December is here and as the temperature rises the countdown to the Christmas break begins. But it appears at least one Australian is determined to ‘chill’. When Reserve Bank governor Glenn Stevens was asked recently about the possibility of an interest rate cut he said: “We’ve got Christmas, we should just chill out …come back … and see what the data says.” The markets took that as a no, for December at least.
The data released in November was certainly mixed. Employment is strong, with unemployment down from 6.2 per cent to 5.9 per cent in October, but wages growth is the slowest in decades. And new business spending on buildings and equipment fell 9.2 per cent in the September quarter, the biggest quarterly fall on record. Expectations are for the stock market to continue its volatile ways, however rather than this being a reason to panic, we are seeing this volatility as an opportunity for our active managers to take advantage of these low valuations. We currently see the Australian market being more favourable than International valuations. (excluding the currency.)
Internationally we are waiting on the raising of Interest Rates in the US, and Central Banks continue to print more money in both Japan and Europe. (this will be good for these share markets.) Emerging markets have some significant debt issues, which is why we have moved away from these sectors, with our focus as mentioned, turning to the local market. There are still opportunities to consider overseas, however now is a time to be more selective on these investments.
After another busy year, with lots of change, we thank you all for your continued business. Merry Christmas and a happy and prosperous New Year everyone from all the Team at Guide!