|
|
|
|
Hedge Clippings | 07 February 2025 The headlines this week have been dominated by a combination of the Trump Show in the US, and Aussie soccer player Sam Kerr's court appearance in London. Tempting as it may be to offer an opinion on one, or the other, we are going to avoid both, instead reverting to our standard fare of considering Australia's - or the RBA's - upcoming interest rate decision. Most, but not all, noted economists have backed their judgment for a rate cut on Tuesday week, while the money market is implying a 90% + chance of a cut. Among those putting their money - or at least their reputations - are the "big four" following release of the December inflation number of just 2.4%, comfortably in the middle of the RBA's 2-3% target range. There are however a few economists - admittedly not from the big four - who are bucking the trend by suggesting the RBA will hold its nerve - and the cash rate at 4.35% where it has been since November 2023, for yet another meeting, citing a couple of reasons: Firstly the "trimmed mean" CPI figure, which the RBA prefers, was above 3%, and the reduction in electricity prices (-17.9%) was thanks to temporary government support. Added to this is the unpredictability of the effects of Trump's tariff policy - or if it comes to that, what the eventual outcome of those tariffs will be. For what it is worth, we expect the RBA to move. In spite of widespread reports of mortgage stress, household spending figures released earlier this week rose 0.4% in December, driven by discretionary spending which rose by 0.6%. Meanwhile the extended National housing market appears to have split into a two-speed market according to PinPoint Economics' Michael Blythe, with prices falling in Sydney, Melbourne, and Canberra, but still rising in Brisbane, Perth, and Adelaide. Albanese (aka Fluff and Puff) and Chalmers are obviously pitching for a cut pre-election, and will no doubt claim responsibility accordingly, while ignoring the fact that all but one of the last twelve rate rises, totalling 4.25%, occurred on their watch. More concerning from the government is their legislation currently in the Senate to levy a 15% unrealised capital gains tax (with no allowance for a refund or offset on losses) on superannuation earnings with balances over $3 million, with Chalmers claiming this will only affect 0.5% of super accounts. However, the $3m figure won't be indexed to inflation, so on our simple calculation, and at an annualised return of 6%, a current balance of $525,000 will trigger the tax in 30 years time. Millennials, welcome to saving for your retirement! Hedge Clippings is not a tax expert by any means, nor for that matter is liable for the tax if the legislation is passed, but the concept of a tax on unrealised capital gains, on super or otherwise, seems idiotic - unless you're the treasurer. News & Insights Market Update | Australian Secure Capital Fund Trump's TikTok Intervention | Magellan Asset Management January 2025 Performance News Bennelong Australian Equities Fund Bennelong Long Short Equity Fund |
|
|
If you'd like to receive Hedge Clippings direct to your inbox each Friday |
