A few macro and related stories today

Greece – so big European finance ministers meeting later today. Nice article highlighting the key Greece dates going forward (paywall):

Thursday June 18: Best chance for a deal

Friday June 19: The morning after

Sunday June 21: Possible emergency summit

June 22 onward: Worst-case scenarios

June 25: Any other business

June 30: Expiration date

July 1: Uncharted territory

July 20: Drop-dead deadline

Greece #2 – Perhaps influenced by continued Greek deposit outflow (€320 mln on Mon, €500 mln on Tue and €950 mln Wed), the Greek central bank is ‘playing with political fire’ but publicly falling out with the Greek government as per this link.  I would kind of agree…
Meanwhile talking about Greece…the best FT letters today – Grexit, coup d’etat, James Dean’s death playing chicken…
China – via @HaidiLun the interesting observation that China bears growling loud today. BAML- biggest bubble since 2000, 30% fall when it bursts. CS- recovery a ‘mirage’, A-share crash in 6 mths’.

Meanwhile this morning property prices better today…not so negative…

(h/t @RealPhatDragon)
…and better property prices led to this lunacy:

More Shenzhen owners decide to cancel deals as home prices continue to rise

Homebuyers sue vendors over cancelled deals after policy support measures fuel rebound

Talking about China a good chart on emerging markets/China/steel from today’s FT:

The Shanghai bourse after its greater run is consolidating below the 5,000 index point level: 

Fantastic – how many ‘clever’ people got this wrong!

 (h/t @lindayueh) 

30 Days Money Challenge

Didn’t get to save much money last year? Have you ever thought how much you could actually save in a month or a year? 100? 1000? 10,000? Well, challenge yourself to find out! Let’s start this new year with “30 Days Money Challenge“! I believe you have come across all sort of saving methods such as the 6 JARS System method and so on, but here’s one that focus more on building the saving habit.

30 Days Money Challenge

30 Days Money Challenge
My Money Jar which using Cookie Jar, you can recycle after CNY!

Like the saying goes, “The habit of saving is far more important than the amount you saved“. It’s true! You can saved a thousand dollar this month but waste it on the next month. So 30 Days Money Challenge will help you to shape your saving habit! Good habits take discipline, courage and hard work to form on a daily basis. Consistent commitment is what makes a habit!  

So, in this simple 30 Days Money Challenge, all you need to do is to double the amount you deposited yesterday. Here’s a table for better illustration:

Many people believe that by repeating a task for 21 days consecutively, a habit may be formed. It remains to be a myth on how the magic number 21 came around, but that’s not important here. As you may see from the table, there are Phase 1, Phase 2 and Phase 3. These 3 phases are actually representing the process of a habit formation, which were developed by the well know business coach, Tom Bartow. I will just summarize here for you:

Phase 1: The Honeymoon
You may feel that it is easy to accomplish, you are highly motivated to kick start.
Everything just goes smoothly here.

Phase 2: The Fight Thru
Motivation and inspiration wear off. You started to struggle with yourself when reality kicks in.
This is the dilemma part where you will be wondering if you should stop or continue.

Phase 3: Second Nature
You have conquered your own thinking and behavior. The habit is formed!
BUT (yes there’s always a but), beware of interruptions as you may back to Phase 2 again!

Ah-hah! So, that magic number 21 probably due to the 3 Phases with 7 days each? Anyhow in our case, the 30 Days Money Challenge will be 10 days each. That pretty much explains The Honeymoon phase where the starting is pretty easy with just 1 dollar and when it gets longer, you started to feel lazy or demotivated in the The Fight Thru phase.

Follow Strictly on Saving DAILY
It’s crucial to follow strictly to save daily as 30 Days Money Challenge not just getting you the total sum at the end of 30 days, but more importantly, to build the saving habit! Even though these are just small amounts but they will eventually add up to a big difference. As you could see at the end of 30 days you will get up to 465 dollars! If you feel that 1 dollar saving increment is too easy, feel free to increase the saving increment.

What if I feel like stopping halfway thru?
It’s completely normal to have that feeling when The Honeymoon phase is over. But here are few techniques to win over The Fight Thru phase. First, acknowledge or simply realize that you are entering into The Fight Thru phase. Next, remind yourself why have you started this. Simple questions such as “How will I feel if I accomplish this?” or “How will I feel if I just give up easily?”. Lastly, relate to your life projection. “What can I do if I accomplished?” and “What my life will be if I stop now? Back to the square one?” Most importantly, come back to read this post again if you feel like giving up.

What’s next after 30 Days?
Same as the tagline of YourFinanceDoctor – Earn, Save, Invest, Repeat. Don’t be held back by the interruption in Phase 3: Second Nature, where you go easy on yourself after achieving 30 Days Money Challenge. For months with 31 days, take that 1 day as the so called “cheat-day” or I called it  the”reward day” (be more positive). So instead of saving that $32, you may use it to treat yourself. So, what’s next? Repeat again from 1 dollar. Be it the same saving increment or you may up level to higher saving increment.

With that, I believe this is a SMART goal challenge where it is specific, measurable, achievable, relevant and definitely time based.

A journey of a thousand miles begins with a single step.

Eager to kick start your 30 Days Money Challenge? Here’s a downloadable PDF file for you to print out. In case, you want to alter the saving increment, here’s the downloadable excel file for you as well.
PDF 30 Days Money Challenge – Starting with 1 Dollar (DOWNLOAD HERE)
Excel 30 Days Money Challenge (DOWNLOAD HERE)

Next up, I will be sharing on what you can do with that amount of money at the end of 30 days.
Feel free to share to your friend as a challenge for them too! 

A few macro and related charts today

Due to some other obligations and a quite heavy reporting schedule today, just time for a few interesting charts and graphics this morning.

So Greek discussions rumble on…

…as the debt repayment dates gets closer. My view remains that the creditors have to get real too…

Nice peripheral yield impact chart on Fast FT.  Some sanity returning to fixed interesting markets…

I mentioned in yesterday’s Wrap (link here) about the surprisingly shabby US industrial growth news.  I thought this graphic on US potential growth rates being impacted was rather fascinating…
Quite a firm cyclically-adjusted P/E ratio then if true…  Caution required the sensible conclusion.  
And finally…interesting on gas prices from Bespoke.  The year-on-year statistics remain shabby of course.  

4 demographic trends to watch out for in 2015

Will population growth rebound?
My analysis of net long term migration has shown a slowing in recent months has shown that net long term migration into Australia has been slowing for the past couple of years, having peaked in early 2013 on a rolling annual basis.

As a result, total annualised population growth has slowed fairly considerably from a peak of well above 400,000 per annum, and should continue to do through the next couple of quarters of data.

On the other hand, the Department of Immigration has printed forecasts as at Q3 2014 which showed net overseas migration beginning to accelerate over the next few years.

Here are four demographic trends to watch out for.

1 – Population growth rebounding?

Will net permanent and long term migration rebound? Looking at the “actuals” it is still rather too early to say for sure. 
Net immigration into Australia is always weak in December, but the data for January and February have certainly revealed stronger results. This is one to put on the watchlist.

As noted here previously, analysis of prior years’ data from the Australian Bureau of Statistics (ABS) revealed that while ostensibly more than 380,000 Australians left the country on a long term or “permanent” basis over the past 12 months, more than 80 per cent of them are likely return home within just one year!

“Analysis shows that the majority of those with an intention of permanently departing, return to Australia within the following year. For example, in the calendar year 2011, out of the 84,240 Australian residents who stated they were departing permanently, only 15,890 spent 12 months or more overseas.”

If sustained, this trend identified by the ABS could potentially keep greater upwards pressure on total population growth.

2 – Record inbounds

As I detailed here, over the past year we have seen record short-term arrivals into Australia at 7 million, with the rate of growth in inbound arrivals exceptionally strong in recent months.
These are trends which you can see with your own eyes when travelling around the capital cities in particular.

Interestingly more than 400,000 of those arrivals came to Australia for education as I shall explore in more detail below.
No prizes for guessing which country is driving the overwhelming bulk of the growth in tourism services – it’s an explosion of visitors from China, although we have seen record American visitors over the past year too.

3 – A miniature baby boom

I’ve seen the articles about everyone stopping having babies due to cost of living pressures and lifestyle choices, just as you have.

And about a decade ago, I might have agreed, since few of my friends seemed to have bothered with having children.

Yet now I’m in the second half of my thirties the majority of my peer group actually did end up having kids, we just did so later than our parents.
Indeed, as I discussed here, we are going through something of a miniature baby boom, with the rolling annual total number of births over the past 24 months tracking at more than 300,000 per annum.
Naturally enough, over the past six years of available data, the greatest number of births have taken place in the states with the greatest headcount: New South Wales (591,000 births), Victoria (442,000) and Queensland (379,000).

The greatest number of settlers in Australia now hail from Asia, by a truly enormous margin. 
It is worth considering too whether the record high number of Chinese and Indian settlers now adopting Australia as their home will have a different outlook on family sizes.

4 – Australia’s newest export boom…education
It is fairly well known that Australia’s most valuable exports of recent years have been iron ore and coal respectively.
However, despite a rampaging increase in export volumes, spot prices for these commodities have crashed sharply of late, impacting monthly FOB values adversely.

The good news is that a new boom industry is set to fill a big part of the gap – foreign students!
In Q1 2015 a massive 147,000 foreign students commenced courses in Australia, smashing all previous records by a huge margin – even the sky-high numbers seen at the stimulatory peak of 2009.
Australia played host to some 590,000 foreign students in 2014, more than a 12 per cent increase on the prior year. Moreover, 2015 is going to shatter all previously held records by a big margin.
One of the main drivers has clearly been the lower Australian dollar, which helped education exports to explode 14 per cent higher in 2014 to $17.5 billion.
Education is consequently now a significantly larger export industry than even tourism. 

That said, the tourism sector has also rebounded nicely in tandem with the lower dollar, as evidenced in the record number of short-term arrivals charted above, as well as the most recently available international trade data.
Unsurprisingly, a greater proportion of tourism and education services are now accounted for by China, a “mega-trend” which is set to continue throughout the years ahead.
The wrap
If you are wondering what Australia will look like in 2061, you can play around with this nifty tool here to get an approximate idea.
Over the next few decades there will be more older people, more part time workers and – in all likelihood – more people working beyond the traditional retirement date.
Despite these potentially “negative” trends (in economic terms, at least), internationally high levels of immigration will ensure than Australia does not become as “top heavy” as some other developed economies have done and will continue to do.
Instead, Australia’s population pyramid in 2061 is expected to look something like this, with a population soaring from 24 million today to more than 41.5 million.
Source: ABS

The latest Financial Orbit Speaks is out!

Financial Orbit Speaks is a regular macroeconomic and stock specific enhanced podcast by Chris Bailey, Founder and Chief Investment Officer of Financial Orbit Limited.

This edition includes thoughts on high volatility in the Chinese equity market, the low GDP growth assumptions by the Federal Reserve, the latest from Greece and the Ukraine plus why active investment/knowing your investments is currently so important.    

You can listen/watch the latest “Financial Orbit Speaks” by clicking above or alternatively here directly on YouTube.


Chris Bailey                                                                                 
Founder, Financial Orbit Limited 

Email: chris.bailey@financialorbit.com
Web: www.financialorbit.com
Twitter: @financial_orbit

Coal crash

The risks of investing in coal mining towns have been well enough documented.

Property Observer noted yesterday how median house prices have continued to crash in Morwell in Victoria, down by 13.3 per cent over CY2014 to just $136,500.

Morwell had a decrease of 6.5% for the December 2014 quarter, having also decreased by 2.7% in the previous quarter.
Yarrawonga decreased by 11.5% and Traralgon by 3.6%.
Sale had a decrease of 2.1% for the December 2014 quarter, having increased in the previous quarter by 1.7%.”

SQM stock and asking prices news

SQM news

SQM Research released its latest newsletter and it was fascinating stuff as always.

Sign up for their newsletter here.

Total listings increased from the prior month in May, particularly in Melbourne and Sydney, which saw an 11.8 per cent increase.

Stock on market is clearly trending up in Perth and Darwin.

In Melbourne, listings have confounded the critics to come down by 16 per cent from very lofty levels indeed in May 2014 as stock is gradually being absorbed. 

In Sydney, stock levels remain exceptionally low, still down by 14.5 per cent year-on-year.

As a share of total capital city listings Sydney sits below way Melbourne, and beneath Brisbane and even Perth.

SQM’s asking price index showed prices for both Sydney units (+0.8 per cent) and houses (+1.4 per cent) continuing to rise in the month of May, which casts further doubt on the idea that sales prices fell in May (they surely didn’t).
Over the past year asking prices for Sydney houses and units are up by 12.4 per cent and 11.1 per cent respectively.
The SQM newsletter notes that despite the increase in Sydney listings in May, anecdotally stock is still being absorbed exceptionally quickly.
It certainly feels that way, with very few listings apparent in some popular suburbs.
This point was re-iterated by Louis Christopher, Managing Director of SQM Research, over on Twitter.
It’s something of an ongoing nightmare for prospective buyers.

Reconciling Your Credit Card – How To Post The Finance Charge

I worked with a client recently who contacted me because they were having issues in Quickbooks for Mac.  After a brief online conversation I quickly determined that they obviously knew the basics of what they were doing and that we probably just needed to do a little bit of detective work to solve the problem.

The problem resolved around the fact that every time they entered the finance charge amount from their credit card statement into the reconciliation page, that same amount was showing up as a payment made on the account.  Not only were these “payment” entries continuing to pile up without being reconciled, but the book balance of the account grew more and more inaccurate. 

The process, in both the Mac and PC version of Quickbooks, involves entering the finance charge amount in the appropriate box of the reconciliation screen, and choosing the correct expense account to assess this charge to. 

So the simplest questions to ask were, are you choosing the correct expense account and is it properly set-up as an  Expense account “Type”.  The answer to both was yes.

Everything the client was doing was correct, so I asked them to send me a copy of the screen shot from their reconciliation screen.  Quickbooks retains the expense account information applied to the previous reconciliation so this screen shot would confirm the proper entry (or not).  The screen shot gave us the answer to the clients dilemma.  Even though they knew where the finance charge should have been expensed to, the screen shot revealed that they were actually posting this charge right back to the credit card.  And since the finance charge journal is a debit to the expense account it was appearing as a payment, as a credit card payment is also a debit posting.

New versions of Quickbooks will catch this error and not allow you to post the finance charge to the same account you are reconciling.  This clients version did not have that protection.

I would strongly recommend that you consider upgrading your software if your version is at least 4 years old.  There are many great features that each new version brings on board and you may be missing out on changes that can make your bookkeeping easier and more accurate.

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