Donald Trump

<html><body><div class="page" title="Page 2">
<div class="layoutArea">
<div class="column">
GUEST OBSERVER
China records a comparatively strong finish to 2016, but Trump trade uncertainty adds downside risk to our moderate easing forecast for 2017.
China’s official national accounts data recorded a modest pickup in growth in Q4, with the economy expanding by 6.8% yoy (up from 6.7% recorded in each of the first three quarters). For the full year, growth was the slowest since 1990, but remains in line with a soft landing, as the growth model gradually shifts towards domestic consumption. 
<a href="https://www.propertyobserver.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.39.51%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.39.51%20PM.png" alt="">
NAB’s forecasts for Chinese economic growth are unchanged – at 6.5% in 2017 and 6.25% in 2018. That said, we continue to note risks to these forecasts – most recently the uncertainty regarding US trade policy under the Trump administration, the high levels of corporate sector debt and risks of price bubbles in real estate markets (despite recent cooling in price growth).
China’s industrial production growth was marginally softer in December – at 6.0% yoy (compared with 6.2% yoy in November) – essentially remaining around recent trend levels. Recent trends in PMI surveys point to improved conditions for manufacturers since the midpoint of 2015.
<a href="https://www.propertyobserver.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.41.01%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.41.01%20PM.png" alt="">
China’s fixed asset investment slowed considerably in December, despite real estate and manufacturing recording stronger growth. Construction activity is yet to show clear signs of slowing – with a fresh surge in construction starts in December – despite weakening house price and sales trends.
China’s trade surplus narrowed again in December, with import values recording a stronger month-on-month increase than exports. Commodity prices have surged in recent months – contributing to the rising trend in import values – with coal and iron ore prices remaining elevated. 
Export values fell in year-on-year terms, however the sizeable discrepancy between Hong Kong and Chinese trade data (due to unauthorised capital outflows disguised as trade activity in late 2015) makes underlying trends in trade flows extremely difficult to ascertain.
<a href="https://www.propertyobserver.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.42.07%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.42.07%20PM.png" alt="">
Growth in retail sales edged slightly higher in December, but stronger retail price inflation has kept real sales below 10% yoy.
China’s credit expanded strongly in 2016 – with new aggregate financing totalling RMB 17.7 trillion (an increase of almost 15% from 2015). This was the largest expansion on record (exceeding the previous peak in 2013). Managing the growth of China’s already considerable debt pile – comparable to higher debt advanced economy levels – remains a key challenge for Chinese authorities in 2017 and beyond. 
China’s official national accounts data recorded a modest pickup in growth in Q4, with the economy expanding by 6.8% yoy (up from 6.7% recorded in each of the first three quarters). This growth rate was slightly stronger than market expectations (at 6.7% in the Bloomberg survey).
<a href="https://www.propertyobserver.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.43.10%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.43.10%20PM.png" alt="">
For the full year, growth was the slowest since 1990, but remains in line with a soft landing, as the growth model gradually shifts towards domestic consumption.
The economic influence of the mid-year construction boom appears to have faded, with an acceleration in service sector growth across Q3 and Q4 – with services growing by 8.1% yoy (up from 7.8% in Q3). That said, property sales may have contributed to this trend – we will be looking closely at non-real estate and non-financial services data when this is released in the next few days.
NAB’s forecasts for Chinese economic growth are unchanged – we anticipate a slight easing in growth over the next two years, to average 6.5% in 2017 and 6.25% in 2018. That said, we continue to note risks to these forecasts – most recently the uncertainty regarding US trade policy under the Trump administration, the high levels of corporate sector debt and risks of price bubbles in real estate markets (despite recent cooling in price growth).
China’s industrial production growth was marginally softer in December – at 6.0% yoy (compared with 6.2% yoy in November) – essentially remaining around recent trend levels. This growth rate was below market expectations (at 6.2% yoy in the Bloomberg survey).
There was slower growth in construction related industrial products – with crude steel output rising by 3.2% yoy (down from 5.0% in November) and cement production falling by 1.2% yoy (compared with growth of 3.7% yoy previously). That said, at 67.2 million tonnes, crude steel output is not far below recent peaks.
Trends were more mixed in other industrial sectors. Motor vehicle output rose by 12.7% yoy (down from 17.8% yoy in November), electricity output was largely unchanged at 6.9%, and coal output was down 3.0% yoy. That said, coal production has risen considerably in recent months, following the easing of government imposed restrictions.
There was a slight divergence in trends in China’s main industrial surveys in December. The official NBS PMI survey was slightly softer, at 51.4 points (from 51.7 points in November) – albeit this level was the highest in over two years. In contrast, the Caixin Markit PMI pushed higher, to 51.9 points – the strongest reading since January 2013. Recent trends in these surveys point to improved conditions for manufacturers since the midpoint of 2015.
China’s fixed asset investment slowed considerably in December – with growth at 6.3% yoy (down from 8.3% yoy in November). The growth in state-owned enterprise investment – which surged across the middle of the year – slowed to 13.2% yoy (on a three month moving average basis) (down from 17.7% in November), while private sector investment has somewhat recovered from weak levels – at 5.0% yoy 3mma in December (from 4.3% previously).
Key sectors for fixed asset investment – such as real estate and manufacturing – recorded stronger investment growth in December – up by 10.0% yoy and 7.2% yoy respectively (on a three month moving average basis).
With real estate investment holding up, construction activity is yet to show clear signs of slowing – with a fresh surge in construction starts in December. Residential construction starts rose by 14.4% yoy (three month moving average) – up from -0.1% yoy in November, despite weakening house price and sales trends.
Official Chinese new house price data shows rose by 13.7% yoy nationally (compared with a peak of 14.0% yoy in November) – but just 0.6% month- on-month – the slowest rate of increase since February, and well below the 1.7% yoy peak across September and October. Growth in house sales has slowed – at 13.6% yoy 3mma in December (down from a recent peak of 38.8% in April) but the volume of sales has remained strong.
This suggests that it is still too early to know if policy restrictions introduced by a range of local governments are having a significant effect on the broader real estate sector – although recent price trends are encouraging. 
China’s trade surplus narrowed again in December, with import values recording a stronger month-on-month increase than exports. Overall, the surplus was US$40.8 billion (compared with US$44.2 billion in November).
China’s imports rose moderately in December – up by 3.1% yoy to US$168.6 billion (compared with US$149.3 billion in November). This result was in line with market expectations, with respondents to the Bloomberg survey anticipating a 3.0% yoy increase.
Commodity prices have surged in recent months – contributing to the rising trend in import values. The RBA Index of Commodity Prices rose by 42% yoy in December, with coal and iron ore prices remaining elevated. In contrast, import volumes rose comparatively modestly, up by 1.2% yoy (according to China Customs data).
Despite easing policy measures that restricted domestic coal production (which led to global coal prices falling from recent peaks), coal imports remained strong in December – up 52% yoy. We expect imports to decline in coming months, as domestic shipments pick up.
Other key commodities exhibited mixed trends. Crude oil imports rose by 9.6% yoy, while both iron ore and copper imports fell in December – down by 7.6% yoy and 7.7% yoy respectively. 
The value of China’s exports rose considerably month-on-month, to US$209.4 billion in December, but was well below the levels of a year earlier – down 6.1% yoy. This result was weaker than market expectations (at -4.0% in the Bloomberg survey), but may be subject to underlying data errors.
The confidence of exporters has remained relatively stable in recent months – with the new export order measure of the NBS PMI survey at 50.1 points (from 50.3 points in November) – a relatively neutral outcome.
<a href="https://www.propertyobserver.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.44.10%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.44.10%20PM.png" alt="">
Once again, the trends for exports by major trading partners were quite mixed – with steep falls in Asia contrasting with growth in the value of shipments to the United States. Exports to the US rose by 5.1% yoy (compared with 7.3% last month). Exports to the European Union fell by 4.7% yoy, while the value of exports to East Asia dropped by almost 14% yoy. 
Unauthorised capital outflows (disguised as trade flows) in late 2015 are distorting trade data. Exports to non-Hong Kong East Asia rose by 1.3% yoy in December, while exports to Hong Kong fell by over 26% yoy. The disparity between Hong Kong Customs and China Customs data was particularly stark in December 2015 – with Hong Kong reporting imports of just US$23.7 billion compared with China’s report exports of US$45.9 billion.
This discrepancy is larger than the year-on-year fall in exports for December 2016 – making underlying trends in trade flows extremely difficult to ascertain. 
Growth in retail sales edged slightly higher in December – increasing by 10.9% yoy (compared with 10.8% previously). Retail price inflation has been moving higher in recent months – resulting in weaker growth in real sales. Retail prices rose by 1.5% yoy – unchanged from last month – meaning that real retail sales growth was 9.3% yoy in December (up from 9.2% previously).
Consumer confidence was marginally weaker in December – at 108.4 points (down from 108.6 points) however this remains well within positive territory, and well above the neutral levels recorded in the early part of 2016.
China’s headline inflation was marginally softer in December – with the Consumer Price Index increasing by 2.1% yoy (compared with 2.3%% in November). 
Food price inflation was comparatively modest in December, with aggregate prices increasing by 2.4% yoy (down from 4.0% previously). This softer trend reflected much weaker price growth for fresh vegetables – at 2.6% yoy (compared with almost 16% last month). 
<a href="https://www.propertyobserver.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.45.30%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.45.30%20PM.png" alt="">
Non-food prices have continued to track higher in recent months, with prices rising by 2.0% yoy in December (up from 1.8% in November) – the strongest increase since November 2011. Fuel prices, utility costs and residence costs have all trended higher since the middle of the year.
Producer prices jumped in December – rising by 5.5% yoy (compared with 3.3% previously) – the strongest increase since September 2011. Commodity price trends had a major influence – with December 2015 marking the trough of the recent cycle. The RBA Index of Commodity Prices surged by 42% yoy in December (up from 27% in November). 
China’s credit expanded strongly in 2016 – with new aggregate financing totalling RMB 17.7 trillion (an increase of almost 15% from 2015). This was the largest expansion on record (exceeding the previous peak in 2013). The largest share of new credit was issued in the first half of the year.
Bank loans accounted for around two-thirds of China’s new credit in 2016 – totalling RMB 11.9 trillion. This level was around 11.8% larger than the previous year. Almost 60% of new bank credit was issued in the first half, while Chinese firms continued to pay down foreign denominated debt across the year.
Major components of the shadow banking sector – trust and entrusted loans – accounted for the second largest share of new credit at just over RMB 3.0 trillion. There was strong growth in shadow banking loans – particularly in the second half of the year – following on from two years of weaker activity due to regulatory pressures.
<a href="https://www.propertyobserver.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.46.46%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/01/24/Screen%20Shot%202017-01-24%20at%2012.46.46%20PM.png" alt="">
Corporate bonds also accounted for a significant share of new credit – at RMB 3.0 trillion, however growth in new net corporate bond issuance was minimal – at just 2.1% in 2016. While growth in corporate bonds was strong in the first half of the year, second half issuance was considerably weaker year-on-year.
Managing the growth of China’s already considerable debt pile – comparable to higher debt advanced economy levels – remains a key challenge for the Chinese authorities in 2017 and beyond. 
</div>
<div class="column">
<div class="page" title="Page 3">
<div class="layoutArea">
<div class="column">
Gerard Burg is an economist, on Asia, at the National Australia Bank. 
</div>
</div>
</div>
 
</div>
</div>
</div></body></html>

jchancellor-FAypfDUnLy

Trump trade uncertainty adds downside risk to Chinese forecast: NAB's Gerard Burg

<html><body><div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">
GUEST OBSERVER
Yep, it happened. And now that the dust is settling, the challenges for Asia are becoming more evident. In sum, 2017 looks like it’ll be the most difficult for the region since 2009. It’s not, of course, entirely the President-elect’s fault – his administration, after all, hasn’t even outlined a detailed policy agenda yet, let alone taken the reins of power. 
Plus, Asia’s travails are partly self-inflicted. Still, if the past few weeks are any indication, things are bound to get a lot tougher. Trade is one thing, with exports already struggling and little prospect for a policy-driven rebound. The bigger issue, though, is the dollar and rates. Financial conditions are tightening across the region, putting a squeeze on domestic demand. It’ll get bumpier, still. 
As impressive as the rebound from the Global Financial Crisis has been, Asia has over recent years merely limped along. The taper tantrum of 2013 was a wake-up call, but the region managed to hit the snooze button for a little while longer, avoiding outright financial stress. 
But growth continued to decelerate, with exports in particular struggling to make meaningful headways since late 2014 and debt saturation weighing on local demand. It’s tempting to think that the latest market gyrations will pass, too, without more substantial harm. But, with every iteration, prospects dim further. 
Start with exports. These, as noted, have struggled for some time now. A combination of factors is to blame, including weak capex the world over, the commodity investment slump, creeping protectionism (or at least the absence of major trade liberalization over the past decade), supply chain disintegration, and an expenditure shift towards services. 
The question for 2017 is whether exports will at last rebound. We have our doubts. An acceleration in US growth should help. Yet this may be offset by continued sluggish demand elsewhere in the world, not least in emerging markets. 
The Trump administration may also help spur a recovery in US private capex, via deregulation and other, purportedly more business friendly policies. Yet it will take time before the full impact is felt, leaving this to be, presumably, more of a story for 2018 and beyond. 
Key to watch will be a deal with Congress to repatriate offshore cash holding by US companies, but it’s not clear that this in itself will send capex soaring if record-low rates previously failed to do so. A promised 1 trillion US dollar infrastructure push could help as well, if this will ever be passed by Congress in its entirety. But again: this too, will stretch out over many years. 
At the same time, a Trump administration may adopt a more protectionist stance. True, details aren’t available yet, apart from some vague talk about punitive action and the promise to shelve the TPP. 
This, no doubt, will restrain exports, even if the impact will likely be more industry specific. But note that uncertainty over trade policy in itself will promptly weigh on growth in Asia by curtailing investment (why invest in further capacity if it remains unclear that the resulting goods can be sold?). In this sense, a pick-up in US capex would partly come at the expense of investment spending in Asia. 
<div class="page" title="Page 2">
<div class="layoutArea">
<div class="column">
It’s hard to see, therefore, a meaningful revival in Asia trade for the foreseeable future. 
However, the bigger issues, at least in the near-term, are US rates and the dollar. The spike in US yields has certainly caught markets by surprise. And, if these revert in due course, the damage might prove limited. But accelerating US growth, fuelled by more generous fiscal spending, could make it easier for the Fed to hike rates. 
In fact, HSBC’s chief US economist Kevin Logan, now expects three Fed hikes over the coming year (up from two). 
This amounts to a stiff headwind for Asian economies that have come to rely on rapid credit growth to sustain demand in recent years. Even China, still partly protected by capital controls, is not immune to this: with the PBoC possibly needing to forego, at the very least, further aggressive easing in order to stabilize FX demand. Elsewhere, rate cuts are also becoming a more remote prospect, such as in Malaysia where policy room is shrinking even as growth sags. 
Currency moves are compounding the effect. While exchange rate depreciation should, in principle, provide a boost to Asian exporters, the resulting tightening in financial conditions (higher rates) could more than offset the loosening of monetary conditions (weaker exchange rates). 
First, growth is currently hugely credit intensive and debt levels high, amplifying the drag of higher rates. Second, for the reasons cited, US import demand, despite accelerating growth, will likely be insufficient to compensate for this. Third, contrary to previous episodes of exchange rate weakness, the current FX sell-off is broad-based and, notably, includes the renminbi, thus leaving few Asian exporters with a meaningful gain in competitiveness. 
Challenging stuff. But the effects are not necessarily uniform across Asia. Indonesia, the Philippines, and India are likely to be more shielded from the “Trump effect” given their low debt and low export exposures. 
By contrast, Malaysia, China, Korea, Taiwan, and Thailand should more affected. The winner, if one can call it that, is the Bank of Japan, with the weaker yen taking the pressure off. But that’s not much of a consolation: Japan, too, will in the end need exports to do a lot better to cure its growth malaise. 
<div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">
Frederic Neumann is co-head of Asian Economics Research, HSBC, and can be contacted <a href="https://www.hsbc.com.au" target="_blank">here</a>.
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div></body></html>

Trump effect soon to be felt in Asia

<html><body>
<img src="https://counter.theconversation.edu.au/content/67372/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Opinion polls, statistical prediction models and betting markets are now all predicting a fairly comfortable victory for Hilary Clinton in the United States presidential election.
However, they all said much the same about the prospect of British voters opting to remain in the European Union, before a majority of them actually voted to leave at the Brexit referendum in June. 
In Brexit those wanting “change” felt much more strongly about it and were thus more inclined to vote, than those favouring the status quo. This might also be the case with Trump voters. So the possibility of a Trump victory can’t be entirely dismissed – and the possible economic consequences of such an outcome are worth considering.
Precisely because a triumph for Trump has by now been so widely discounted – including by the financial markets – this outcome would prompt a much larger financial market reaction than a Clinton victory. 
The unexpected outcome of the Brexit referendum saw the London share market fall by more than 5%, and the British pound by more than 8%, in the following 24 hours. And although the share market has since more than recouped its initial losses, the pound is now almost 18% below its pre-referendum level against the US dollar.
The financial market reaction to a Trump victory in the US presidential race is likely to be sharper. As the Reserve Bank of Australia governor Philip Lowe noted earlier this month, “the possible election of President Trump wouldn’t be as benign an event”, as Brexit turned out to be. A paper published this week by Justin Wolfers and Eric Zitzewitz (of the University of Michigan and Dartmouth College, respectively) suggests that the US, UK and Asian share markets could fall by 10-15 percent, and that the Mexican peso would fall by 25 percent, in the event of a Trump victory.
From an historical perspective this is an extraordinary prospect, given that, as Wolfers and Zitzewitz note:
"In almost every case back to 1880, equity markets have risen on the news that Republicans win elections and fall when Democrats win."
This is also because, at least superficially, Trump is proposing policies that are more likely to benefit rich households (who are more likely to own equities), while Clinton is explicitly advocating higher taxes on capital.
These findings are more understandable in the light of mainstream economists’ assessments of the likely implications of the policy proposals put forward by the two main contenders. Out of 414 respondents to a survey conducted by the US National Association of Business Economists, 55% thought Hilary Clinton would “do the best job as president of managing the economy”. 
Only 14 percent thought that Donald Trump would (and that was 1 percentage point less than the proportion who nominated Libertarian Party candidate Gary Johnson). It’s perhaps worth emphasising that this was a survey of business, not academic, economists.
This overwhelming view likely reflects three particularly important concerns to mainstream economists about the Republican presidential candidate’s policies.
<h2>Differences in policies</h2>
Donald Trump’s policies would significantly increase the US Budget deficit. The bipartisan Committee for a Responsible Federal Budget (CRFB) last month estimated that the combination of tax cuts and spending increases proposed by Donald Trump would add US$5.3 trillion to US public debt over the next decade, lifting it from 77 percent to 105 percent of GDP. 
By contrast, the spending and tax measures (cuts for some, increases for others) advocated by Hilary Clinton would boost public debt by US$200 billion, to 86% of GDP, over the next decade. A more recent analysis of Donald Trump’s tax proposals by the Urban Institute and Brookings Institution’s Tax Policy Center suggests that they would increase US Federal debt by US$7.2 trillion over a decade. 
While both candidates assert that their policy proposals would boost economic growth, which would in turn result in lower (rather than higher) budget deficits, the Committee for a Responsible Federal Budget (CRFB)  calculates that economic growth would need to average 3.5% per annum over the next decade in order to stabilise the debt-to-GDP ratio without further tax increases. According to the CRFB, that would “likely require a level of productivity growth that has not been achieved in any decade in modern history”. Whereas the same objective would require economic growth averaging 2.7% per annum under Hillary Clinton’s proposals.
In addition to this, Donald Trump has consistently advocated a major upheaval in US trade policies, including the repudiation of the North America Free Trade Agreement (NAFTA) and the designation of China as a “currency manipulator”. This is something which under existing US trade laws would allow the imposition of tariffs of up to 45% on goods imported into the US from China. 
The greatest adverse impact of such measures would be on low-income households in the US, as the result of having to pay much higher prices for goods that make up a large proportion of their spending. But there would also be an obvious negative impact on the Chinese economy – since China’s exports to the US account for 18% of its total exports, and just under 4% of China’s GDP. 
It’s also hard to imagine that China wouldn’t seek to retaliate in some way against any such measures by a Trump Administration. In a studypublished by the Petersen Institute, Marcus Nolan, Sherman Robinson and Tyler Moran suggest that in such circumstances, the US economy would experience a recession in 2018 and 2019, with unemployment rising to 8.6%.
It’s hard to imagine how a trade war between the world’s two largest economies, Australia’s largest and third-largest trading partners, could have anything other than negative consequences for Australia.
Another concern for mainstream economists arising from Donald Trump’s economic agenda is his contempt for the independence of the US Federal Reserve. Trump’s suggestion that the Federal Reserve should have been more willing to raise US interest rates this year is not without some basis. 
But his personal criticisms of Federal Reserve Chair Janet Yellen, combined with the fact that there are already two unfilled vacancies on the Fed’s Board of Governors, suggests that the Fed could quickly become much more politicised in the event of a Trump victory. That would likely undermine confidence in US monetary policy, potentially leading in turn to a weaker US dollar and higher US bond yields. 
<h2>Relationships between the US and other nations</h2>
Beyond these concerns to mainstream economists, the Republican candidate’s attitude to longstanding US strategic alliances – with European countries, Japan and Korea – threatens to create much greater political uncertainty around the world. It may even prompt an “arms race” entailing greater proliferation of nuclear weapons.
Trump hasn’t specifically listed Australia as being among the US allies who “aren’t paying anywhere near what it costs to defend them”. It could be that Australia’s status, as one of the few countries with which the US runs a trade surplus, puts us in a different category. Nonetheless, a deteriorating regional security environment could result in the Australian government concluding that it needs to spend more on defence.
It’s important to note that not all of the foregoing concerns will be completely alleviated should, as seems more likely, Hillary Clinton becoms the 45th President of the United States. If that result were to be accompanied by a “clean sweep” of both the Senate and (less likely) the House of Representatives, left-wing Democrats such as Elizabeth Warren and Bernie Sanders will have a much larger influence on US economic policy. 
The differences between Donald Trump and the left wing of the Democratic Party on trade policy, or on the independence of the Federal Reserve, are in reality quite small. So while a Clinton victory on 8th November is much the better outcome from an Australian perspective, it would not be in Australia’s interests for her to win too well.
Saul Eslake is vice-chancellor’s fellow, University of Tasmania and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/saul-eslake-665" target="_blank">here</a>.
</body></html>

A Trump presidency could bring a range of economic disasters

<html><body>
<img src="https://counter.theconversation.edu.au/content/68571/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
2016 will go down as a watershed year for all the wrong reasons: Britain’s EU exit faces strong opposition; Syria remains plunged in civil war; and in the wake of the US election politics in the two major Anglosphere democracies are now deeply polarised. 
In Britain and the US, the majority of voters have embraced candidates and movements that eschew globalisation, immigration and free markets. Instead, they preach nationalism, closed borders and protectionism.
But it is hyperbolic to suggest that the post-2008 financial crisis era is beginning to look very much like the 1930s in the wake of the Wall Street crash. This is not a clash between fascism, communism and democracy. But what the Brexit and US presidential votes do show is that modern democracies have proven incapable of dealing adequately with income inequality, unemployment and declining opportunity.
With Trump as president, US policy is likely to become more unpredictable, but the business of government and policy implementation must go on nevertheless. 
Despite Republican majorities in Congress, Trump will not be able to treat the legislature as a mere rubber stamp. In the US system, Congress holds the whip hand. Moreover, Trump is at war with so many senior Republicans, he is unlikely to enjoy a smooth ride. Where congressional Republicans and Trump do agree is that tax cuts are needed.
<h2>Unchartered waters</h2>
In this respect, we are really navigating unknown waters as to how Trump will behave in office as president. Trump has no public sector background. He will be the first US president to enter the office without any gubernatorial or congressional experience, or any previous role in an administration. 
Ronald Reagan, Bill Clinton and George W. Bush served as state governors; John F. Kennedy and Barack Obama were junior senators (Obama also served as a state senator from 1996); George H.W. Bush served in multiple roles, including the vice presidency. In the post-war period, only Eisenhower comes close to Trump as a political cleanskin. But Eisenhower had a substantial military career, a reputation as a war hero, and had been a key adviser to both the military and the Department of Defense before and after World War II.
Trump’s victory has been built on his image as a Washington outsider. But his isolationist, nationalist and protectionist policies are not new; the first US Secretary of the Treasury, Alexander Hamilton, was an unabashed protectionist, viewing American infant industries as central to the US’s commercial rivalry with industrial Britain. 
On defence and trade policy, Trump is close to many of the positions articulated by the America First movement in the 1930s and 1940s. Substantial figures, such as Charles Lindbergh and future president Gerald Ford, sought to keep America out of the second world war. But once Washington entered the war, it did not make the same mistake it made after Versailles in 1919; instead, the US became a global economic and military superpower, eschewing the isolationism of 1920–41.
As a self-declared neo-isolationist, one of the keys to Trump’s victory was his denunciation of the free-trade orthodoxy that has dominated Washington’s economic agenda since the Bretton Woods conference of 1944, which created the IMF, World Bank and, later, the GATT, the predecessor to the World Trade Organisation.
Let’s take a look at the state of play of the US’s current and mooted free trade negotiations. We’ll also briefly canvass how President Trump is likely to deal with Janet Yellen and the Federal Reserve. 
<h2>The Trans-Pacific Partnership (TPP)</h2>
The TPP was initiated under George W. Bush’s administration, but President Obama pushed the 12-member bloc, obtaining fast-track trade promotion authority from Congress in June 2015. This allowed him to press forward with the finalisation of the agreement, which was released in October 2015. However, Trump’s opposition to TPP, along with Hillary Clinton’s second thoughts about her support for it means the deal is unlikely to pushed through during Obama’s final weeks in office.
In November 2015, Trump declared TPP “insanity”. Trump’s anti-TPP campaign demonstrated how he and the Tea Partyists had so convincingly vanquished the traditionally pro free trade Republican Party. By July this year, Republicans began to erase all trace of TPP support from their websites. By September, staunch TPP supporters Marco Rubio and Pat Toomey performed a volte-face; having praised the TPP, now they sought to bury it. Both Obama and Hillary Clinton were depending on the pro-TPP Republicans to get the pact through Congress.
Verdict: Dead in the water. Many Australians will applaud Trump for killing the TPP, as it was <a href="https://theconversation.com/ratifying-the-tpp-may-be-tough-but-australia-needs-it-48663" target="_blank">far from popular</a>. 
<h2>The North American Free Trade Agreement (NAFTA)</h2>
NAFTA was a product of the Reagan-Bush years, building on its 1998 predecessor, the Canada-US Free Trade Agreement (CUSTA). George H.W. Bush’s administration did most of the heavy lifting, but Bill Clinton pushed NAFTA through Congress in 1993, expending considerable political capital as he faced off against the unions, the Democrats’ biggest supporters.
Trump has labelled NAFTA “the worst trade deal ever”. True, NAFTA may have destroyed 879,000 US jobs, according to one study. But it also provided a low cost labour base for both the US and Canada, as they strove to compete with Asian manufacturing and the EU’s newly opened eastern periphery.
Verdict: No happily ever NAFTA. Likely to stay, but regulatory changes will be made.
<h2>
Europeans came out in force against the TTIP. Francois Lenoir/Reuters
</h2>
<h2>The Transatlantic Trade and Investment Partnership (TTIP)</h2>
TTIP may be dead already, mostly due to the fact that it’s as popular as Hillary Clinton. It is in Europe that TTIP has found its strongest opponents, with thousands protesting against it.
Clinton, Sanders and Trump’s position against TTIP coalesced early, as it was clear it was a vote loser within all three candidates’ voter bases. In a pitch to Sanders supporters, Clinton declared she would quash any deal that hurt American jobs. 
Clinton’s opposition to free trade deals demonstrated how decisive both the Sanders and Trump campaigns had been in shaping the narrative of the anti-free trade debate. Equally, the union base of the Democratic Party had always opposed FTAs. Had Clinton won the election, it is likely she would have attempted to revive TTIP during her tenure, as both the EU and US had pushed for a transatlantic FTA in some form since 1990. 
Verdict: This is an <a href="https://www.goodreads.com/quotes/64604-this-parrot-is-no-more-it-has-ceased-to-be" target="_blank">ex-parrot.</a>
<h2>A UK-US free trade deal?</h2>
President Obama infamously intervened in the UK Brexit debate earlier this year, declaring Britain would go “to the back of the queue” if it left the EU and sought a FTA with the US. Theresa May, Boris Johnson and Liam Fox will be hoping that President-elect Trump will welcome a special free trade relationship.
During the campaign, Trump advisers indicated that he would be willing to discuss a FTA with the UK. Indeed, Trump stated that Britain would “always be at the front of the line” when it came to trade deals. This would be critical to Brexit Britain; the US is the UK’s largest third-country market, with more than £30 billion in exports.
But the UK also enjoys a trade surplus in goods and services with the US, and Trump’s administration is unlikely to grant substantial concessions to an ally that already makes substantial hay from its existing tariff arrangements.
In other words, why would President Trump do a deal that gives UK firms more access to the US market?
Verdict: Boris needs to grab that American passport of his, head for Washington and start speed-dating. Soon.
<h2>Audit the Fed!</h2>
What future for Janet Yellen, Federal Reserve Chair? The Donald has expressed his dislike of the Federal Reserve chair on more than one occasion.
In September 2016, Trump took aim at Yellen’s near zero interest-rate policy, arguing it existed only to make Obama look good. Janet Yellen wasn’t about to take this lying down. In a press conference, she responded – implicitly – to Trump, arguing that:
“I can say emphatically that partisan politics plays no role in our decisions…We do not discuss politics at our meetings.”
It’s unknown whether Trump would seriously attempt to remove Yellen. But in May this year, he did state that he would “most likely” replace her as she was “not a Republican”. In September, Trump’s position hardened; he said he would audit the Fed and replace Yellen in the first 100 days of his administration.
There are precedents; in 1981, US Treasury Secretary Donald Regan began to brow-beat Fed Chair Paul Volcker for maintaining his tight monetary policies as the Reagan administration sought to introduce wide ranging tax cuts. Despite Reagan’s early support for Volcker (a Carter appointee), by 1987, the President had had enough; he ended Volcker’s tenure, bringing in Alan Greenspan.
Verdict: Anyone looking for a central bank chief? Used for one term only. Low, low interest rates.
<h2>Another brick in the wall</h2>
Trump’s triumph is partly built upon faulty and drastically over-simplified conceptualisations of the operation of the US and the global economy. Corporations, banks, finance and even consumers are no longer “national” entities. They have not been for many years. Manufacturing and services are not local but global. This complex web of interdependence has manifested itself over many decades.
Globalisation has even brought jobs back to America; but in the post-GFC environment, this has produced US jobs that, on average, pay 23% lower than they did prior to 2008.
Mexican walls, Chinese trade negotiations and bans on Muslims: if Trump were to implement some of these initiatives it may have some impact upon people movements. But low-tech manufacturing jobs en masse are not coming back to America. The US used to build vast numbers of radios and TVs; these have not been made in America for a long, long time. Similarly, Apple is not about to repatriate iPhone production and establish manufacturing onshore. And US corporations are not about to stop doing business with the rest of the world.
This is the brutal reality that Trump cannot smash, but his supporters appear to believe he can. He is wrong and they are wrong. And they will be bitterly disappointed.
Remy Davison is Jean Monnet Chair in Politics and Economics, Monash University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/remy-davison-2838" target="_blank">here</a>.
</body></html>

Trump can kill trade deals but he can’t kill globalisation

<html><body>
<img src="https://counter.theconversation.edu.au/content/69117/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The federal deficit will be worse in 2017-18 than predicted in the May budget, despite some easing in the delays imposed by the Senate, Deloitte Access Economics’ budget monitor predicts.
It also says the short-term business implications of a Trump presidency are likely to be smaller and slower than the headlines have suggested but in the longer term there may well be net negatives for the global and Australian economies.
The Deloitte assessment comes as the government starts the final parliamentary fortnight of the year, reasonably confident that it will get its industrial relations bills, which were the triggers for the double dissolution, passed.
In a gloomy outlook for the government’s core challenge of budget repair, Deloitte says: “There are challenges seen on almost every front: under-performance on wages and jobs is forecast to continue, we see shortfalls creeping back in on company tax, super may also fall shy, and GST may do the same.”
On current policy settings, Deloitte forecasts a deficit of A$29.9 billion in 2017-18, which is A$3.8 billion worse than budgeted.
“That says something simple: no, the tide isn’t turning,” Deloitte says.
It estimates a $40.5 billion deficit in 2016-17, $3.4 billion worse than budgeted, and a total blow out of $24 billion in the deficit over the forward estimates. 
The government will release its budget update on December 19.
Deloitte applies a reality check to the benefits of the boost in coal prices, which has seen contract prices going to $US200 a tonne and spot prices to more than $US300.
Coal “is dragging Australia out of the income recession we’ve juggled since late 2011. But King Coal also comes with some king-sized caveats.
"First, as many coal companies have been making losses, a switch to earning profits has a slower-than-usual impact on tax payments. Second, many of the factors that sent coal stratospheric are temporary, and most other commodity prices are more in line with budget assumptions.”
So a spike in national income would then ease back, according to the forecast.
It says both wages and jobs are likely to undershoot official forecasts. The tax take from individuals is predicted to fall short of the budget forecasts by A$1.3 billion in 2016-17 and by A$2 billion in 2017-18. In a break with recent trends, a minor shortfall in indirect tax of A$500 million is also forecast in 2017-18.
While the government has made some progress with measures in the Senate “the overall story on spending remains one of the continuing cost of failing to get a backlog of measures through parliament, topped up by a soupcon of new measures”.
Commenting on the Deloitte report, Treasurer Scott Morrison said the government would be adopting a cautious approach to commodity price assumptions in the budget update “and agrees with Deloitte that commodity price impacts are being offset by wages and inflation outcomes”.
“Deloitte also correctly identifies the need for more important savings measures to be passed by the parliament, that are opposed by Labor. This reinforces the position adopted by rating agencies who continue to watch our parliament to see whether they will support the government’s approved pathway to restore the budget to balance,” Morrison said.
Deloitte says that while the election of Trump was bigger news than Brexit, its shorter-term implications are likely to be less than the speculation.
“The US political system has remarkably strong checks and balances, and those checks and balances have increasingly solidified into gridlock over a number of years”, so presidents are rather less powerful than popular opinion believed.
On the other hand, there are Republican majorities in both houses of Congress, and presidential power is at its strongest on foreign policy – suggesting policy change is now more likely in some areas.
“Examples relevant to Australia include trade and climate change policy, and perhaps foreign policy more generally.
"On balance, we would recommend concentrating on the longer-term implications. In brief, we’d say that overall policy changes may well be net negatives for the global and Australian economies – especially trade- related developments and the increased potential geopolitical uncertainties. However, a number of those negatives will be years in the making.”
In Peru for APEC, Prime Minister Malcolm Turnbull continued to extol the virtues of the Trans-Pacific Partnership (TPP), despite it being apparently dead under a Trump administration.
He said Trump had “never said that he’s against free trade. He has criticised a number of agreements on the basis that they’re not good enough deals.
"It may well be that over time the TPP is re-embraced by the United States, by the Congress or indeed by the president, perhaps in the same form it is today, perhaps in a different form.
"The important thing is to maintain the commitment to the arrangements, the free trade, the open markets that are delivering jobs in Australia,” Turnbull said.
Observers are taking the fact the government is preparing to bring on the bills to tighten union governance and to re-establish the Australian Building and Construction Commission in the Senate this fortnight as a sign that it thinks it can get them through. Previously Turnbull has said they would be brought forward “when we believe there is a majority that will support it and on terms that we will accept”.
Asked about this at the weekend Turnbull said that with the Senate “it’s a long game and we work away, we respect every single senator”. On Sunday Employment Minister Michaelia Cash was engaged in negotiations over the legislation.
Michelle Grattan is professorial fellow, University of Canberra and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/michelle-grattan-20316" target="_blank">here</a>.
</body></html>

Trump’s economic impact slower, smaller than predicted – but still bad: Deloitte

<html><body>
<img src="https://counter.theconversation.edu.au/content/66755/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The 2016 US presidential election has been unprecedented in several ways. For starters, seasoned psephologists were surprised by Donald Trump’s success in the Republican primaries. 
And while the “fundamentals” of the election would suggest the Republicans would have a significant edge – due to tepid economic growth and an incumbent Democratic president – even one of the key proponents of this model doubts its applicability this year. 
The reason for this doubt is that Trump is an unconventional candidate who has eschewed normal campaign practices such as setting up field offices, building up campaign staff, fundraising, and spending on TV advertisements. 
Trump’s campaign has been built upon controversial statements that have kept his name in the news. This strategy served him well during the primaries, where he received nearly US$3 billion in free coverage. 
Any one of Trump’s major gaffes would have likely been fatal for other campaigns. But he has proven uniquely resilient. Why?
<h2>Trump and populism</h2>
The narrative the Trump campaign has played during the continual turmoil and controversy that has surrounded him is that the elites who have abandoned him or disagree with him are all part of the establishment he seeks to destroy. This is a populist appeal that resonates with a large portion of the population who feel their voices have not been heard.
Trump’s recently revealed disrespectful remarks about women fit with an identity of the alpha-male populist figure who is strong while his opponents are “weak”, “crooked”, and lacking in “stamina”.
The leader is central to the idea of populism. It is the leader who will emancipate the “people” on their behalf, unshackling them from the ills, constraints, and indignities imposed upon them by a corrupt and indifferent elite. 
Populism has been a part of American politics from its inception. The Anti-Federalists were a populist response to the push for the Constitution and the strong national government it created. 
But, as Alexis de Tocqueville observed, Americans have been able to keep populism at bay and avoid the emergence of democratic despotism to the extent that they resist reliance on strong authority figures to emancipate them. They rely more on themselves and their democratic capacities to work together to affect change in some aspect of political life. 
This is the same contrast Barack Obama drew during his speech at this year’s Democratic National Convention between his view of America and the narrative developed by the Trump campaign.
<h2>A slow-moving trainwreck?</h2>
Many Republicans are now abandoning Trump following signs his campaign may be coming off the rails completely. The release of a videoin which Trump describes himself as engaging in sexual assault led to scores of Republicans, including Speaker of the House Paul Ryan, abandoning him. 
However, despite early concerns, they had dutifully fallen in line endorsing him between the primaries and the convention.
One of America’s most-respected journalists, CBS’ Bob Schieffer, described Trump’s handling of himself in the second debate and particularly his threat to jail his opponent as “disgraceful” and beneath the dignity of the office he seeks. 
Yet polling reveals 2016 is one of the most stable races in modern times. The reason for this appears to be growing partisanship. There has been a significant uptick in this since the 1990s. 
Although there has been a consistent story about the level of undecideds and the level of support for third parties in this election, Democrat Hillary Clinton has retained a consistent lead since June 2016.
<h4> </h4>
<h2>Not going away</h2>
In many ways, the populist vein that Trump has tapped into won’t go away.
With a two-term Democratic president in the White House now, pundits have noted that 2016 is a “change election” whereby there is widespread fatigue for the incumbent party and demands for change, which has made the populist message resonate with so many. This has so far sustained Trump’s campaign where others might have failed.
Twitter users tend to cluster in partisan networks. Online networks are often critical for sustaining political rumours, which have played such a big part of the rise of Trump’s campaign. 
But it does not end there. If retweeting is a measure of Trump’s support on Twitter, he does not have fair-weather fans. Rather, they are in for the long haul. 
Consider the comparison between Trump and Clinton’s average tweet metrics in relation to the margin of Clinton’s polling lead. As Trump does worse in the polls, his retweets go up – whereas there is no statistically significant relationship between Clinton’s retweets and her polling margin. 
The conditions that made the Trump campaign possible will persist as long as there is a belief that governments are run by a corrupt and indifferent elite. It is a caution for whoever wins the White House that they will have to find new ways to connect with ordinary citizens.
Michael Jensen is senior research fellow, Institute for Governance and Policy Analysis, University of Canberra and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/michael-jensen-306913" target="_blank">here</a>.
</body></html>

Why has Trump succeeded where others would have failed?

The potential implications of the US Presidential election on Australia: NAB's Alan Oster

<html><body>
GUEST OBSERVER
Supporters and critics alike agree that Donald Trump says many contradictory things, and that's part of the problem.
Most Australian property investors are confused. They have no idea how his presidency will affect their investments.
Well, I frequently get asked about Trump, and I have some answers for you. The Chinese investors we work with ask us often about the new U.S. President — and other events in the 89 countries where we offer listings for them to purchase. 
Here, I share our three most important insights on managing real estate investments in the era of President Trump.
Buy dependable value
Trump's White House has been described by its own allies as "chaotic" and as suffering from "obvious dysfunctionality." The United States is torn between those who ferociously support him and those who are just as vociferous in their rejection of everything he stands for.
Some of this turmoil is making its way to Australia. Cory Bernardi and Pauline Hanson are among those who have announced they hope to reorient Australian politics and society in a more populist fashion. Many promise to resist.
Politics is in ferment, and politics does affect the economy. A Parliament in turmoil can't pass economic reforms, infrastructure plans or jobs bills.
In this environment, a smart property investor will look for assets with enduring value. Now is not the time to speculate on quick capital gains.
Be strategic and play it safe with a long-term investment in suburbs that have good access to transit, shopping and quality schools. If you negatively gear, try to keep your negative cash flow well within manageable territory — in case the worst happens, like losing your job or facing unexpected, large expenses.
Find opportunities amidst the confusion
We all hope President Trump doesn't start a trade war (or any other kind of war). If he does create market turmoil, however, smart investors will look for opportunities among the confusion.
Warren Buffett's famous advice applies here: be greedy when others are fearful and fearful when others are greedy.
Remember, Trump can serve as President for only four years, or eight if he is reelected. And, as we have seen with the last several Prime Ministers, even Australian politicians come and go.
The Commonwealth, on the other hand, is a prosperous country with a swelling population that is relatively enlightened, innovative and industrious. Whatever the short-term vicissitudes, it is impossible to imagine this country being poorer or smaller in 10 years.
If the current political disputes hurt confidence and undermine the market, that is your moment. Seek to find buying opportunities whose price has suffered, but which look likely to revert to trend in the medium term.
Look to Asia
Ours has been branded the China Century for a good reason. China already has the world's largest total population, the world's biggest middle class and the world's most numerous ultra-high-net-worth demographic.
Chinese are the biggest property investors in Australia, the USA, Canada, the UK, New Zealand, Thailand, Singapore, Hong Kong, Japan and many other countries.
Australia exports more to China than to any other country. China is our largest source of international students, our most valuable tourism market, a major source of foreign direct investment and our largest agricultural goods market. 
If you work in the property industry, then you need a China strategy. If you invest in property, then you need to understand how Chinese buying trends affect your investment.
These are my three tips for succeeding at property investment during this unpredictable moment in time.
Gavin Norris is head of Australia for Juwai.com, the No. 1 Chinese international property portal and can be contacted <a href="https://www.juwai.com" target="_blank">here</a>.
</body></html>

What does Donald Trump mean for your property investments? Gavin Norris

<html><body>
GUEST OBSERVATION 
The past week has been light on data, but full of angst. At the centre was President Trump again raising questions over the appropriateness of the Federal Open Market Committee's (FOMC) ongoing gradual normalisation.
The market subsequently found cause to be more cautious on growth, the S&amp;P500 jolting 3% lower on Wednesday before recovering almost 2% on Thursday. Markets across the world, by and large, followed suit.
During an interview with the Wall Street Journal, President Trump made clear his displeasure with the FOMC over their gradual normalisation.
President Trump’s focus was arguably more on his economic legacy than the appropriateness of the FOMC’s actions, made clear by comments referencing President Obama’s “zero [interest] rates”.
But President Trump did clearly say that he sees the FOMC as the biggest risk to the US “because I think interest rates are being raised too quickly”.
Many across the globe would instead argue that it is his administration’s trade policies that are the greater cause for concern, particularly with respect to business investment.
While the US Markit PMI’s held up in October, according to the flash release, core durable goods shipments and orders both showed weakness in September.
For core shipments, September was the second consecutive flat outcome. Core orders furthermore signalled that growth is to remain absent, falling for a second consecutive month in September.
This soft trend fits with the deterioration seen of late in the regional business surveys’ investment intention series, but is a stark contrast to the optimism around fiscal expansion and domestic demand.
Taken together, these observations highlight the uncertainty that the tariffs have created.
Combined with the end of extraordinary fiscal policy in late-2019, the negative shock to business investment from the US’ own tariffs is crucial to our view that growth will decelerate through mid-2019 and see the FOMC go on hold – indefinitely.
US housing data released this week gave the FOMC an additional reason to be cautious but not alarmed.
New home sales fell over 5% in September; moreover, this was the fifth decline in six months.
If we take a step back and consider data for the past two years however, the trend looks more flat than downward.
Given home builder confidence and Case-Shiller house price growth remain strong, and the 30-year mortgage rate accommodative, the current level of sales should persist and inventories remain manageable.
Turning to Europe, the ECB met for their October meeting this week. By and large, their views were unchanged.
The Council continues to have considerable confidence in the domestic economy, particularly the strength of employment.
The latter is expected to flow through to wages and underlying inflation in time, bringing inflation to the ECB’s ‘near 2% year target’. Although risks are still considered “broadly balanced”, evident in the Q&amp;A however was that external risks to this view have built.
This highlights a need to pay close attention to the ECB’s forecasts as they are updated at the December meeting and the end of each quarter thereafter.
We remain of the view that only the deposit rate will be increased from late-2019, with the refinance rate to wait until at least mid-2020. Risks to this view are skewed towards a later start to hikes.
Coming back to Australia, in the absence of any data, RBA discussion of the labour market was the focus.
Following the unemployment rate’s jolt lower to 5.0% in September, historically the benchmark for ‘full employment’ in Australia, Deputy Governor Debelle remarked this week that “We [the RBA] have an open mind on the question of what actually constitutes full employment”. 
Westpac’s own view is that the unemployment rate consistent with full employment is actually likely to be well below the current 5.0% figure, hence wage growth and inflation are unlikely to pick up anytime soon.
This fits with the experience of the US where, with the unemployment rate now a percentage point below historic estimates of ‘full employment’, wages are only just starting to accelerate robustly.
Looking ahead, we see the Australian unemployment rate holding near 5.0% through 2018 and 2019, and hence wages growth and inflation remaining benign.
The next key update for Australia will be the September quarter CPI report, due next week.
On all fronts, it is expected to highlight the absence of inflation pressures and justify the RBA remaining on hold through 2019 and 2020.    
Elliot Clarke is a senior economist at Westpac and can be <a href="https://www.westpac.com.au/news/authors/elliot-clarke/" target="_blank">contacted here.</a>
</body></html>

j.ballantyne1990-6AQqhLzZaK

Trump's tariffs likely to lead to further interest rate caution: Westpac's Elliot Clarke

<html><body>
After adjusting to Brexit, the global real estate sector is now managing a bond rout triggered by the election of Donald Trump to the US presidency  according to Alistair Elliott, chairman, Knight Frank.
In a recent visit to Australia he said  global direct property investment had already dropped from the record levels of 2015 due to a hesitancy about the right time to buy rather than any change in sentiment towards real estate.
"Post the financial crisis, property has had a strong role and I see no sign of that ebbing... in a world where it is difficult to find returns, property is a relatively secure bet," he said.
"We do not expect this [the slowdown in direct real estate investment] to worsen. Indeed as an increasing quantity of investment capital gathers to seek out yield then there is a case to suggest investment volumes may well begin to increase as we get clarity around the new administration's future plans for the USA and with the UK developing an agenda with key trading partners in Europe."
"Melbourne and Sydney [offices] have real growth and that would give confidence to the buyers compared to other cities where rental growth is reaching its peak."
</body></html>

Donald Trump

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Donald Trump

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News