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Economic Snapshot – 2016 Review & 2017 Outlook

Economic Snapshot – 2016 Review & 2017 Outlook

In summary

In hindsight 2015/16 proved to be a volatile year of repeating mini crisis’. Despite the erratic political and economic news, we still enjoyed modest growth in most of the traditional main stream asset classes. This ended up coupling nicely with some surprisingly buoyant returns in bonds, small cap equities and listed property. Although this was an impossible task to foreshadow at the beginning of the year, diversification into what is traditionally the more volatile areas proved beneficial for investors.

Overall the year seemed to be full of new surprises, triggering bouts of volatility in equity markets and ever lower sovereign bond yields. It started with China’s devaluation in August 2015, shortly followed with OPEC’s decision to push the price of oil down to regain lost market share, and then extenuated with the Federal Reserve [Fed] in the USA generating on-off again messages about lifting interest rates. Finally, we had the surprising Brexit vote with the UK referendum deciding to withdraw from the European Union. Not surprisingly, this all undermined investors’ confidence in the global economy. However fears of imminent recession proved overdone as global growth slowed and resilience emerged in keeping with economic fundamentals. Some would say a victory for the economists.

In this very unusual environment investors continued to seek yield (Real Estate Investment Trusts and Infrastructure) while avoiding riskier growth assets (Emerging Markets). The US cash futures market ended the year pricing in no further move from the Fed for the better part of the next two years. Many commentators feel this is overly pessimistic and believe it’s likely that the Fed will have to take some cautious tightening steps in the coming year.

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Financial procrastinations: A common trap in business and personal financial management

Financial procrastinations: A common trap in business and personal financial management

by Michelle Durham

Does it seem like everyone else is going places while you’re stuck where you are? Do you keep muttering “How do they do it?” under your breath when you see kids in their crisp private school uniforms, or families heading to the airport for yet another family holiday? You work just as hard as they do (if not harder), and yet you’re the one being left behind, which means they must be doing something you’re not, or vice-versa.

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Brexit – What Does It Mean For Australian Investors?

Brexit – What Does It Mean For Australian Investors?

Given the amount of press coverage over the last weeks and months, most of you would be aware that the UK was to hold a referendum (Brexit) to decide whether or not they would remain as part of the European Union.  It was always going to be a closely run race with almost all pundits predicting a victory for the ‘’Remain’ voters.

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Economic Snapshot –   May – June 2016

Economic Snapshot – May – June 2016

In May we experienced an important realignment of interest rate expectations – both here in Australia and in the USA. Both countries are resisting a change of rates for differing reasons. There has been softer than expected inflation data in Australia leading to a holding strategy on rates whereas the USA had stronger than expected spending data – but is communicating concern about Britain leaving the European Union which in turn has led to a similar hold strategy. All things being equal and assuming Britain remain in Europe the USA is more likely to increase rates. We live in interesting times?

In Australia, the market priced another cut in the cash rate, while in the USA the market brought its short-term expectations for the cash rate more into line with the Federal Reserve’s guidance. These changes in the market’s expectations about interest rates contributed to a modest but renewed depreciation of the $A – which continues to show resilience upside strength beyond expectations.

Australia

 Economic data for Australia released in May prompted further expectations of lower domestic interest rates. For example, the latest wage price index figures showed hourly rates of pay grew by a mere 0.4% in the March quarter and by 2.1% over the past 12 months. This was the lowest reading in the last 20 years. Economists have noted that this pace of wage inflation is lower than history suggests it should be given where the unemployment rate is at the moment.

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PrimeAdvisory Business Tax Planning Alert 2016

PrimeAdvisory Business Tax Planning Alert 2016

With 2 weeks until the end of the financial year, it is time to plan and set business strategies for the new financial year and beyond.

From 1 July 2015, start-up companies, trusts or partnerships can immediately deduct a range of professional expenses associated with starting a new business such as professional, legal and accounting advice.

From 1 July 2015, there were new rules for the tax treatment of employee share schemes, including tax concessions for start-up companies that meet certain conditions. Are you affected?

Employers need to provide 2016 PAYG Payment Summaries to employees and other workers by 14 July 2016. These must then be submitted to the ATO by 14 August 2016 or penalties will apply. Are you payroll ready?

The Small Business Entities Restructure Roll-Over bill may present broader opportunities for business restructure without income tax costs.  The bill applies to transfers of genuine assets on or after 1 July 2016. Is this an opportunity to reassess your business structure? Read More

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