What I Have Been Focused On: I have been looking closely at the RBA minutes of meetings, language in Phillip Lowe’s statements and speeches and other rhetoric as well as RBA modelling and published data to try and ascertain whether rates have peaked or when they will level out. I was surprised to learn that documents released pursuant to a Freedom of Information request revealed that the RBA did not believe that a 2.5% jump in Interest rates would have any impact on house prices. Seriously? A year 10 economics student would be able to foresee that knock-on effect and the RBA who has hundreds of analysts crunching numbers, sophisticated modelling software, sensitive data off limits to the rest of us and a huge economic brains trust didn’t see that one coming? Heaven help us!
What I Have Been Reading: The Wall – Ant Middleton. Nothing groundbreaking here but a nice little refresher course. Basically a book that reminds us that the only limitations are those that we place on ourselves. I need books like this when I get complacent and don’t push the boundaries of my comfort zone. The overarching recurring theme of why we hit the wall and live “inside the box” is that we mistake our own tunnel vision or limited beliefs for the limits of the world. We care too much what others think and we all too often play way too small.
What I Have Been Watching: I have been keeping an eye on Inflation figures – both locally and globally. It’s not pretty. Energy prices are spiralling out of control and may quadruple, meanwhile there is no quick fix . A low Australian dollar also means we will import inflation. The inflation figures for the last quarter were higher than expected (at 7.3% – expectations were for 7% – given that inflation was running at 6.1% in the previous quarter). The recent Federal budget didn’t do any heavy lifting to curb inflation which means that most of the pressure to cool down the economy will need to come via monetary policy – meaning the RBA will need to continue to increase rates.
What I Have Been Studying: Ways for businesses to beat the system. I have noticed anecdotally (and in the media and ASIC published insolvency notices) an increase in businesses having a hard time with cash flow, labour shortages, past debt from lockdowns and the pandemic which was deferred but not forgiven and now needs to be repaid (eg ATO debt and lease payments). Meanwhile runaway inflation and rising rates have meant that business profitability is down. Once this happens, from experience I know that it is a very slippery slope. But all of this can be avoided (but not by following the other sheep) as the system is less than perfect. Fortunately, there are some hacks and loopholes for business owners that I am researching and collating. Don’t worry I will share once I put the finishing touches on it – watch this space.
What’s Coming Up: We have a free livestream event next week for those that want to learn how to protect their assets and make sure their succession planning is in order in these uncertain times. You can grab all the details and register here.
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Till next week,
We released a new podcast episode this week, it is an interest rate breakdown so that you can stay on top of your game. You can listen to it on Apple, Spotify, Youtube, our Website or wherever you find your podcasts, you don’t want to miss it.