This week the RBA announced it would keep interest rates at 0.25%. They are likely to fall further and little chance we will see much of an interest rate rises for years. Property has been knocked and investment property has suffered due to huge impacts on the rental markets with rent freezes and bans on evictions.
This is all bad news for investments. Right? Is it any wonder that any additional capital is heading to the one place where a recovery of significance is still possible. People need income and capital growth – which isn’t available elsewhere except the stock market.
It may be that investors are looking higher up the risk curve but either way there isn’t much choice for growth elsewhere at the moment.
The opinion that debt and credit-exhaustion might set in and investors start taking money off the table is entirely possible – when there are alternatives. It is also true that the recession hasn’t yet bitten, for some. For others the unemployment, reduction in pay and stress has bitten quite hard.
Only 60.3 per cent of Australians have a job — slightly higher than the pandemic lows earlier this year, but otherwise it is at the lowest levels in more than a decade. There has also been a big rise in underemployment of 3 per cent over the past year, meaning 11.4 per cent of Australian workers do not have as many hours of work as they need.
The focus of the budget was (rightly) jobs – with $100bn splashed to stimulate the economy to provide jobs and prosperity to overcome our health induced recession. The thing that bothers me (excluding poor old Victoria) is if SA, NSW, WA, NT, ACT, and QLD are almost “back to normal”. If that is true, we should see unemployment drop as the states open more and at a greater pace.
The budget has done its bit and poured money into the economy. Come on Aussie – lets get on with it.
Net migration accounted for 62% of population growth for the 12 months to March 2020. Let’s think about the influence on corporate revenues and profitability, government taxes and expenditure, housing demand and construction, along with the supply of labour. Migration will come back – depending on the vaccine development. But will our actions toward China cause a permanent rift between our educators and the 200,000 Chinese citizens previously enrolled.
By copying the US actions towards China we have put our strong position in the region into jeopardy. At a time when we need jobs … And now the latest debacle is coal.
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