Just because rates have been at records lows doesn’t mean they can’t go any lower. For one, there’s the Aussie property market to think about. However, by looking at what the big banks are doing, we can glean what the RBA is likely to do in the future.
Right now, pass the cash parcel is in full swing, and central banks are only very timidly trying to reduce the size of the parcel. That’s basically why you’ve seen the US stock market rise unimpeded for the past two years. Central banks are behind the curve. There is too much cash in the system given the positive investor psychology that is unfolding.
In today’s piece, from 16 November, Ryan explains what ancient Chinese proverbs have to teach the modern investor. He looks at why interest rates are inevitably headed up in 2018, and both the good and bad things that could mean for your investments.
As long as the big four can comfortably maintain their positions at the heart of Australian finance, it’s unlikely to change. There’s little competition for the big four, outside one another. But that comfortable position may not be as secure as they think.
Donald Trump’s long promised tax cuts finally passed. By reducing the corporate tax rate from 35% to 21%, Trump hopes to encourage US firms to repatriate capital and invest it at home. Tax cuts appease the right wing. Increased jobs and wages appease the working class. Everyone wins, right?
There’s still a shaky feeling around the global economy, as people worry what years of money printing and low interest rates have done. But that’s precisely why interest rates have to rise. And soon…
Calls for an inquiry into misconduct in the banking industry have been coming for some time. If public confidence in the banks is shaken, that could be more damaging than the real potential for misconduct to be brought to light and punished. So, is this the end of the banks’ dominance in Australia? Are our favourite dividend-paying stocks in trouble?
The royal commission is likely to recommend increases in regulation, red tape and bureaucracy as the solution to the problems that arise. They are less likely to look at options like increasing market competition or mandating technological improvements. And funnily enough, that’s perhaps what the big four banks actually want in the current environment.
I do acknowledge that cryptocurrencies make some people nervous. They change deeply embedded societal structures. They change the fabric of your daily life. The security of certainty. Cryptocurrencies are a move in the direction of freedom. If we are willing to pay the price.
Ripple is also backed by Google. And as the company continues to expand its uses, the value of the coins will continue to climb.