Don't bet on another RBA rate cut in the immediate future
The Reserve Bank has acknowledged it may have gone a wee bit too far with the paring knife, releasing minutes yesterday indicating low rates are negatively impacting savers and households.
The notes say that what would have in the past, stimulated construction and household spending, isn't working the same way now - and that any positive gains are being wiped out by the bigger negatives of eroding savings and consumer confidence.
This coincided with news that the International Monetary Fund has downgraded its forecasts for Australian economic growth for the next two years. Hell, it reckons even Greece's economy - the global poster child for fiscal mismanagement - will grow faster than Australia's during that time.
Pundits from both sides of the political divide are ripping their hair out from the roots over this stuff. Last night, Alan Jones had to cut to a break early to compose himself after breaking down in tears on his eponymous Sky program over the plight of Australian cattle farmers, being forced to sell breeding stock to stay afloat in the face of misdirected and too-slow drought relief. Meanwhile, yin-to-Alan's-yang Ross Gittins, economics writer at the SMH, is despairing today about the widening gulf between haves and have-nots and putting the blame squarely at the feet of government.
The answer to this from Canberra, is a feat of misdirection the Four Horsemen would be proud of. The general consensus of the Morrison government's ACCC witchhunt into the lending practices of the big four banks is that is a waste of time and money, and an irresponsible distraction from the main issue: that this economy needs stimulus if it's going to improve. It could also backfire and have the opposite effect to that intended.
AFR columnist, Patrick Commins has an excellent article in today's edition. He very clearly breaks down the reasons why the big banks feel they're on solid ground when it comes to arguing the toss over their lending practices. He also makes the case for why they could be less profitable - which will be music to the ears of Josh Frydenberg's crack squad, but it's a small win in the face of an unwinnable battle.
In any case, if bank customers feel that strongly about it, there's not been a time in the past 10 years where there's more opportunity to vote with their feet.
Belt-tightening in construction
Everywhere you look today, you'll find stories derived from the latest Adviev Remuneration Reports. Anyone who works in or on the edges of the property sector though, would relate to the Property edition which shows demand for design and building consultants has been cut back to beyond an inch of its life.
We know it's going to take a good six to 12 months before the housing construction sector starts to experience the renewal of fortunes benefitting the second-hand residential property market at the moment. Many builders and developers are trying to ride it out by cutting spending - which is going to bring a whole new set of problems later on.
There's also movement among the big players. The world's largest building materials company, LafargeHolcim is looking to exit Australia and New Zealand as it works to cut down debt. Meanwhile, US private equity firm, Lone Star Funds is moving in the other direction, as it considers a bid to buy Australia's largest building materials provider, Boral.
Mascot Towers crumbling
The state of affairs for embattled Mascot Towers unit holders keeps getting worse. The latest is that structural failures are worse than had been feared, with existing cracks widening and new cracks emerging.
Already struggling to fund the cost of repairs, apartment owners are apparently facing a future where the building may be unsalvageable.