Tony Alexander

Economic Commentaries

Some Thoughts On The Long Term

Thursday May 24th 2012

I bet you think this week’s Overview will be all about the Budget. It isn’t. The newspapers give great coverage so there is no point in merely repeating what you will have already read by the time you deign to open this publication. Instead, while noting that the Budget came out and its highlights, this week I reckon the most interesting thing in the WO is the article in the Housing Market section.

Rising awareness of the housing shortage has now mixed with reduced expectations for returns on equities and term deposits to produce an environment in which a lot of people are going to seek housing asset exposure.

As for Europe – if anyone has heard any positive news please do let me know. The main thing I see is an increasingly emboldened bolshie Greek politician blackmailing the Germans to make his day by kicking them out of the Euro and suffering the destabilizing consequences. The situation is highly likely to get worse in coming weeks before yet another temporary patch is placed on the rot. If one could pick the timing of the worsening then soothing (I can’t) then fantastic trading opportunities would open up in the equity, FX, exchange rate and fixed interest markets.

But for now what it means is likely further weakening in the NZ dollar which is already at a low for 2012 of US75 cents, nice unexpectedly low interest rates for borrowers, and a reminder of the volatility inherent in sharemarkets. 

This Tuesday the May issue of my Growing With China publication was released. If you wish to be placed on the emailing list to receive it and future editions please email me at asking for it.