Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - & author of Things That Make You Go Hmmm...one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Friday, 16 June 2017

What happens next is the interesting part

Stimulus & elastic money

It was reported this week that the UK unemployment rate remained at its lowest level since comparable records began, while the employment rate is also hovering at the highest levels on record. 


Australia recorded a much better result yesterday, with the unemployment rate declining to 5.5 per cent, the lowest reported result since 2013

In New Zealand the unemployment rate has dropped below 5 per cent, and in the US it is now all the way down to just 4.3 per cent. 

Even the Euro area has at last been recording marked improvements, with the unemployment rate dropping into single digit territory. 


Overall, then, respective stimulatory policies have by and large achieved their primary objective, at least in the short term.

'Normalising'

To date, the Bank of England has not succeeded in lifting its base rate, but with inflation rising recently more members are now leaning towards a hike. 

In the US, the Federal Reserve believes that the recovery is on track and has already been hiking the Fed funds rate, up to 1 to 1.25 per cent.

Some have long argued that by choosing to stimulate the economy with low interest rates and quantitative easing - rather than allowing a deflationary correction to play out - even greater distortions and imbalances have been created.

These distortions include higher levels of debt, and lower savings, arguably paving the way for the next recession.

Despite the global money supply having been increased by trillions of stimulatory dollars, there have been few signs of the widely predicted rapid inflation in consumer prices, but there has been an inflation in asset prices and in debt loads. 

A level of stronger inflation may now be considered beneficial by central banks, particularly if it helps to inflate away some of the accumulated debt.

So the argument goes, once inflation takes hold then inflation expectations will also rise faster still, leading in turn to even higher rates of inflation. 

What has taken place over the last decade has been unprecedented in many respects, so nobody can say with any certainty what will happen next. 

At the moment, though, there are few signs of runaway inflation.