Economy

Economies in Europe and the US will continue to limp along at best. We’re still concerned that the condition of the PIIGS (Portugal, Italy, Ireland, Greece and Spain) will deteriorate and more will have to be bailed out.

… there will continue to be a great deal of social unrest in Europe as they adjust Government cutbacks to reduce debt.

… official interest rates will keep rising and be 5.5-6 per cent by the end of the year. Although a crack in China or a Europe-led financial crisis will dampen rate rises.

… The economy should maintain a 3-3.5 per cent growth rate, inflation will spike on food and oil price rises, unemployment will stay low and the skills shortage continue.

Shares

Major stocks are trading on pretty high multiples at the moment and will have to produce decent results to maintain these levels.

… If commodity prices start to ease and resource companies begin issuing profit downgrades then we could see the market under increased pressure.

… solid but unspectacular 2011

… the key will be sticking to solid companies with strong cash flows and good management.

… Good dividend yields will be a real bonus.

Property

We think there will be a slight easing in values, without a crash, this year but it will certainly be a buyers market.

… Prices will be under pressure in 2011.

Australian Dollar

Global investors see the Aussie dollar as providing good investment exposure to the commodities boom and to Asia.

… see the currency continuing to appreciate for the next couple of months and then ease in the second half of the year to finish in the low 90 US cents.

It’s amazing how often you can get yourself a better deal when shopping, and in unexpected ways.

We found an unlikely gem the other day when buying new sunglasses. If have private health insurance such as Medibank Private, you can get an instant extra 15 per cent off the price of the sunglasses at the counter when shopping at Myer. Who would have known?

Other benefits payable by some of the private health funds include a rebate on quality sports shoes and for remedial massage.

It’s worth checking with retailers about the deals they have and also checking your health fund for the all the bells and whistles they offer.

The September CPI figures show the Reserve Bank doesn’t need to worry about inflation getting out of control in the near future.

This should lead to a cut in official interest rates tomorrow as a means of building a safety net against economic shockwaves from Europe and the US.

With official rates of most other developed countries below one per cent against out 4.75 per cent, there is certainly a lot of room to move.

The only worry now is whether the banks will pass on any rate cut to their borrowers. There is some speculation they will keep all or part of the advantage. It won’t be a good like as a number of the major banks are reporting their profits which are likely to be pretty good.

What are all those starving children in Afirca complaining about, when weve got problems like these??

(That was a joke... don't yell at me)

Happy Friday everyone!