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Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124...

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Savanth Sebastian, Economist, @CommSec
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Page 1: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

Savanth Sebastian, Economist, @CommSec

Page 2: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

Important Information

2

This presentation has been prepared without taking account of the objectives,

financial situation or needs of any particular individual. Before acting on the

information in this seminar, you should consider its appropriateness to your

circumstances and, if necessary, seek appropriate professional advice.

Commonwealth Securities Limited ABN 60 067 254 399

AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of

Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the

ASX Group.

Examples used in this presentation are for illustrative purposes only.

Page 3: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Inflation in focus

Oil price slumps

Weak growth Europe, Japan

Skittish confidence

China transition

US rates decision

Australia lacks momentum

Page 4: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Global Issues

Negative interest rates

Deflation/disinflation

Currency wars

Budget deficit/debt

Quantitative easing

Page 5: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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The big 2 in driver’s seat

Page 6: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Chinese economy will slow over time

Page 7: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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More diversified trade…

Page 8: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Page 9: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Lacking confidence

In Short Could do better

So What? Job market risks

Rates to stay low

Kinder budget

Page 10: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Strong housing; uncertain business

Page 11: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Job market improves

Page 12: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Still spendingWhat We Bought

Annual change, December quarter 2014

% change Real (inflation-adjusted) spending

15.3 Electrical, Electronic & Gas Goods Retailing

11.3 Footwear & Other Personal Accessory Retailing

9.2 Hardware, Building & Garden Supplies Retailing

8.0 Furniture, Floorcovering And Textile Goods Retailing

5.5 Takeaway Food Services

5.0 Liquor Retailing

3.6 TOTAL

2.2 Cafes And Restaurants

2.1 Supermarkets And Grocery Stores

1.8 Department stores

1.8 Pharmaceutical Cosmetic And Toiletry Retailing

1.3 Sporting goods, toys, video games

0.6 Flowers, antiques etc

-1.2 Clothing Retailing

-5.6 Butchers, fruit, bread, fish shops

-7.3 Newspapers And Books

Source: ABS (unpublished), CommSec

Page 13: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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State of homes

HOME PRICES

March 2015 2.7%

1.5%

5.6%

-0.3%

2.2%

-0.1%

-0.8%

13.9%

Annual % change

Source: CoreLogic RP Data, CommSec

Page 14: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

Supply & Demand

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In Short Strong housing market

So What? Positive for building trades

Positive for retailers

Need to follow cycle

Page 15: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

Construction boom & foreign investment

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Page 16: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Stimulus factors

Page 17: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Super-low rates

Page 18: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Shares, rates, houses

Page 19: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Opportunities & Risks

Opportunities

Wealth is rising

Housing-dependent areas to do well

Tame Budget

Interest rates to stay low

Risks

Economy not growing fast enough

Rising unemployment

No lift in confidence

Scant real wage growth

Page 20: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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Outlook

FORECASTSend 2015end 2014

2.75-3.25%2.5%Economic Growth

2.25-2.75%2.4%Underlying inflation

5.75-6.25%6.1%Unemployment

end 2015mid 2015

2.00-2.25%2.00-2.25%Cash rate

6,100-6,3005,900-6,100Sharemarket (All Ords)

US70-77cUS71-78cAustralian dollar

Page 21: Savanth Sebastian, Economist, @CommSec - ICE …...Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the ASX Group. Examples used in this presentation are for

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