Just Getting Started

Another fantastic week where the USA stock market kept hitting recored highs. Which is exactly where the Dow Jones closed yesterday…

So where’s the headlines about the US adding billions in wealth and all time records being broken again and again? Where is that headline? So we can be sure of two things. 1. The US and global economy is growing extremely strongly. We get data on the second quarter for US gross domestic product, or GDP growth later tonight. This is likely to show sharp acceleration to around an annual rate of 2.5%. My personal forecast has been 2% to 3% GDP for 2017 all along, and I think toward year end we could well see at least one quarterly number above 3%. 2. The media is still trying to avoid the fact that we live in the most prosperous period in history. Today’s headlines are about the Tech sector having the smallest of slight corrections or anything else that would suggest to the reader that all is not well and prepare for the next apocalypse.

Both points are incredibly valuable from the Australian property point of view. We have a very strong global economy. China has reaccelerated this year too, just as we said it would, already growing at 6.9% and could well break above 7% in the second half of the year. The background reality then is extremely positive property. Then to make it perfect for investors is the fact that the media having got their forecasts that property prices were going to fall every year since 2009, are falling back to vague statements like, well the market might go sideways sometime between now and 2020, and that this would be very bad too? I mean really? The kind of nonsense you get from places like Fairfax and The Australian Financial Review? We have been right on property, and as real investors and home buyers increasingly recognise that their hesitation in recent years, brought about by media stories scaring them, has been one big massive mistake, then they will go shopping a little more eagerly than ever before. We often talk about the damage done to real families by all the media type idiots who don't know the first thing about modern economics keeping people at bay from purchasing. These ordinary people have lost forever the property wealth they could have had. Has it stopped? Is it over…. Of course not! The outlook is just as strong as it has ever been. So as the media try to find a way out of being totally wrong, never admitting or apologising for always being wrong, we have to just keep taking advantage of everyone else's hesitation before the whole world catches on to just how good things are. It was a great pleasure to give a keynote address and a lecture at the University of Sydney Business School this week. The post graduates I was addressing were from the top universities of Europe, South America and Asia. May I just say what a delightful group they were. None of that GenY attitude often so prevalent. There people had to already speak two languages and have two degrees under their belt. The country of Sweden only sends one student. So we are speaking cream of the crop really. What was interesting was that my talking about our living in the most prosperous period in history came as a great surprise to them. The whole world is so brain-washed by the media consumption of the day, they are missing it. It is a bit like sitting in your lounge room all day wearing a rain coat, because the TV says the weather is terrible? When all you have to do is look out the window to see how great things are! And go out into the world and enjoy it. The media for instance and all the major banks never thought the Australian dollar would go up. It was supposed to be at 60, or even 50 cents this year. They were all wrong yet again. As they are so consistently on stocks and property. The other interesting thing that came out of my visit with the International Business Degree students was that the phenomenon of China investing and buying in local communities is a truly global event. A student from Czech, and another from Hungary were quick to tell stories of local Chinese purchases that didn’t seem to make sense. China is expanding. It is now a superpower, and one with 24% of the world’s population. It is not about whether we agree. It is the territory. China is expanding into the entire world, and will certainly remain a stayer in the Australian property market. Markets don’t go up all the time, but they are going up now! Stocks, property, commodities and currencies like the Australian dollar, Euro and Sterling. These are great times as the world has never before experienced. Australian property, like stocks, is at the bottom of the future range right now. Something to think about?

Clifford Bennett