News

The QE 2 journey is coming to an end.

Through the Quantitative Easing measures, the US Treasury has pumped an astonishing $9 Trillion into the financial system.  The aim of this was initially to overcome the problems caused by excessive debt in the private sector (Banks).  This really only moved the problem but it did avert more financial failures.

It also kept interest rates low which encouraged greater investment in shares and it helped lift the US from recession.

This all sounds like it has gone well, however it gets a little more complicated when we look at who is buying this massive amount of debt.  Overseas nations continue to be buyers but the most recent capital raisings by Treasury were bought by the US Federal Reserve (Fed).  According to The US Federal Reserve and PIMCO, it amounts to 70% being purchased by the ‘Fed’. 

That’s right, the US Treasury is selling to the US Fed.

Who knows where this will end up, maybe the Fed will keep buying and if not, maybe someone else will step up, but the interest rates on offer are artificially low so investors and Funds will not be queuing up to buy the Bonds.

The Aussie dollar is back in the headlines

The meteoric rise of the $A versus the US has had the experts lining up to make predictions.  A few seem to be trying to outdo others by estimating ever increasing numbers.  As we have said before, it is near impossible to consistently forecast most things in the financial markets, especially currencies. 

The common and logical theme is that there are some sound reasons for the $A to remain above parity with the $US.  The reasons include the expected continuing strong demand for commodities worldwide, debt problems facing the US and ongoing trend of the US dollar falling against the major economies and those of Asia.

A major part of the A$’s strength over the last decade has been the downtrend in the US$. After a pause in 2008 during the GFC, this appears to be resuming.

Source: Bloomberg, AMP Capital Investors

Further US$ weakness is likely. The US Federal Reserve is signalling no urgency to raise interest rates at a time when other central banks are either lifting interest rates or contemplating lifting them. In addition, rising global investor confidence is reducing demand for the US$ as a “safe haven”. The converse of US$ weakness is renewed strength in a range of other currencies:

• The euro is looking stronger on the back of European Central Bank (ECB) talk of a rate hike and confidence that European authorities are confining sovereign debt problems to Greece, Ireland and Portugal.
• Asian currencies have risen to the top of their recent range against the US$. With the Renminbi steadily appreciating against the US$ and interest rates still rising across Asia, it’s likely Asian currencies - including the Korean won, Taiwan dollar and Singapore dollar - have more upside.
• The Yen strengthened after the Japanese earthquake. This has since been short circuited by G7 intervention, confusing the outlook for this currency

The major asset classes, positive but below average.

The table below indicates the returns from various asset classes for the 12 months ending 31^st March 2011.  The main asset classes have delivered below average results for that year.  However a benefit of using us is our well diversified approach of asset class investing. We have accessed returns from other areas that have added value above large Australian and overseas shares and Australian property.  This has been done whilst adding a level of risk that is manageable and provides additional return.

Lost Super

Did you know that in Sale there is $5,625,000* in lost super. 

Could any of this unclaimed super be yours?

If you have changed jobs in the last 10 years, had more than one job at the same time, changed address, changed names or have forgotten how many super funds you have, you may have some lost superannuation.

There are websites that are quick and easy to use to help you find your lost superannuation, all you need to search for lost superannuation is your:

• Tax file number
• Family and given names
• Date of Birth

The following websites can be used to find your lost superannuation:

• SuperSeeker
• AUSfund

If you have or think you may have lost superannuation, please feel free to contact us.  We can help you locate your lost super and consolidate it into one super fund.

*$5,625,000 has been calculated as follows: $13bn of lost super in Australia, is approximately $1000 per working Australian. In postcode 3850 there is a working population of 5625 (Source: ABS Census 2006) and so approximately $5,625,000 million is missing in the 3850 region.

Some light relief...Best insurance story of the year

This took place in Charlotte, North Carolina. A lawyer purchased a box of very rare and expensive cigars, then insured them against, among other things, fire. Within a month, having smoked his entire stockpile of these great cigars, the lawyer filed a claim against the insurer.

In his claim, the lawyer stated the cigars were lost 'in a series of small fires.' The insurance company refused to pay, citing the obvious reason, that the man had consumed the cigars in the normal fashion.  The lawyer sued - and WON!  

Delivering the ruling, the judge agreed with the insurance company that the claim was frivolous. The judge stated nevertheless, that the lawyer held a policy from the company, in which it had warranted that the cigars were insurable and also guaranteed that it would insure them against fire, without defining what is considered to be unacceptable 'fire' and was obligated to pay the claim.

Rather than endure a lengthy and costly appeal process, the insurance company accepted the ruling and paid $15,000 to the lawyer for his loss of the cigars that perished in the 'fires.'

NOW FOR THE BEST PART...

After the lawyer cashed the cheque, the insurance company had him arrested on 24 counts of ARSON!!! With his own insurance claim and testimony from the previous case being used against him, the lawyer was convicted of intentionally burning his insured property and was sentenced to 24 months in jail and a $24,000 fine.