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All eyes on the RBA as they cut today….

Good Morning,

 

Today, our friends at the RBA meet to decide whether to cut official interest rates….

 

Over 70% of economists surveyed suggest that they will cut interest rates.

 

We tend to agree… With inflation sitting near record lows and consumer & business confidence not improving, the RBA will cut interest rates today by 25bp…

 

But the question remains…

 

Will banks pass it on?

 

Yes…

 

in part….

 

Will this fuel new demand for housing?

 

Unlikely….

 

But what it will do, is mean that access to cash is extremely cheap and having money in the bank earning interest, is effectively ~0.00%, once inflation and costs are taken out.

 

So the search for yield will continue this reporting season….

 

Last night, US stocks fell (Dow Jones -27 points), as crude oil heads into a “bear-market”….

 

We have been open about crude and our thoughts and we see further downside risk in the near-term….

S&P 500 companies posting results this week include Pfizer, Procter & Gamble Co, Time Warner and Priceline Group.

About 58 per cent of index members that have reported so far beat sales projections, while 81 per cent topped profit estimates. Analysts estimate profit at S&P 500 companies fell 3.2 per cent in the second quarter.

So.. What's on today?

RBA rates decision @1430, ABS Building approvals 

The SPI is down 27 points this morning

 

Niv Dagan is an Executive Director of Melbourne based boutique funds management and corporate advisory firm, Peak Asset Management (www.peakassetmanagement.com.au). He is also a regular financial commentator on Sky Business.

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