Chart of the week: China's Great Wall against Trump's trade war

By | MLC Economic | No Comments

Chart of the week: China's Great Wall against Trump's trade war

20 September 2018

Bob Cunneen, Senior Economist and Portfolio Specialist 

China's monetary condition indicators

Source: Federal Reserve Bank of St Louis and Reuters Datastream

President Trump has just confirmed another 10% tariff on US$200 billion in imported goods from China. This is the second round of ‘Trump’s trade war’ following the earlier 25% tariff on US$50 billion on Chinese imports. So President Trump has effectively escalated the conflict since the bold Twitter tweet that “trade wars are good and easy to win”.

China’s tariff response has been more modest. China has imposed tariffs on US imports totalling only US$110 billion. China’s restraint in applying equivalent tariffs may reflect a number of factors. China imported only US$130 billion in goods from the US in 2017, so is running out of goods to apply tariffs to. China also wishes to negotiate an early end to this trade war given the downside risk to their economy. A trade war could lower China’s economic growth by up to 1% by penalising exports and damaging investment.

Where China has been more active in defending their economy is by providing easier monetary conditions. China’s central bank has assertively added cash to the financial system which has lowered interbank interest rates from 4% to 2.6% since May (blue line). This should eventually lead to lower interest rates for businesses and households. China has also guided the Chinese currency to fall by 7% against the US dollar (red line). This should help Chinese exports to stay price competitive. Both of these Chinese monetary measures are critical parts of the Great Wall’s defence against President Trump’s trade threat.

 Source : Nab assestmanagement September 2018 

Important Information

This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (“MLC”), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230686) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney 2060. An investment with MLC does not represent a deposit or liability of, and is not guaranteed by, the NAB Group. The information in this communication may constitute general advice. It has been prepared without taking account of individual objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. MLC believes that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to the accuracy or reliability of this information (which may change without notice). MLC relies on third parties to provide certain information and is not responsible for its accuracy, nor is MLC liable for any loss arising from a person relying on information provided by third parties. Past performance is not a reliable indicator of future performance. This information is directed to and prepared for Australian residents only. MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm’s length basis.

Source: MLC Economic Monthly update

Chart of the week: Is there any hope for the Pacific Peso?

By | MLC Economic | No Comments

Chart of the week: Is there any hope for the Pacific Peso?

13 September 2018

Bob Cunneen, Senior Economist and Portfolio Specialist

                              Australian dollar vs commodity prices

                                           Source: Reserve Bank of Australia.

 

After a period of remarkable calm over recent years, the Australian dollar (AUD) has fallen sharply against the US dollar (USD) (blue line) over the past six months. For a currency which is colloquially known as the ‘Pacific Peso’, the AUD’s slide to 0.71 is hardly surprising given the conventional wisdom.  

The US economy is a strong performer currently with unemployment below 4% and annualised growth above 4%. The US Federal Reserve (Fed) is expected to continue raising interest rates. While Australia’s unemployment rate has gradually fallen to 5.3% and economic growth has picked up speed to 3%, the Reserve Bank of Australia (RBA) appears comfortable sitting still on interest rates. So the AUD seems destined to decline given higher US interest rates are likely over the coming year.

Yet the AUD is not a certain ‘one way bet’ to fall further. The USD still confronts the challenge of large US budget and trade deficits that require financing. Interestingly, one of the key fundamental supports for the AUD has actually improved this year. Australia’s key commodity prices as measured by the RBA have held up reasonably well (red line). Higher coal and natural gas prices this year have managed to offset lower prices for copper and aluminium. Provided that Australia’s key commodity prices remain resilient and the Australian economy maintains solid economic growth, the downside risk to the Pacific Peso could prove to be a temporary mirage.

Source : Nab asssetmanagement September 2018 

Important Information

This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (“MLC”), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230686) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney 2060. An investment with MLC does not represent a deposit or liability of, and is not guaranteed by, the NAB Group. The information in this communication may constitute general advice. It has been prepared without taking account of individual objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. MLC believes that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to the accuracy or reliability of this information (which may change without notice). MLC relies on third parties to provide certain information and is not responsible for its accuracy, nor is MLC liable for any loss arising from a person relying on information provided by third parties. Past performance is not a reliable indicator of future performance. This information is directed to and prepared for Australian residents only. MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm’s length basis.

 

Source: MLC Economic Monthly update

Chart of the week: Wall street's sentiment is all 'trumped up' again.

By | MLC General News | No Comments

Chart of the week: Wall street's sentiment is all 'trumped up' again.

06 September 2018

Bob Cunneen, Senior Economist and Portfolio Specialist

                                           US shares vs Sen

 

Source: Federal Reserve Bank of St Louis and Reuters Datastream.

Wall Street achieved record highs last week for the benchmark S&P 500 Index (black line).  This extraordinary rally has seen the US share market more than quadruple in price since the lows of March 2009.  A pantheon of positives are cited as supporting US shares –  the strong US economy, moderate wages and inflation pressures, gradual interest rate rises and the corporate tax cuts. Given these favourable tailwinds, corporate profits have surged by a remarkable 25% over the past year to June 2018 (according to Factset).

However there are warning signs that US shares are becoming all too exuberant. Investor surveys and market positioning measures show that the optimism on US shares is very high. This sentiment gauge* (red line) is also notably above the share market peaks of 2000 and 2007.

Wall Street may seem a safe haven given the current turbulence in emerging markets such as China, Argentina and Turkey. However the high US sentiment gauge result suggests that investors appear overly confident of Wall Street’s prospects.

 *Sentiment gauge based on VIX volatility, household share holdings, Sentix investor survey, Margin Debt and Policy Uncertainty Index.

 Source : Nab nabassetmanagement September 2018

Important Information

This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (“MLC”),  a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230686) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney 2060. An investment with MLC does not represent a deposit or liability of, and is not guaranteed by, the NAB Group. The information in this communication may constitute general advice. It has been prepared without taking account of individual objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. MLC believes that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to the accuracy or reliability of this information (which may change without notice). MLC relies on third parties to provide certain information and is not responsible for its accuracy, nor is MLC liable for any loss arising from a person relying on information provided by third parties. Past performance is not a reliable indicator of future performance. This information is directed to and prepared for Australian residents only. MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm’s length basis.

 

Source: MLC General article newsletter

Monetary Policy Decision – Statement by Philip Lowe, RBA Governor, September 2018

By | MLC Economic | No Comments

Monetary Policy Decision – Statement by Philip Lowe, RBA Governor, September 2018

At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The global economic expansion is continuing. A number of advanced economies are growing at an above-trend rate and unemployment rates are low. Growth in China has slowed a little, with the authorities easing policy while continuing to pay close attention to the risks in the financial sector. Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. One ongoing uncertainty regarding the global outlook stems from the direction of international trade policy in the United States.

Financial conditions remain expansionary, although they are gradually becoming less so in some countries. There has been a broad-based appreciation of the US dollar this year. In Australia, money-market interest rates are higher than they were at the start of the year, although they have declined somewhat since the end of June. These higher money-market rates have not fed through into higher interest rates on retail deposits. Some lenders have increased mortgage rates by small amounts, although the average mortgage rate paid is lower than a year ago.

The Bank's central forecast is for growth of the Australian economy to average a bit above 3 per cent in 2018 and 2019. In the first half of 2018, the economy is estimated to have grown at an above-trend rate. Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Household income has been growing slowly and debt levels are high. The drought has led to difficult conditions in parts of the farm sector.

Australia's terms of trade have increased over the past couple of years due to rises in some commodity prices. While the terms of trade are expected to decline over time, they are likely to stay at a relatively high level. The Australian dollar remains within the range that it has been in over the past two years on a trade-weighted basis, but it has depreciated against the US dollar along with most other currencies.

The outlook for the labour market remains positive. The unemployment rate has fallen to 5.3 per cent, the lowest level in almost six years. The vacancy rate is high and there are reports of skills shortages in some areas. A further gradual decline in the unemployment rate is expected over the next couple of years to around 5 per cent. Wages growth remains low, although it has picked up a little recently. The improvement in the economy should see some further lift in wages growth over time, although this is likely to be a gradual process.

Inflation is around 2 per cent. The central forecast is for inflation to be higher in 2019 and 2020 than it is currently. In the interim, once-off declines in some administered prices in the September quarter are expected to result in headline inflation in 2018 being a little lower, at 1¾ per cent.

Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5½ per cent. This is largely due to reduced demand by investors as the dynamics of the housing market have changed. Lending standards are also tighter than they were a few years ago, partly reflecting APRA's earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality.

The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

Source: Reserve Bank of Australia, September 4th, 2018

Enquiries

Media and Communications
Secretary's Department
Reserve Bank of Australia
SYDNEY

Phone: +61 2 9551 9720
Fax: +61 2 9551 8033

Email: rbainfo@rba.gov.au

Source: MLC Economic Monthly update

The Twilight Zone with Trump, Trade Wars and Turkey

By | MLC General News | No Comments

The Twilight Zone with Trump, Trade Wars and Turkey

 

Bob Cunneen
Senior Economist & Portfolio SpecialisAugust 2018

The calendar year is coming to a close but some markets are struggling to make the finish line in good shape. We’re in a twilight zone where Trump, trade wars and countries like China and Turkey could present risks to Australian investors over coming months. These are important to be aware of, even though the future is beyond prediction.

President Trump’s political challenges could see Wall Street go into reverse

Wall Street is close to the record highs set in January 2018. Indeed the NASDAQ Index, which is dominated by technology shares such as Apple, Amazon and Facebook, has been the best performing share index so far this year. Lower taxes, a strong US economy and mild wages growth has seen corporate profits surge in 2018. Many investors consider this the ‘best of all possible worlds’ for US shares and have piled money into Wall Street.

However this optimism could easily falter. The US mid-term elections in November 2018 could also see Republicans lose control of Congress. If this occurs, the Trump corporate tax cuts may be challenged by the Democrats. The Mueller investigation into collusion with Russia during the 2016 election campaign is also a threat to President Trump’s standing. Hence political risk could dominate both Washington and Wall Street in the final months of 2018.

The US Federal Reserve (Fed) is determined to increase interest rates.  

The Fed has provided guidance for gradual interest rate rises over the coming year. Yet guidance is not a guarantee. Should US inflation start to sharply rise, the Fed could surprise with more aggressive interest rate rises. Higher interest rates would have a direct impact on company profits, damaging Wall Street prospects and investor returns.

The Trade War is escalating rather than fading

The opening shots in this campaign were President Trump’s twitter line in May that “trade wars are good and easy to win”. Since then, the trade conflict has only intensified. The US has implemented tariffs on steel and aluminium imports and targeted US$50 billion in select Chinese imports. President Trump has threatened another US$200 billion of Chinese imports with tariffs. China has responded with tariffs on US exports. 

These tariffs will see US businesses and consumers confront higher prices for imported goods, like mobile phones, computers and toys. Higher prices, which means rising inflation, could further accelerate the pace of interest rate rises from the Fed. This is hardly “good” for the US economy, share markets and interest rates.

The ‘Turkish bath’ for emerging markets

Emerging markets are low income economies with less advanced financial systems. While these economies have strong long-term growth prospects, they also feature higher financial and political risks. China and Turkey are two key emerging economies that have been prominent in 2018.

China’s share markets have disappointed this year with negative returns. The trade war with the US, as well as concerns over high company and local government debt, has seen Chinese share investors become more cautious. China’s economic growth also appears to be slowing, casting doubt over company profit prospects.

Turkey’s financial waters have also become heated. Inflation has been rising and now stands above 15%. That means the average price of goods and services is rising 15% each year. Turkey is also running large budget and trade deficits.

European banks have provided significant capital investments and loans to Turkey. Turkey is also a potent political risk given its proximity to Syria and as a member of Europe’s NATO defence organisation. A key lesson of the Asian Crisis in 1997-98 with Thailand is that even when small components of the global economy break down, they can have dramatic consequences. The potential contagion risk from Turkey to global markets bears watching.

Australia faces some challenges in coming months

Australia’s economy seems to be ending 2018 in better health. Business surveys are positive, there is strong jobs growth and the unemployment rate has fallen to 5.3%.

However Australians are still worried, judging by subdued consumer sentiment surveys and slow retail spending. High electricity prices, the burden of large debt obligations and slow income growth are the key concerns. Add to this a housing market that is cooling, with tighter lending standards coming from the banks. The immediate path ahead for the average Australian is a tough one. 

Fortunately the lucky country seems to have a few positives. Exports are still growing and infrastructure spending on road and rail are supporting the economy. However Australia remains dependent on a prosperous global economy. The ‘T’ risks with President Trump, US interest rate tightening, trade wars and Turkey will require vigilance as 2018 comes to a close.

All data current as at 28 August 2018. 

Source : Nab assetmanagement August 2018  

 

Important information

This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (MLC), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230 686) group of companies (NAB Group), 105-153 Miller Street, North Sydney 2060.

This information may constitute general advice. It has been prepared without taking account of an investor's objectives, financial situation or needs and because of that an investor should, before acting on the advice, consider the appropriateness of the advice having regard to their personal objectives, financial situation and needs.

Past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market.

Any opinions expressed in this communication constitute our judgement at the time of issue and are subject to change. We believe that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to their accuracy or reliability (which may change without notice) or other information contained in this communication.

This information is directed to and prepared for Australian residents only.

MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm's length basis.

 

Source: MLC General article newsletter

Chart of the week: A slow train is coming for Australian wages

By | MLC Economic | No Comments

Chart of the week: A slow train is coming for Australian wages

22 August 2018

Bob Cunneen, Senior Economist and Portfolio Specialist

 

                                                   Source: Datastream 

Australia’s nominal wages growth has been weak over recent years. Wages are growing at only a 2.1% annual rate currently (blue line). This slow wages growth reflects a combination of factors. Australia has struggled with elevated unemployment and underemployment rates. There are also the long-term challenges of globalisation and technology. These local and global factors have combined to generate job insecurity which has curtailed Australian wages growth.

The US economy has also faced this slow train on wages (red line). After the calamitous collapse in the US housing market with unemployment surging to 10% in early 2009, US wages growth stagnated until 2014. However with stronger jobs growth and the US unemployment rate falling to 4%, US wages growth has started to accelerate in recent years.

There are similar promising signs for Australian wages. Recent strong employment growth has seen Australia’s unemployment rate grind lower to 5.3%. There is diminishing ‘spare capacity’ as the unemployment rate approaches the Reserve Bank of Australia’s estimate of full employment at circa 5%. So higher wages growth is becoming more likely for the Australian workforce as the labour market progressively give employees more bargaining power.

 Source : Nab assetmanagement August 2018 

Important Information

This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (“MLC”), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230686) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney 2060. An investment with MLC does not represent a deposit or liability of, and is not guaranteed by, the NAB Group. The information in this communication may constitute general advice. It has been prepared without taking account of individual objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. MLC believes that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to the accuracy or reliability of this information (which may change without notice). MLC relies on third parties to provide certain information and is not responsible for its accuracy, nor is MLC liable for any loss arising from a person relying on information provided by third parties. Past performance is not a reliable indicator of future performance. This information is directed to and prepared for Australian residents only. MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm’s length basis.

Source: MLC Economic Monthly update

Chart of the week: A Turkish bath for global markets?

By | MLC Economic | No Comments

Chart of the week: A Turkish bath for global markets?

Bob Cunneen, Senior Economist and Portfolio Specialist

                                    Turkey's currency vs bond yield

                                                     Source: Datastream

 Turkey’s financial markets have taken a big bath this year. The Turkish lira has collapsed by 34% against the US dollar this year with the currency now at 5.84 to each US dollar (blue line). Turkish 5 year government bond yields now yield 24% compared to only 12% at the start of 2018 (red line).

Turkey’s financial waters have been warming up for a considerable period. Inflation has been rising and now stands above 15%. Turkey is running a large current account deficit at -6 % of Nominal Gross Domestic product (GDP) that requires supportive capital inflows to finance. Turkey also has significant foreign debt at approximately 53% of GDP.

Turkey is a potential risk to global markets both financially and politically. Turkey is critically important given its proximity to Syria and as a member of Europe’s NATO defence organisation. The financial linkages are even more problematic for Europe. European banks have significant investments and loans in Turkey. The Bank for International Settlements estimates that Spanish, French and Italian bank assets in Turkey were approximately US$138 billion at the end of 2017. So European financial shares are proving acutely sensitive to Turkey’s current turbulence.

A key lesson of the Asian Crisis in 1997-98 with Thailand, and the Global Financial Crisis of 2007-09 with US subprime mortgage securities is that even when small components of the global economy break down, they can have dramatic consequences. The potential contagion risk from Turkey to global markets bears watching by investors.

 Source : Nab assetmanagement August 2018

Important Information

This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (“MLC”), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230686) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney 2060. An investment with MLC does not represent a deposit or liability of, and is not guaranteed by, the NAB Group. The information in this communication may constitute general advice. It has been prepared without taking account of individual objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. MLC believes that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to the accuracy or reliability of this information (which may change without notice). MLC relies on third parties to provide certain information and is not responsible for its accuracy, nor is MLC liable for any loss arising from a person relying on information provided by third parties. Past performance is not a reliable indicator of future performance. This information is directed to and prepared for Australian residents only. MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm’s length basis.

Source: MLC Economic Monthly update

Chart of the week: Australia's waiting game on interest rates

By | MLC Economic | No Comments

Chart of the week: Australia's waiting game on interest rates

10 August 2018

Bob Cunneen, Senior Economist and Portfolio Specialist

                                 Australian interest rates

                       Source: Reserve Bank of Australia’s statistical tables F1 and F2.

Australia’s Reserve Bank of Australia (RBA) celebrated a second birthday for monetary policy this week. Australia’s key cash interest rate (blue line) has been held steady at 1.5% for the past two years.

This is a remarkably stable interest rate considering the twists and turns of the Australian economy over recent years. Essentially the RBA has held interest rates steady given competing forces confronting the economy. The mining investment downturn and sedate retail spending have made a case for lower interest rates. Conversely the Sydney and Melbourne housing price booms, infrastructure surge and stronger jobs growth have argued for higher interest rates.

Australia’s government bond market seems to be pricing higher interest rates over coming years. The two-year government bond yield has risen above 2% this year (red line). Given that this two-year government bond yield has typically led movements in interest rates over the past decade, this implies the RBA is set to raise interest rates. So from the bond markets perspective, the RBA is merely playing a ‘waiting game’ until the case for raising Australia’s cash interest rate becomes compelling.

 Source : Nab assestmanagement August 2018 

Important Information

This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (“MLC”), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230686) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney 2060. An investment with MLC does not represent a deposit or liability of, and is not guaranteed by, the NAB Group. The information in this communication may constitute general advice. It has been prepared without taking account of individual objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. MLC believes that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to the accuracy or reliability of this information (which may change without notice). MLC relies on third parties to provide certain information and is not responsible for its accuracy, nor is MLC liable for any loss arising from a person relying on information provided by third parties. Past performance is not a reliable indicator of future performance. This information is directed to and prepared for Australian residents only. MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm’s length basis.

Source: MLC Economic Monthly update

Protecting your finances after redundancy

By | MLC General News | No Comments

Protecting your finances after redundancy

Being made redundant can mean some major lifestyle changes. For many, the biggest challenge is managing money while looking for work.

To help keep you focused, we've put together a checklist of priorities—as well as some handy advice for staying afloat financially.

UNDERSTANDING YOUR REDUNDANCY PAYOUT

According to ASIC, a redundancy payout can be made up of any of the following:

  • a severance payment

  • an incentive payment

  • a payment in lieu of notice

  • unused annual leave and long service leave.

Regardless of its makeup, in most cases you’ll get a lump sum when you finish your role. The amount of the payout will likely vary depending on how long you’ve been with your company, and will be taxed accordingly.

It can be helpful to sit down with a financial expert and explore your options. Keep in mind key dates, major debts or payments, and whether you can afford a break before looking for work.

Depending on where you are in your career, a redundancy payout could be a blessing in disguise. It can sometimes provide you with a financial buffer to explore other opportunities.

MANAGING YOUR SPENDING HABITS

Redundancy can give you a certain amount of freedom, but you may still need to adjust your spending habits. Without any income, you should consider revising your necessary and unnecessary expenses.

  • Weekly budgets can help manage your day-to-day needs

  • Consider yearly budgets for the bigger costs such as mortgage payments, school fees and holidays

Just remember that reworking your spending habits doesn’t have to mean restricting your lifestyle. Figuring out what you're happy to compromise on is a great place to start.

DEALING WITH DEBTS

Depending on the size of your payout, you might find it hard to keep up debt repayments on things like your home, car, or school fees. If you’re finding it tricky, please contact us on |PHONE|.

The important thing is to act quickly and not simply avoid making payments. That could be where you’ll run into trouble.

REVIEWING YOUR CONTRACTUAL RIGHTS

You can learn more about your redundancy rights and entitlements under the 2009 Fair Work Act.

If you believe that you're being paid an amount less than what was agreed in your contract, or less than what the Fair Work Act indicates, seek out legal advice or contact the Fair Work Ombudsman directly.

PLANNING AHEAD

Unless you're looking to move into retirement, it's important to plan your next career move. If you're having challenges re-entering your industry, it might be a good idea to look into education or retraining opportunities. The Department of Human Services may be able to provide services to assist you to update or change your skills.

Source : Nab August 2018 

Reproduced with permission of National Australia Bank (‘NAB’). This article was original published at https://www.nab.com.au/personal/learn/unemployment-redundancy/protecting-your-finances-after-redundancy 

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2018 National Australia Bank Limited ("NAB"). All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page. "

Source: MLC General article newsletter

Chart of the week: Italy's 'La Dolce Vita' has turned sour

By | MLC Economic | No Comments

Chart of the week: Italy's 'La Dolce Vita' has turned sour

31 July 2018

Bob Cunneen, Senior Economist and Portfolio Specialist

 

                   European industrial production

                

                Sources: Eurostat and Thomson Reuters Datastream.

European industrial production has improved over recent years. For the year to May, production has increased by 2.4%. However this broad measure of European economic activity camouflages the wide divergence in performances across the continent. This sharp activity divergence over the past decade shows the fault lines in Europe’s bold experiment of monetary integration.

Germany has been in the fast lane on the Autobahn highway system since the ‘Global Financial Crisis’ (2007-2009) and ‘Europe’s Sovereign Debt Crisis’ (2011-2012). Germany’s industrial production is a healthy 13% above 2007 levels (black line). By contrast, France (blue line) has been struggling in the slow lane with production still 7% below 2007 level.

Italy seems to be in the ‘break down lane’ with its industrial production levels still 16% below 2007 levels (red line). The sweet life for Italy (‘La Dolce Vita’) has turned sour given low business investment, high government regulations and a weak banking system that has constrained economic activity. This economic weakness also accounts for the emergence of the two populist political parties in the Five Star Movement and Lega parties who have now formed a coalition government in Italy that is causing consternation across Europe.

 Source : Nab nabassestmanagement 31 July 

Important information

This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (“MLC”), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230686) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney 2060. An investment with MLC does not represent a deposit or liability of, and is not guaranteed by, the NAB Group. The information in this communication may constitute general advice. It has been prepared without taking account of individual objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. MLC believes that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to the accuracy or reliability of this information (which may change without notice). MLC relies on third parties to provide certain information and is not responsible for its accuracy, nor is MLC liable for any loss arising from a person relying on information provided by third parties. Past performance is not a reliable indicator of future performance. This information is directed to and prepared for Australian residents only. MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm’s length basis.

Source: MLC Economic Monthly update