growth and concern governments are no longer able to respond.

Shares are cheap, but the risk of a US recession has clearly increased and if one is on the way shares can get a lot cheaper. Short-term investors should remain cautious. However, if we are right and the more likely outcome turns out to be low messy growth but not a return to recession, then current valuations make shares attractive from a long-term perspective. Therefore averaging in over time would make sense.

How vulnerable is Australia to a new global downturn?

Australia is vulnerable to any renewed global downturn, given impacts on confidence, financial flows, and potentially trade. However, Australia is far better placed to withstand a global downturn and we see the risk of recession here as low at around 20%. Interest rates have a long way to fall. The Australian dollar would likely fall if the global economy returns to recession boosting competitiveness.

Public debt is a fraction of that in other countries and so more stimulus can be applied if need be. Corporate gearing levels are low and companies are cashed up. Banks are less dependent on global markets for funding than in 2007. Australian households have also built up a large savings buffer. Finally, our key export markets in Asia are more secure than those in Europe and the US.

Concluding comments

For short-term investors, there is a case to remain cautious. For long-term investors, attractive share market yields, low and falling yields on bonds and bank deposits and the likelihood of more monetary stimulus on the way suggests shares may be attractive on a longer-term basis, meaning there is a case to average in over time.

Weak Opening After Wall Street Drop

2011-08-22T07:38:00.000+10:00

ASX May Open Weaker Today
SHARE investors today will follow another poor lead from Wall Street before what's likely to be more conflicting signals about the local economy's health from a string of blue-chip profit disclosures.

More than 70 June-balance companies are expected to report this week, headed by the world's biggest miner, BHP Billiton.

ASX 200 futures trading points to the market opening 0.7 per cent lower, extending Friday's 3.5 per cent rout. The market received another weak lead from Wall Street on Friday, with the Dow Jones industrial average tumbling 1.57 per cent on persistent Eurozone debt and European banking concerns. It fell 4 per cent over the week.

Banks cut Term Rate Deposit Rates

2011-08-19T07:50:00.000+10:00

Banks have slashed term deposit rates amid a flood of money flowing in from wary consumers and speculation that official interest rates could fall. Since the start of last week, 29 banks have cut their term deposit rates, according to rate comparison site Mozo.com.au, bringing the average two-year deposit rate down 40 basis points to 5.69 per cent. Three-year deposits have dropped an average of 47 basis points to 5.77 per cent on average in the same period.
Investors, and some analysts are tipping that official Reserve Bank interest rates - on which most savings and deposit rates are set - will fall in response to a slowing local economy and the worries created by the sovereign debt crisis in Europe.

The lingering fears, worsened by the dramatic sharemarket plunges last week, have dented consumer confidence and encouraged households to save more and borrow less.
"When demand from investors for term deposits goes up, it's often the case that rates will come down," said Damian Smith, chief executive of rate comparison group RateCity.com.au. Australian Prudential Regulation Authority data showed that banks at the end of June held just under $500 billion of cash deposits from households, up $34 billion, or 7 per cent from a year ago.
"Banks are awash with cash," said Mr Smith. Commonwealth Bank dropped the rate on a two-year deposit of $50,000 by 70 basis points to 5.3 per cent over the past week, while National Australia Bank lowered its rate by 35 basis points to 5.5 per cent.
The market is tipping a 64 per cent chance of a cut to official interest rates when the Reserve Bank meets next month. Early last week, as markets plunged following the S&P downgrade of US debt, the investors predicted a 50 basis point cut in the RBA cash rate in September.

The central bank has kept official interest rates on hold at 4.75 per cent, to which it last raised them in November.

Things To Do In A Bear Market....

2011-08-17T07:52:00.000+10:00

HOW TO ACT IN A BEAR MARKET…

When a bear jumps in your path, don’t be aggressive, don’t turn and run, and don’t crouch down or otherwise show fear or vulnerability. If the bear charges you, muster all your courage and stay where you are: the charge is most likely a bluff, and if you stand your ground the bear will turn away.

That’s good advice when being chased by a real bear, and good investment advice during a bear market. If you’re not reacting to fear, if you’re in control of your actions, your portfolio has a higher probability of getting through the ordeal safe and sound.

Don’t panic. Stay calm. Get away from the issue. Here are my suggestions for dealing with this bear market:

1. Go for a walk and take the dog. If you don’t have a dog, borrow one.

2. See a dumb movie. Have you seen The Hangover Part2 ? That’s a good one to watch when you want to become brain dead. It will make you feel better, even though the title may remind you of what it’s like to be an equity investor these days.

3. Go out for a nice meal. Perhaps to a nice Italian restaurant. Unfortunately for me, where I live in Central Texas there aren’t many good Italian restaurants. Split a good bottle of wine with your date. I like Pinot Noir, but you may prefer Chianti or Merlot.

4. Have a long conversation with your spouse or significant other about where you’re going on your next vacation. Never mind that you have less money to go, just have the conversation anyway. Watch the Travel Channel or House Hunters International over the next few days. Stay away from Jim Cramer’s Mad Money show and other financial related programs.

When you catch yourself relaxing and not thinking about the markets, only then consider your situation. How many times has the stock market recovered from a sharp sell-off during your lifetime? The answer is, every time! And it will recover again this time. If it doesn’t recover, we’re all going to have a lot more to worry about than our money. So, don’t worry about it.

Finally, think about what you should really be doing with your portfolio. The answer is either sit tight or rebalance. Rebalancing means selling some bond funds and buying more stock funds until your allocation gets back to your long-term target. The same result could be accomplished by investing the cash you’ve been sitting on while you waited for a time like this to buy.

Bear markets are easy to escape if you know what to do. Don’t panic. Move slowly, steadily, and keep your “balance.” You’ll be wealthier for it.

Please contact Amazon Financial Group if you require further information or advice, (03) 9866 2400 or email admin@amazon.net.au

Australian share market closes in the black after historic week

2011-08-12T18:05:00.000+10:00

THE Australian share market today ended in positive territory, rising 0.8 per cent after one of the most volatile weeks in its history. The S&P/ASX 200 rallied 31.8 points, or 0.77 per cent, to 4172.6, while the All Ordinaries rose 34.4 points (0.82 per cent) to 4237.9. The increase came after another remarkable rally on Wall Street last night. The Dow Jones rose 423 points yesterday, but it remained 301 points in the red ahead of tonight's session, after a week of the most volatile trading sessions since the global financial crisis.

The ASX 200 was trading higher shortly after the open, but the benchmark index weakened across the afternoon. The Australian dollar remained under pressure, trading at $US1.03. Morgan Stanley Smith Barney Vice-president Fabiola Gibson said the volatility, which had created some positive trading sessions, had eroded investor sentiment towards equities. "Sentiment has just fallen off a cliff," Ms Gibson told The Australian Online. "The difficulty in a market like this is that no one has time to think. "In a market like this you need nerves of steel." Despite the recovery in Australia over the past three sessions, the ASX 200 remains down 12 per cent for the year.

In the US, the blue-chip Dow had fallen nearly 12 per cent for the month as of yesterday's close, while the S&P 500 had shed 13 per cent and the Nasdaq had lost nearly 14 per cent heading into the latest session. The futures market is pointing towards mixed sessions on major world markets tonight.

UBS Warburg Australia Equities executive director Rob Taubman said the Australian market reflected investors' confidence in the strength of the local economy. "It's feeling much more stable today," he said. "I think there's been a realisation by funds that the yield and valuations are in pretty attractive territory now." Mr Taubman said the gains were not expected to last as investors continued to keep a close watch on the direction of offshore markets.

Among Australian banks, National Australia Bank was off 6 cents at $22.96, Westpac was up 2c at $20.47, Commonwealth Bank slipped 2c at $48.56 and ANZ lost 17c to $19.92. Miners ended the day stronger. BHP Billiton was up 28c at $38.21, while Rio Tinto gained $1.11 at $71.52.

Share Market opens strong

2011-08-12T10:47:00.004+10:00

THE Australian share market rose strongly in early trade after Wall Street's sharp gains in a week of huge swings in global markets.

The benchmark S&P/ASX 200 index rose 1 per cent to 4183.7 in early trading, although a steep fall in BlueScope Steel on asset write-downs contained the advance in the market overall.

The "risk-on" trade boosted the Australian dollar, which was trading at $US1.0322 at 10am AEST, up from $US1.0287 at the close of Sydney trading yesterday.

Asian stock markets also opened strongly, with Japan climbing 0.9 per cent and South Korea rising 1.5 per cent. Investors also took profits on haven assets, with spot gold falling 1 per cent to $US1749.50 in early Asian trade. On Wall Street, US stocks notched a massive advance, as investors seized on favourable corporate and economic reports to recover most of the ground they lost in the previous session. The blue-chip Dow Jones Industrial Average soared 423.37 points, or 3.95 per cent, to 11143.31, the second biggest point and percentage gain this year.

It was the fourth straight move of 400 points or greater, a first in the Dow's history. "It's great to have these up days, but I think that we are going to continue to be in a choppy period with these big swings," said Margaret Patel, senior portfolio manager at Wells Capital Management. "The reason we had our meltdown was really over in Europe. It made the markets look like one of the dark days in 2008, melting away with no rhyme or reason."

The strong gains in global equity markets came as regulators in Spain, Italy, Belgium and France said they would impose new bans on short selling from today in an effort to lower volatility in European stock markets.

"They have done so either to restrict the benefits that can be achieved from spreading false rumours or to achieve a regulatory level playing field, given the close inter-linkage between some EU markets," said ESMA, which co-ordinates securities rules in the EU, following a conference call with all 27 national regulators.

Australian Share Recovery...

2011-08-10T17:28:00.001+10:00

Australian shares rallied today;

Extending yesterday's remarkable turnaround, as the market held on to gains triggered by a jump overnight on Wall Street. At the close, the benchmark S&P/ASX200 index was up 106.5 points, or 2.6 per cent, at 4141.3, while the broader All Ordinaries index had risen 110.6 points, or 2.7 per cent, to 4207.3.

The rise added about $34 billion to the market's value, as investors swooped to buy shares in what one trader described as an oversold market.

Energy and materials stocks led the gains, jumping 3.8 and 3.3 per cent respectively, while financials added 2.4 per cent. Property trusts and IT bucked the trend, posting a fall of 1.8 per cent and 0.7 per cent.

Regional stockmarkets also clawed back lost ground, while financial bookmakers expect Europe's main indexes, which finished the last session in positive territory, to open slightly higher. But S&P 500 futures fell 0.4 per cent, suggesting at least a pause in Wall Street's sharp rally.

RBS Morgans private client adviser Bill Bishop said the market had been buoyed by improved sentiment in the US.

‘‘We had a massive upswing on the Dow Jones overnight,’’ Mr Bishop said. ‘‘It was wild, but because we follow Wall Street we of course were up - we opened strongly and just got stronger.

‘‘It’s a great psychological boost, what happened yesterday.

Update on Market Crisis

2011-08-09T12:38:00.005+10:00

Fear is driving the Market

Fear and sentiment seems to be driving the market downturn, at the moment there is global selling which is causing a “Bear” market to occur, what has to be remembered is that Australia is a strong economy. Consumer confidence has taken a huge hit, however our building and export economy is still very strong. Any clients considering accessing their retirement savings as a result of the latest global stock market crash should be very calm. Mr Swan says that worried investors should remember the Australian economy was in a stronger position than others. The markets liked to see governments with firm fiscal policy, such as the federal government's commitment to return the budget to surplus, he said. 'What I would say to them is be very calm and methodical in assessing these events,' Mr Swan told ABC Radio on Tuesday. 'The fact is that this economy is strong, the investments that you have are in very good financial institutions, strong institutions.' Australian shares are expected to resume a five-day slide on Tuesday. It is the market that is deteriorating and not the economy…

We have to remember our LONG TERM goals with this, there is opportunity NOW to invest in the market to purchase at a low, however anyone holding shares/managed funds at the moment should remain calm and remember that it is time in the market that will count.

Shares in free fall amid global panic

Australian stocks are being hammered as they re-join the global plunge in equity markets, losing about $65 billion in value, as investor fears show little sign of easing. Mid-morning, with losses accelerating, the benchmark S&P/ASX200 index was down 216.3 points, or 5.4 per cent, to 3769.8, while the All Ordinaries index slumped 224 points, or 5.5 per cent, to 3832.7.

Panic selling shaves $32bn off Australian stocks

Panicked investors shaved about $32 billion from the value of the Australian share market, sending it to a two-year low on fears of a volatile Wall Street in the aftermath of the first ever downgrading of US sovereign debt. Monday was the fifth consecutive trading session that the domestic bourse closed in the red and added to the $95 billion that was wiped from the value of the local market last week.

The benchmark S&P/ASX200 index closed down 119.3 points, or 2.91 per cent, to below the psychologically significant 4,000-point mark at 3,986.1 points. The broader All Ordinaries index slumped 113 points, or 2.71 per cent, to 4,056.7 points. Investor confidence had been battered by a stream of negative offshore news but the selloff had been overdone.

"Investors are moving from crisis resolution to the next disaster without pausing for breath," he said. "Last week, the market was taken by concerns about the US economic recovery, the concern being that it was stalling and bringing the rest of the world into a further recession. "On Friday night, we saw jobs data (in the US) that directly contradicted that idea.

"So overall, the numbers are not suggesting that there is a recession coming. ".... and we're seeing corporate earnings coming through around the globe that are not consistent with the idea that the market is going backwards." Mr McCarthy said there had been a big surge in trading volumes on Monday, with more than double the usual contracts traded on the futures exchange. He said the futures market had flipped around wildly all day. The gold price hit a fresh all-time intraday high of $US1,704.30 an ounce in Hong Kong trade, as Asian stocks tumbled in the aftermath of the downgrading of US sovereign debt by Standard & Poor's. The price of gold in Sydney closed at a record high at $US1,710.18 per fine ounce, up $US52.57 from Friday's close at $US1,657.61.

Wall Street calls a code blue

Alan Kohler

Last night’s 500 point fall on the Dow Jones and shocking 6.6 per cent fall by the S&P 500 were not primarily caused by S&P’s downgrade of US debt. That debt itself continues to rise in price, not fall. The Dow has corrected 15 per cent and the ASX 200 by 18 per cent because investors have discovered the limitations of artificial stimulus on the economy. The Great Reflation has run its course but the patient is fading.

S&P’s gratuitous and probably self-serving action on the weekend merely highlighted the problem that is staring everyone in the face: America has reached its debt limit and must start cutting back just as the economy is apparently getting weaker. Something similar is happening in Europe and Australia. Ironically it is politics, not economics, that is the source of the problem. The bond market is telling the US Treasury that it can, and should, continue to borrow but it’s the right-wing politicians holding the balance of power in the House of Representatives that have demanded fiscal consolidation now – supported by S&P.

The Federal Reserve, having closed off QE2, is mute, balance sheet bloated like the stomach of a character from the film La Grande Bouffe. The market is pleading for QE3, but so far nothing. Likewise Europe has stimulus ammunition available, but politics stands in the way, along with Jean-Claude Trichet, the famously tight president of the European Central Bank. Germany continues to enforce fiscal and monetary orthodoxy when the logic of monetary union demands that it and the other surplus states must stimulate demand to offset the austerity programmes being imposed on the peripheral states by bond markets and the EU and IMF bureaucrats. The ECB has said it will buy Italian and Spanish bonds, but it’s too little, too late. What’s required now is a European version of quantitative easing, flooding the eurozone with cash: any intervention now must be massive to convince markets that the authorities are serious.

Politics is also imposing fiscal consolidation on Australia at precisely the wrong time. The Australian government is tightening fiscal policy by about 2 per cent of GDP to meet an unnecessary, politically constructed deadline of 2013 for returning to surplus, with one quarter of negative GDP already under our belt and another one threatening. No wonder share markets are falling and gold is at $US1700. It seems the past three years of grinding tentative recuperation from the crisis that came from the massive injection of fiscal and monetary adrenaline in late 2008 and early 2009 have come to nothing. The patient is slipping back into a coma.

Wall St in biggest plunge since GFC

2011-08-05T09:21:00.000+10:00

Wall St in biggest plunge since GFC

US stocks plunged this morning in the biggest sell-off since the financial crisis, driving the Dow Jones Industrial Average down more than 500 points, as investors appeared to lose faith in the ability of the world's policy makers to revive the global economy and stave off a rolling debt crisis in Europe.

The Dow kept cascading lower throughout the session. It finished just off the lows with a 512.76-point decline, or 4.31 per cent, to 11,383.68, erasing all its gains for 2011.

The slump of the past few weeks has driven the Dow down more than 10 per cent from its May intraday highs -- putting the index officially in correction territory.

It was the measure's biggest single-day loss since December 1, 2008, when the Dow plunged 679.95 points at the height of the financial crisis, one of the market's worst days ever.
The Australian dollar fell more than US2 cents in early trade to $US104.60 from $US106.89 cents yesterday.

Investors across the globe have been buffeted by economic and political turmoil in recent days.

In the US, fears have turned from worries about a possible default by the US government to a weakening economic outlook. A string of data have pointed to a slowing of the recovery and investors are bracing for the closely watched non-farm payroll report today.

In Europe, leaders are struggling to contain a growing debt crisis. Investors are increasingly worried troubles are spreading to Italy and Spain, driving down stocks across the region and sending borrowing costs of peripheral nations soaring.

On the floor of the New York Stock Exchange, the mood was sombre and tense.

"There is no reason to buy US cash equities," said Doreen Mogavero, president of Mogavero Lee & Co "(Investors have) come to the point where we find out we could be looking at ten more years of austerity."

In the US, all the blue-chip Dow stocks were lower as investors sold across the board. All the S&P 500 sectors were in the red and just three of the 500 stocks rose. Aluminum producer Alcoa was the hardest hit blue-chip stock, plunging 9.3 per cent, followed by Bank of America, which fell 7.4 per cent.

"This is a fear-driven market. We're in a mini-free fall. It's not a Black Monday, or Black Thursday, but it's in pretty bad shape -- all the big stocks are being liquidated," said Christian Thwaites, president and chief executive at Sentinel Investments.

Gold and silver, which had been up on the day, reversed course as investors sold the metals to meet stock-based margin calls, traders said. If investors have purchased stocks with borrowed money, they often have to front more cash when the price of those shares fall, known as a margin call.

Underscoring that worried investors are increasingly seeking cold cash, the Bank of New York was preparing to charge some large depositors to hold their funds. The biggest US custodial bank said this week in a note to clients it would begin slapping a fee next week on customers who have vastly increased their deposit balances over the past month.

The bank cited the massive US dollar deposits it has received over recent weeks, as investors and corporations retreat from financial markets amid Europe's debt crisis and the recent debate over US government borrowing.

In Europe, the European Central Bank moved to reactivate two of its anti-crisis measures in an attempt to stop the currency bloc's sovereign-debt woes from spreading to Italy and Spain. Japan intervened in currency markets to curb the strength of the yen, which has risen as investors shift into currencies considered safer assets.

The ECB left key interest rates unchanged. Mr Trichet's comments on the weakening economic recovery prompted the central bank to resume its program of government bond buying for the first time in five months. But traders said the central bank was only buying Portuguese and Irish sovereign bonds, a decision Mr Trichet acknowledged was not "unanimous".

"You've got a weak economy, the aversion of a debt crisis but not a solution, and you've got the rest of the globe starting to implode in a lot of areas, especially Europe," said Barry James, president and chief executive of the James Advantage Funds. "It's natural that people would react with fear."

The cost of insurance. Can you afford NOT to have it????

2011-08-03T17:50:00.004+10:00

There is great debate about the cost of insurance and whether or not it is a ‘waste of money’ or ‘not affordable’ and whilst this perceived cost can be a great talking point around the bbq, often rarely do you hear about the cost of not having the cover in place.

Two stories in particular come to mind that emphasise this point. (Real clients of ours);

Story 1 – John and Jenny

John smith* and his wife Jenny both had policies in place which covered them for Life, Trauma and Income Protection cover. Like most people, John and Jenny worked hard to meet their day to day expenses and often there didn’t seem to be much left over, so they decided to sit down and look for a for a way to cut costs.

The first thing that John and Jenny cut was the cost of their insurance cover. They thought that it was an expense that they just didn’t need and so they wrote to their insurance company and requested that their cover be cancelled.

Two weeks later John started to feel unwell and so he went to the Doctor. After extensive testing, the doctors discovered that John had bowel cancer and would need extensive and lengthy treatment. Unfortunately this also meant that John could no longer work and, as the sole breadwinner for the family, it meant that they would no longer have an income coming in to meet their day to day expenses.

The bills soon started to pile up and not only was Jenny left to deal with her very sick husband, she was also left to deal with the creditors.

If John and Jenny had kept their cover in place, then upon diagnosis of his cancer, John would have received his lump sum Trauma payment which would have finalised the mortgage on his house and he also would have been able to receive his Income Protection cover which would have provided him and his family with a monthly income that, with the mortgage finalised, would have been more than sufficient to meet their day to day costs.

So whilst John and Jenny saved themselves a few dollars by cancelling their cover. In the end it cost them a great deal more.

*names have been changed due to privacy.

Story 2 - Dave & Mary

If you had passed Dave* in the street a year ago, you would have seen a smartly dressed business man who may have seemed to not have a care in the world. How much can change in the short span of a year? Well as it turns out......A lot!!!

Dave had a good job in the business world, a wonderful wife and two lovely children. His wife Mary* was expecting their third child and Dave felt on top of the world. Because he was the income earner, Dave and Mary decided that it would be a good idea if Dave had Life insurance cover on himself just in case something happened. Like most couples, they didn’t see much point the extra cost of getting cover on Mary as she was at home with the children.

Unfortunately Mary died whilst giving birth to their third child.

Dave struggled with the shock and the grief of losing his beloved wife and he had to find a way to care for his 7 year old son and his 4 year old and new baby daughter. Friends offered assistance in the beginning and for a while Dave managed to cope. Unfortunately life moves on and the assistance from friends became less and less as their lives became busier. As a result Dave was left to care for the children on his own. This took time. Too much time. Dave was forced to leave his job in order to look after the children full-time.

With no income coming in apart from what he was able to obtain from benefits, the bills soon started piling up and when Dave no longer could afford to pay the mortgage on the house, the bank took it.

Dave packed up the children in the car and tried to find work wherever he could, however what he earnt generally was just enough to cover the cost of child care. In the end Dave and the children were homeless and living in the car. Now Dave had new concerns. He had already lost his wife, his job and his home and now he was faced with the real certainty that he would lose his family.

If Dave had taken out Life cover on Mary (for enough to at least finalise the mortgage on the house), then Dave and his children would still have a home.

*Names again changed due to privacy

These are real stories and we have only changed the names for privacy reasons. So next time you and your partner are having that conversation about ‘the cost of insurance’, please take time to consider what it might cost not to have it!

Contact our office (03) 9866 2400 or email admin@amazon.net.au if you wish to discuss your needs?

2011-08-02T15:28:00.001+10:00

RBA leaves rates on hold for another month

Borrowers have been spared higher interest payments for at least another month after the Reserve Bank of Australia today decided to keep interest rates on hold for the eighth consecutive meeting.

The RBA board chose to leave the official cash rate at 4.75 per cent, the level reached when rates were last hiked on Melbourne Cup Day last November. Read the full RBA statement Chronology of interest rate movements since 1990 What the economists say Home loan guide

Although many economists predicted that rates would not be moved today, the decision was made against a backdrop of inflation which has stepped above the RBA's target band of 2-3 per cent.

Last week, ABS data showed that the consumer price index (CPI) rose 0.9 per cent in the June quarter, with the annual rate jumping to 3.6 per cent, its highest level since 2008 and up from 3.3 per cent in the March quarter, sparking speculation of a rate rise.

The RBA board members, though, also had to consider the impact higher borrowing costs would have on a patchy local economy. The global outlook is far gloomier, with the US today narrowly avoiding a crisis over its debt limit and the economies of most developed nations barely out of recession.

The Aussie dollar dropped on the decision, losing close to half a US cent to $US1.0937 from $US1.083.

What the RBA said

Reserve Bank governor Glenn Stevens said the board judged that it "was prudent to maintain the current setting of monetary policy, particularly in view of the acute sense of uncertainty in global financial markets over recent weeks".

But he noted that the RBA was mindful of how events overseas could affect the local economy.

"Downside risks have increased, however, as concerns have grown over the outlook for the public finances of both Europe and the United States," he said.

Economists' view

RBC Capital Markets economist Su-Lin Ong said the decision showed the RBA remained concerned with the medium-term inflation outlook.

"What’s more pressing is the uncertainty about the global backdrop and that’s dominating at the moment," she told BusinessDay.

"Greece and US debt ceiling probably dominated the discussion. In times of uncertainty the RBA has a tendency to sit on its hands and that what it’s doing now."

Australian shares jump on US debt deal

2011-08-01T17:59:00.001+10:00

AUSTRALIAN shares gained more than 1.5 per cent in a "relief rally" after the United States avoided a debt default with an eleventh-hour agreement to cut its deficit.

US President Barack Obama said the deal will cut about $US1 trillion in spending over 10 years and avoid the nation's first ever default, which would have had a devastating effect on the US economy and global markets.

At the close, the benchmark S&P/ASX200 index was up 73.2 points, or 1.65 per cent, at 4497.8, while the broader All Ordinaries index rose 72.6 points, or 1.61 per cent, to 4573.1. Tokyo shares jumped 1.84 per cent.

On the ASX 24, the September share price index futures contract was 89 points higher at 4466 points, with 41,624 contracts traded. The Australian dollar edged higher to $US1.1050, up from $US1.0952 late Friday.

IG Markets dealer Chris Weston said the US deal had sparked some optimism on domestic markets and throughout Asia on Monday.

“We're certainly getting some relief there,” he said. “Asian markets are very buoyant today and the futures are predicting a pretty good relief rally in the US overnight.”

But Mr Weston said there were still big questions for investors.

The US deal still needs to be approved by Congress and includes the establishment of a bipartisan committee of Congress to report back by November, with a proposal to further reduce the US deficit.

“The big question mark is do we get that downgrade to US debt?” Mr Weston said. “While it's a good situation that we've avoided default, people are reluctant to take sizeable bets, so we're probably seeing a bit of short covering on the back of that.”

Mr Weston said a positive vote in the US Senate could lead to a rally in the US during the offshore session, despite ongoing concerns about US growth and the sustainability of the EU.

Locally, resources companies and banks were the main beneficiaries of the positive investor sentiment.

courtesy of Business Weekly

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