Disappointing Q3-2018 GDP - rate cuts on the cards

Shane Oliver says the next move in the RBA cash rate will be down, not up

Previously people were talking about rate hikes being the next move.
Now we're talking about possible rate cuts (at least 0.50%) in the next year.
RBA's economic forecasts are falling way short of reality.

Might be a 'good news' for homeowners and property investors, but the underlying reasons are scary.

• Falling housing prices and wealth
• Falling household savings
• Stagnant wages
• Uncertainty with global trade wars
• Uncertainty from NSW and federal elections
• Tightening credit

 

New RMBS issuance is under lot of upward funding price pressure so not sure how much of RBAs cut will be passed back if at all any. Besides RBA doesn't have much monetary lever left to pull given that we are already at an all time low IRs with an all time high household debts. I think it will preserve its limited firepower for bigger economic event than defending frothy segments price falls.

One thing to keep in mind is the price falls are not due to credit price, its due to credit availability, and lower rates doesn't magically change that.

 

I think the GDP result today is a preview of what could happen in the next couple of years -- stagnant economy buoyed mostly by government infrastructure and election pork barreling, but with household balance sheets squeezed by near-GFC savings rate and lower wealth, we might even see a recession!

Labor will win the next federal election, will inherit a weakened economy, and be constrained from providing stimulus because the budget is in disrepair!

 

Rate cuts won’t help us now. We need to pay down debt to take the handbrake off the economy.

 

Well they can print money like the US Fed a ha ha ha -- Down Under Quantitative Easing and Zero Rate Bound!!!!

 

Today, from Westpac’s Bill 'the Rates Whisperer' Evans:

This result will come as a disappointment to the Reserve Bank. Note that the forecast for GDP growth in 2018 for which appeared in the November Statement on Monetary Policy was 3.5%. With the first three quarters of the year totalling 2.2% the December quarter would have to print growth of 1.3% (a 5.2% annualised growth pace) – a highly unlikely event. We can expect the Bank to lower its forecast for GDP growth in 2018 from 3.5% to 3.0% when it next releases its forecasts on February 9 2019.

That forecast will then challenge the 2019 forecast of 3.25% which appeared in the November Statement. It was reasonable for the Bank to assume some slowing between 2018 and 2019 (Westpac’s growth forecast for 2019 has been 2.7%) particularly with a more clouded outlook for global growth and a likely accelerated contraction in residential investment. (Note new dwellings contracted by 0.8% in The September quarter following two quarters which averaged 3.2% in March and June). That would immediately push the likely 2019 forecast back to around Westpac’s forecast of 2.7%.

So, this print is likely to change the Bank’s growth rhetoric of strongly above trend to slightly above trend drifting back to trend in 2019.

Westpac has consistently forecast that the cash rate would remain on hold through 2019 and 2020. If we are right that the Bank will revise down its growth forecasts on the basis of this result then lower expected growth momentum going into 2020 may also temper the Bank’s attitude to rates in 2020 as well.

 

QE is likely an option but then the trigger has to be a bigger event like collapsing big4s.
Solvency issues will be defended, not sure how will that stop house price falls let alone recovery?

 

would be interesting to see big4 share prices and dividend payouts come 2021.

 

Better watch out
Better not pout
That tight credit
They better forget it
Otherwise the Oz economy
Will become a huge anomaly

 

I have more important concerns than house prices.

 

Aussie investors have been v.v. naughty.
So no pressies for you.

 

I've pulled out of local shares when Trump was elected, and focused on international companies instead. It was the best decision ever.

 

Depends on how far you want to go back with CBA dIv's ,but anyone forecasting the price in 2021 would take it more seriously if they track the price year on year compounding away ...

2018 final dividend
Commonwealth Bank of Australia announced a final dividend of $2.31 per share for the second half of the financial year ended 30 June 2018.


Dividend per share
Record Date
Payment date
Australian franking level
NZ imputation credit per share (NZD)
DRP available
DRP discount
Dividend per share
$2.31



Dividend history
Dividend history of Commonwealth Bank fully paid ordinary shares.

Half year ended
Dividend per share (AUD)
Payment date
Australian franking level
NZ imputation credit per share (NZD)
DRP price (AUD)
ASX announcement
Half year ended
31/12/2017
Dividend per share (AUD)
$2.00
Payment date
28/03/2018
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.07
DRP price (AUD)
$75.38
ASX announcement
5/03/2018
Half year ended
30/06/2017
Dividend per share (AUD)
$2.30
Payment date
29/09/2017
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.09
DRP price (AUD)
$75.73
ASX announcement
5/09/2017
Half year ended
31/12/2016
Dividend per share (AUD)
$1.99
Payment date
4/04/2017
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.09
DRP price (AUD)
$83.21
ASX announcement
13/03/2017
Half year ended
30/06/2016
Dividend per share (AUD)
$2.22
Payment date
29/09/2016
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.11
DRP price (AUD)
$72.95
ASX announcement
5/09/2016
Half year ended
31/12/2015
Dividend per share (AUD)
$1.98
Payment date
31/03/2016
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.09
DRP price (AUD)
$72.68
ASX announcement
7/03/2016
Half year ended
30/06/2015
Dividend per share (AUD)
$2.22
Payment date
1/10/2015
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.11
DRP price (AUD)
$74.75
ASX announcement
4/09/2015
Half year ended
31/12/2014
Dividend per share (AUD)
$1.98
Payment date
2/04/2015
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.09
DRP price (AUD)
$91.26
ASX announcement
9/03/2015
Half year ended
30/06/2014
Dividend per share (AUD)
$2.18
Payment date
2/10/2014
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.11
DRP price (AUD)
$80.39
ASX announcement
22/09/2014
Half year ended
31/12/2013
Dividend per share (AUD)
$1.83
Payment date
3/04/2014
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.09
DRP price (AUD)
$75.26
ASX announcement
11/03/2014
Half year ended
30/06/2013
Dividend per share (AUD)
$2.00
Payment date
3/10/2013
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.12
DRP price (AUD)
$73.42
ASX announcement
24/09/2013
Half year ended
31/12/2012
Dividend per share (AUD)
$1.64
Payment date
5/04/2013
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.08
DRP price (AUD)
$68.76
ASX announcement
26/03/2013
Half year ended
30/06/2012
Dividend per share (AUD)
$1.97
Payment date
5/10/2012
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
$0.12
DRP price (AUD)
$54.54
ASX announcement
10/09/2012
Half year ended
31/12/2011
Dividend per share (AUD)
$1.37
Payment date
5/04/2012
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$48.81
ASX announcement
12/03/2012
Half year ended
30/06/2011
Dividend per share (AUD)
$1.88
Payment date
6/10/2011
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$47.48
ASX announcement
5/09/2011
Half year ended
31/12/2010
Dividend per share (AUD)
$1.32
Payment date
1/04/2011
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$52.92
ASX announcement
7/03/2011
Half year ended
30/06/2010
Dividend per share (AUD)
$1.70
Payment date
1/10/2010
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$51.75
ASX announcement
22/09/2010
Half year ended
31/12/2009
Dividend per share (AUD)
$1.20
Payment date
1/04/2010
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$53.56
ASX announcement
8/03/2010
Half year ended
30/06/2009
Dividend per share (AUD)
$1.15
Payment date
1/10/2009
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$44.48
ASX announcement
7/09/2009
Half year ended
31/12/2008
Dividend per share (AUD)
$1.13
Payment date
23/03/2009
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$28.45
ASX announcement
9/03/2009
Half year ended
30/06/2008
Dividend per share (AUD)
$1.53
Payment date
1/10/2008
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$42.41
ASX announcement
-
Half year ended
31/12/2007
Dividend per share (AUD)
$1.13
Payment date
2/04/2008
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$39.44
ASX announcement
-
Half year ended
30/06/2007
Dividend per share (AUD)
$1.49
Payment date
5/10/2007
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$54.8
ASX announcement
-
Half year ended
31/12/2006
Dividend per share (AUD)
$1.07
Payment date
5/04/2007
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$50.02
ASX announcement
-
Half year ended
30/06/2006
Dividend per share (AUD)
$1.30
Payment date
5/10/2006
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$45.24
ASX announcement
-
Half year ended
31/12/2005
Dividend per share (AUD)
$0.94
Payment date
5/04/2006
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$43.89
ASX announcement
-
Half year ended
30/06/2005
Dividend per share (AUD)
$1.12
Payment date
23/09/2005
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$37.19
ASX announcement
-
Half year ended
31/12/2004
Dividend per share (AUD)
$0.85
Payment date
31/03/2005
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$35.9
ASX announcement
-
Half year ended
30/06/2004
Dividend per share (AUD)
$1.04
Payment date
24/09/2004
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$30.14
ASX announcement
-
Half year ended
31/12/2003
Dividend per share (AUD)
$0.79
Payment date
30/03/2004
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$31.61
ASX announcement
-
Half year ended
30/06/2003
Dividend per share (AUD)
$0.85
Payment date
8/10/2003
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$28.03
ASX announcement
-
Half year ended
31/12/2002
Dividend per share (AUD)
$0.69
Payment date
28/03/2003
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$24.75
ASX announcement
-
Half year ended
30/06/2002
Dividend per share (AUD)
$0.82
Payment date
8/10/2002
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$31.92
ASX announcement
-
Half year ended
31/12/2001
Dividend per share (AUD)
$0.68
Payment date
28/03/2002
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$31.96
ASX announcement
-
Half year ended
30/06/2001
Dividend per share (AUD)
$0.75
Payment date
8/10/2001
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$28.79
ASX announcement
-
Half year ended
31/12/2000
Dividend per share (AUD)
$0.61
Payment date
30/03/2001
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$30.82
ASX announcement
-
Half year ended
30/06/2000
Dividend per share (AUD)
$0.72
Payment date
9/10/2000
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$27.31
ASX announcement
-
Half year ended
31/12/1999
Dividend per share (AUD)
$0.58
Payment date
31/03/2000
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$24.42
ASX announcement
-
Half year ended
30/06/1999
Dividend per share (AUD)
$0.66
Payment date
30/09/1999
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$24.75
ASX announcement
-
Half year ended
31/12/1998
Dividend per share (AUD)
$0.49
Payment date
26/03/1999
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$24.5
ASX announcement
-
Half year ended
30/06/1998
Dividend per share (AUD)
$0.58
Payment date
30/09/1998
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$18.79
ASX announcement
-
Half year ended
31/12/1997
Dividend per share (AUD)
$0.46
Payment date
27/03/1998
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$18.06
ASX announcement
-
Half year ended
30/06/1997
Dividend per share (AUD)
$0.57
Payment date
30/09/1997
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$14.55
ASX announcement
-
Half year ended
31/12/1996
Dividend per share (AUD)
$0.45
Payment date
27/03/1997
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$12.51
ASX announcement
-
Half year ended
30/06/1996
Dividend per share (AUD)
$0.52
Payment date
30/09/1996
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$10.64
ASX announcement
-
Half year ended
31/12/1995
Dividend per share (AUD)
$0.38
Payment date
1/04/1996
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$9.96
ASX announcement
-
Half year ended
30/06/1995
Dividend per share (AUD)
$0.46
Payment date
25/10/1995
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$9.86
ASX announcement
-
Half year ended
31/12/1994
Dividend per share (AUD)
$0.36
Payment date
28/04/1995
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$8.92
ASX announcement
-
Half year ended
30/06/1994
Dividend per share (AUD)
$0.36
Payment date
26/10/1994
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$6.93
ASX announcement
-
Half year ended
31/12/1993
Dividend per share (AUD)
$0.24
Payment date
29/04/1994
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$7.81
ASX announcement
-
Half year ended
30/06/1993
Dividend per share (AUD)
$0.22
Payment date
27/10/1993
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$8.86
ASX announcement
-
Half year ended
31/12/1992
Dividend per share (AUD)
$0.20
Payment date
30/04/1993
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$7.56
ASX announcement
-
Half year ended
30/06/1992
Dividend per share (AUD)
$0.20
Payment date
30/10/1992
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$5.62
ASX announcement
-
Half year ended
31/12/1991
Dividend per share (AUD)
$0.20
Payment date
30/04/1992
Australian franking level
Fully franked
NZ imputation credit per share (NZD)
N/A
DRP price (AUD)
$6.64

 

CBA - from $96 in 2015 to $70 in 2018
that's a 27% fall in value.

 

Strange item is, everyday investors calmly wait in line to buy thinking it will go above $100.00 as it will one day..

 

Many shares have fallen 27% in price this FY (in 5 months) .

For example (two that I own):

AMP, down 31.74%
ARB, down 27.90%​

All part of the game.

Bit like Sydney property prices, they don’t always go up .

 

What do you think on AMP ,as I also have bought in a few times over the last six months,only 25% down so far ..Bit like buying sight un seen with no due diligence ,based solely on a once blue chip company..

 

Alot of their business is devided and sold off.

Not as much left as their once was form what i can see.

Im not an expert in the field.

 

I'm riding this one with you. Always a bumpy ride.