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Moving interstate? The cost of living in a new Australian city could surprise you

Posted On:May 20th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

If you’re relocating to a new city, it’s a good idea to do your homework about living costs…particularly if it’s Sydney.

When you’re moving interstate it’s natural to focus on the costs and logistics of the actual move—removalists, storage, rental bonds.

But what about the costs of living in a new city?

It’s important to crunch the numbers beforehand to avoid any nasty

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If you’re relocating to a new city, it’s a good idea to do your homework about living costs…particularly if it’s Sydney.

When you’re moving interstate it’s natural to focus on the costs and logistics of the actual move—removalists, storage, rental bonds.

But what about the costs of living in a new city?

It’s important to crunch the numbers beforehand to avoid any nasty surprises, particularly if you’re heading to Sydney.

One of our former prime ministers famously said that if you don’t live in Sydney you’re just camping out.

And whether you believe Paul Keating or not, it’s fair to say that the harbour city’s popularity comes at a price.

A tale of two cities

Natalija and Melissa recently moved in opposite directions along the Hume. Here are their first impressions of their new homes.

Natalija moved from Sydney to Melbourne

  • What’s cheaper than you expected? I was surprised by how much more affordable Melbourne was than Sydney. I wasn’t expecting to pay less rent in an area that was relatively the same distance to the CBD. In Sydney I paid $200 more per week to live in an inner city suburb (Darlinghurst). And it took me longer to get to work as I walked because I couldn’t spend any money on transport! Where I live in Melbourne (Prahran), I pay less rent and I live in a great spot, close to restaurants, bars and parks. I can walk everywhere and still afford to catch public transport to work. And I can still save money for my mortgage and holidays! I just love the Melbourne vibe.

  • And what’s more expensive? Perhaps car insurance and registration are slightly higher than Sydney but everything in Melbourne is nominally more affordable.

  • What tips you would give anyone moving to a new city? Do your research, particularly on sought-after areas in proximity to work and schools. This will ultimately affect how much you spend on buying/renting a house, contents, insurances and bills. Also consider your lifestyle choices (restaurants, bars, gym etc). It’s all dependent on your own situation.

…and Melissa moved from Melbourne to Sydney…

  • Is anything cheaper than you expected? $2.50 all day travel on Sunday with the Opal card.

  • And what’s more expensive? Rent! You a pay a lot a more in Sydney and you typically get a lot less. I am paying an extra $130 per week in rent compared to Melbourne, and for a space that is smaller than what I had. Melbourne is better value when it comes to rent, but that’s Sydney for you.

6 living costs that vary around Australia

Here are some things that could be more expensive (or cheaper) in your new city, whether you’re thinking of joining Melissa and five million other Sydneysiders or Natalija and the 20 million other Australians just camping out.

1. Buying groceries and clothes

As a general rule if you’re leaving Sydney you’ll save money—for example, consumer prices are 13.24% lower in Brisbane than in Sydney1.

But economies of scale mean that if you’re moving to a more remote or smaller city you could find yourself paying more for the basics. So anyone moving from Sydney to Darwin or Hobart would be pleasantly surprised by housing and transport costs but not as excited by the fact they could be paying a little more for the weekly grocery shop2.

And if you’re moving to a bigger city it could all depend on where you’re based. If you’re in an inner-suburban apartment you might have limited choice with grocery shopping. If you’re in an outer suburb you may have bigger—and cheaper—supermarkets nearby.

Clothes are another matter. If you’ve been living in subtropical Queensland and you’re moving south, you might need to adjust to a very different weather, as well as a whole new wardrobe.

In Melbourne you’ll need an outfit for every season—often in the same day. In Townsville on the other hand you could save money…just stock up on thongs and singlets and you should be right.

2. Eating out and socialising

Eating out in your new city could set you back more than you bargain for.

The average cost of a daily cappuccino is $4.01 in Sydney, $4.48 in Perth and a whopping $4.78 in Darwin3.

For anyone moving north from Sydney or Melbourne, a three-course meal for two at a mid-range restaurant is cheaper in the Gold Coast ($70) and even cheaper in Darwin ($65).

But a McMeal is a bit more in the Top End—$12 at Maccas compared with $10 in most of the rest of Australia4.

3. Commuting to work

Your monthly pass on public transport is another cost of living that varies widely across Australia—$99 in Adelaide, $130.43 in Perth, $140 in Brisbane, $147 in Melbourne and…wait for it…$217.39 in Sydney. So perhaps follow Melissa’s advice and stick with Sunday travel if you’re in Sydney!

And of course, public transport can vary widely depending on where you live in a particular city, both in terms of cost and comfort. A short ferry ride from the north shore to Circular Quay in Sydney is a very different commuting experience to the train from Parramatta. Equally, if you’re moving to a regional or more remote capital city you may find you need to rely on the car more as public transport can be patchy at best and non-existent at worst.

4. Renting an apartment

In terms of our state capitals, no prizes for guessing that Sydney is the more expensive state capital with a median weekly rent of $583. The most affordable? Adelaide just beats Perth, with the average apartment in the city of churches costing you $375 a week5.

5. Buying a house

It won’t surprise anyone to know that Sydney tops the charts when it comes to buying a house, with a median house price of $1,027,962 for the March 2019 quarter. For anyone prepared to camp out, head to Tassie where a house in Hobart will set you back $478,2476.

6. Sending the kids to school

For anyone with school-age kids, education options are going to be at the top of your list when you decide to move. So it’s important to do your research on how things work in your new city. New Melbournians might be surprised to find that the Victorian capital has a very distinct split between public and private schools, with very few selective schools compared to Sydney.

If you’re set on educating the kids privately through high school then costs can vary widely, from $373,421 in Darwin to $543,334 (yes, Sydney again). Parents of kids at Catholic schools get the best deal in Canberra and the most expensive in Brisbane. And even government school costs vary considerably, from nearly $70,000 in Sydney and Melbourne to less than $50,000 in Adelaide and Hobart7.

New city, new you?

Moving cities isn’t just about money. It’s about setting up a whole new life in a whole new place. Ask yourself some questions about how you’ll go in a new environment.

  • Think connections. If there’s someone you went to school with or used to work with in the area, why not look them up and reconnect? They could be an invaluable source of local knowledge and introduce you to their local network of friends.

  • Think demographics. If you’re retired and moving to a city dominated by twentysomethings, or if you’re a young parent and moving to a suburb full of retirees, you might find it difficult to meet like-minded people.

  • Think jobs. If you work in the creative industries and you’re moving to an area dominated by finance, you might find it hard to secure a job in your preferred field and might need to think a bit laterally about job opportunities.

  • Think sport. If the kids barrack for their local league side in Sydney and you’re planning to move across the Nullarbor, you might need to broaden their sporting horizons to include AFL or soccer.

  • Think atmosphere. If you’re used to the excitement and buzz of living in a big city on the east coast and you’re planning to move to somewhere quieter like Hobart, you might need to adjust to a different pace of life.

If you’re planning a move, check out this great cost of living comparison tool.

Source : AMP May 2019 

Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling |PHONE|, before deciding what’s right for you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP and our company do not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP and our company do not accept any liability for any resulting loss or damage of the reader or any other person.

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Australia continues to deliver for real estate investors

Posted On:May 20th, 2019     Posted In:Rss-feed-market    Posted By:Provision Wealth

Despite falling business and consumer confidence since the start of the year, the Australian economy remains in positive territory and moderating economic conditions notwithstanding, commercial real estate assets should continue to perform this year and into the future, buoyed by strong underlying fundamentals.

On a state-by-state basis, economic growth is no longer confined to the service-led economies of Melbourne and Sydney.

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Despite falling business and consumer confidence since the start of the year, the Australian economy remains in positive territory and moderating economic conditions notwithstanding, commercial real estate assets should continue to perform this year and into the future, buoyed by strong underlying fundamentals.

On a state-by-state basis, economic growth is no longer confined to the service-led economies of Melbourne and Sydney. Recovery is now beginning in the mining states, with Brisbane entering a sustained period of recovery, although economic growth in Perth remains low. This dynamic should now start to flow through to real estate assets.

Different strokes for different states

The new economy states of Victoria and New South Wales are being powered by high-value services and migration-driven population growth. This will continue to underscore demand for office and logistics real estate.

It’s early days for Queensland and Western Australia’s economic recovery. But the office and retail sectors should benefit as the economic backdrop improves, with industrial real estate assets already enjoying the uptick in mining export volumes, which is creating renewed demand for storage and transport space.

However, lack of supply is driving investors to alternative real estate assets. For instance, more investors are interested in real estate debt. The move by investors up the risk curve into alternative assets suggests we are in a new cycle, one in which markets are more focused on how assets perform versus capital inflows.

Technology a game-changer

New business models, for instance the rise of flexible working, have challenged the way real estate is valued and managed. In this environment, owners of older assets must consider how they may need to be repositioned in light of trends such as co-working and omni-channel marketing shaping the way businesses use offices and other commercial buildings.

The average Australian office asset is 30 years’ old, and buildings constructed in the 1990s were not designed to support flexible working spaces and wellbeing initiatives, which place new demands on buildings. Next-generation assets, which are designed for more agile use, will provide new opportunities for investors in the medium-to-long term.

Economic conditions suggest sufficient demand to support the increasing pipeline of developments – particularly in the office and industrial sectors. However, there are risks to retail assets, especially those with limited scope for redevelopment and centres in secondary locations. Based on our analysis of markets such as the US, successful retail performance in a period of increased competition rests on providing customer value through experience and convenience.

The short-to-medium term outlook for total returns will favour assets that can generate strong income returns, which are less reliant on capital expenditure and are attuned to changing trends in technology, demographics and urbanisation.

Markets showing income growth potential

Growth cycles typically favour core markets, but these rules don’t necessarily apply during times of technological disruption and global economic transition. As such, the definition of what constitutes a core asset will need to change to take a more inclusive view on flexibility, amenity and technology infrastructure, as tenants’ needs evolve.

Online retailing is generating significant upside for the industrial sector, which is seeing heightened investor interest from long-term, institutional investors. 
In tandem, retail tenants that have been associated with Australia’s highly stabilised retail sector in non-discretionary categories such as fresh food are now shifting more of their sales online via distribution centres, creating the potential for long term, stable, recession-proof cash flows for investors. This follows a similar trend in the US and Europe, where online spending is more than double the Australian spending rate.

Office assets are benefitting from strong demand from the technology sector, as these businesses increase their workforce and as international entrants look for locations in Australia and landlords can expect attractive conditions in the local commercial real estate sector for some time to come.

Source : AMP CAPITAL May 2019

Important notes

While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455)  (AMP Capital) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

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The 5 Deadliest Habits to Avoid As You Get Older

Posted On:May 15th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

Even when they’re truly detrimental to your health, certain activities can be difficult to give up. Whether it’s smoking, regularly indulging in sugary beverages, or binge drinking, there are a handful of practices that experts have linked to an early death.

Before suggesting that these activities were harmful, researchers studied big groups of people over long periods of time.

In one of

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Even when they’re truly detrimental to your health, certain activities can be difficult to give up. Whether it’s smoking, regularly indulging in sugary beverages, or binge drinking, there are a handful of practices that experts have linked to an early death.

Before suggesting that these activities were harmful, researchers studied big groups of people over long periods of time.

In one of those studies, published this week in the American Heart Association journal Circulation, scientists found troubling links between high intakes of soda and early death. And in a large review of two studies published in the same journal last year, researchers pinpointed five habits that appeared to be tied with a significantly shorter lifespan.

Here’s an overall look at what scientists have concluded are the most harmful habits for your health:

1. Drinking Sugary Beverages and Eating Processed Foods

Drinking soda, juice, and other heavily sweetened beverages appear to take a heavy toll on our bodies.

In fact, a new 34-year study of more than 118,000 people suggested that the more sugar people drank, the more likely they were to die from problems such as heart trouble. However, as with many nutrition studies, this one merely involved observing people over time. That means the research could not definitively conclude that sugary drinks are bad – it could suggest only that they might be.

If you’re worried about your drinking and eating habits, there’s plenty you can do to counteract the problems tied with sugary drinks. Aside from simply avoiding soda and juice, a growing body of research suggests that a meal plan focusing on vegetables, protein, and healthy fats has key benefits. Those include losing weight, keeping the mind sharp, and protecting the heart and brain as you age.

The best diets (and the ones linked with the longest life) involved high intakes of vegetables, nuts, whole grains, healthy fats (such as those from fish and olive oil), and low intakes of sugary beverages, such as soda and juice, processed sweets and breads, red and processed meats, and trans fats and salt.

2. Smoking

Smoking kills. No other habit has been so strongly tied to death.

In addition to cancer, smoking causes heart disease, stroke, lung diseases, diabetes, and chronic obstructive pulmonary disease, which includes emphysema and chronic bronchitis, according to the Centres for Disease Control and Prevention (CDC).

Smokers inhale burned tobacco and tar along with toxic metals, such as cadmium and beryllium, and elements such as nickel and chromium – all of which accumulate naturally in the leaves of the tobacco plant.

So it’s no surprise that studies find that abstaining from cigarette smoking for life is linked with living longer. If you’ve already smoked, the research still has good news: Both quitting and cutting back have also been linked with positive outcomes related to life expectancy.

“Smoking is a strong independent risk factor of cancer, diabetes, cardiovascular diseases, and mortality,” researchers wrote in one study. “And smoking cessation has been associated with a reduction of these excess risks.”

3. Sitting For Long Periods of Time

In general, staying sedentary for lengthy periods of time seems to be awful for your health.

But getting up every once in a while to do regular cardio exercise is an all-natural way to lift your mood, improve your memory, and protect your brain against age-related cognitive decline. In other words, it’s the closest thing to a miracle drug that we have.

A wealth of recent research suggests that cardio – any type of exercise that raises your heart rate and gets you moving and sweating for a sustained period of time – has a significant and beneficial effect on the brain.

“Aerobic exercise is the key for your head, just as it is for your heart,” according to a recent article in the Harvard Medical School blog Mind and Mood.

Most research suggests that the best type of aerobic exercise for your mind is anything you can do consistently for 30 to 45 minutes at a time.

4. Being Overweight or Underweight

People who weigh above or below average appear to face a slightly higher risk of death from a range of causes, according to a large recent study that assessed peoples’ weight using a measure called the body mass index (BMI).

Researchers like to use BMI for quick assessments of large groups of people. Generally speaking, a BMI of between 18.5 and 24.9 is considered within the “healthy range” for adults over age 20, according to CDC.

And people who fell within that BMI range tended to outlive their peers who fell outside it, the study found. In other words, people who had BMIs that were either above or below the “healthy range” lived shorter lives than people with BMIs that fell within that range.

That said, BMI is far from a perfect means of gauging your overall health.

The 1830s-era measure does not take into account a number of key health factors, including overall body fat, gender, muscle composition, or the amount of fat you’re carrying around your middle.

This measure, also known as abdominal fat, is emerging as a key alternative to BMI because of its strong links with heart health and diabetes.

5. Drinking Heavily

It’s been tough to pin down the precise relationship between drinking and overall health. A little bit of alcohol (such as one or two drinks per day) seems to be OK. More than that, however, and the benefits appear to vanish.

The most dangerous types of drinking are heavy drinking and binge drinking.

Defined by the CDC as eight drinks or more per week for women and 15 drinks or more per week for men, heavy drinking has been tied to a host of negative outcomes, including an overall shorter life expectancy.

Binge drinking, or having four drinks if you’re a woman and five drinks if you’re a man within two hours, may be equally or even more harmful, studies suggest.

Other problems tied to heavy drinking and binge drinking include cancer, heart disease, respiratory disease, and injury.

Source : FoodMatters April 2019 

Reproduced with the permission of the Food Matters team. This article by Erin Bodwin was originally published at https://www.foodmatters.com/article/5-deadliest-habits-avoid-you-get-older

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

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This Small Country Is Leading the Way in Going Plastic Free

Posted On:May 15th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

As we find ourselves in the midst of the war on plastic, we are seeing some (slow) progress in our own home towns, but there are inspiring countries across the globe that are going the extra mile to rid our planet of the mountains of unnecessary waste.

Just how much waste are we talking? Well, there’s around 8 million metric tons

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As we find ourselves in the midst of the war on plastic, we are seeing some (slow) progress in our own home towns, but there are inspiring countries across the globe that are going the extra mile to rid our planet of the mountains of unnecessary waste.

Just how much waste are we talking? Well, there’s around 8 million metric tons of plastic that end up in our oceans each year, the equivalent of dumping a garbage truck full of plastic in the water every minute, plus there’s all the waste in the landfill to consider!

It is truly a significant problem that we are all responsible for fixing.

Leading the way in the reduction of plastic consumption are the people of Vanuatu who are taking massive strides in reducing single-use plastic items. The original announcement of their progressive plan, to ban all plastic bags and bottles that cannot be reused, was made on the Vanuatu Independence Day, 30th July 2017. As of July 2018, they have already put much of this into effect, banning single-use plastic bags, drinking straws, and styrofoam food containers, all of which had been known to make their way into Vanuatu’s pristine ocean. Thankfully, that has already begun to clear.  So what will they tackle next?

Vanuatu has been working towards their target of a complete ban, forbidding single-use plastic bottles from being imported into and used in the country. This will be yet another step in their plan to ban. The Prime Minister has recently released a statement, including the many other single-use plastic items they plan to ban within the year. It’s inspiring to see such powerful and swift action made by this small Pacific island nation in order to save our planet.

The other countries and cities following suit with notable initiatives and alternatives for plastic are:

1. Kenya

Though extremely harsh, Kenya’s penalty for using, producing or selling a plastic bag is proving effective, with most people choosing a creative bag solution rather than face four years in jail or a $38,000 fine since the law was put in place in August 2017.

2. United Kingdom

From January 2018 the UK has been working towards setting the ‘global gold standard’ on eliminating plastic waste, working through their 25-year plan that started with eliminating plastic microbeads from rinse-off cosmetic products. They’ve continued their plan with taxing single-use plastic bags, banning plastic straws, stirrers, and cotton buds, and the Queen herself even put a complete ban on these products in the Royal Estate since February 2018.

3. Taiwan

Taiwan has begun implementing their wide-reaching ban on all single-use plastics, building on existing recycling programmes and charges for plastic bags, building up to their blanket ban by 2030 restricting single-use plastic bags, straws, utensils, and cups.

4. Zimbabwe

Since July 2017 anyone caught violating the ban on expanded polystyrene in Zimbabwe could face a fine of between $30 and $500.

5. Canada

Montreal and Victoria have banned single-use plastic bags with large fines in place for individuals and corporations caught violating the ban. Across the country, microbeads are completely banned following research that revealed there were 1.1 million microbeads per square kilometre infamous Lake Ontario. 

6, Malibu

It was voted that from June 1, 2018, Malibu would implement a ban on the sale, distribution, and use of single-use plastic straws, stirrers, and cutlery to keep this pollution from reaching the beaches and ocean.  

7. Seattle

September 2017 saw the ‘Strawless in Seattle’ campaign enacted, involving more than 100 restaurants, sports, airports, and aquariums banning straws. Now it’s a city-wide common practice to go without plastic straws.

8. Australia

The 2nd largest waste producer in the world, Australia has now phased out single-use plastic bags across most of the country with the support of major supermarket chains now only providing reusable bags for sale.

9. Hamburg

Non-recyclable plastic coffee pods have been banned in the German city of Hamburg since February 2016 as they found billions of the plastic coffee shells were dumped in landfill each year.

10. France

There’s been a total ban on plastic bags in France since 2015, and following an announcement in 2016, there will be a ban on plastic cups, plates, and cutlery coming into effect in 2020.

Source : FoodMatters May 2019

Reproduced with the permission of the Food Matters team. This article by Laurentine ten Bosch was originally published at https://www.foodmatters.com/article/vanuatu-become-first-country-world-ban-plastic-bottles

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page. 

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The trade war is back – what went wrong, what it means for share markets and Australia

Posted On:May 14th, 2019     Posted In:Rss-feed-oliver    Posted By:Provision Wealth

After taking a back seat over the last six months as negotiations appeared to make progress the US/China trade war is back on with the President Trump – “tariff man” – ramping up tariffs on Chinese imports again and threatening more and China moving to retaliate. This note takes a simple Q & A approach to the key issues.

 

What is

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After taking a back seat over the last six months as negotiations appeared to make progress the US/China trade war is back on with the President Trump – “tariff man” – ramping up tariffs on Chinese imports again and threatening more and China moving to retaliate. This note takes a simple Q & A approach to the key issues.

 

What is a trade war?

A trade war is where countries raise barriers to trade with each other (such as tariffs or quotas on imports or subsidies to domestic industries) usually motivated by a desire to “protect” domestic jobs often overlaid with (or dressed up by) “national security” motivations. To be a “trade war” the barriers need to be significant in terms of their size and the proportion of imports covered. The best known global trade war was that of 1930 where average 20% tariff hikes on US imports led to retaliation by other countries and contributed to a plunge in world trade.

What is so good about free trade and wrong with protectionism?

A basic concept in economics is comparative advantage: that if Country A and B are both equally good at making Product X but Country B is best at making Product Y then they will be best off if A makes X and B makes Y. Put simply free trade leads to higher living standards and lower prices whereas restrictions on trade lead to lower living standards and higher prices.

It often strikes me as perverse that some want to protect local industry, but they don’t buy local themselves. The experience of heavily protecting Australian industry in the post WW2 period was that it was just leading to higher prices and lower quality products and Australians were voting with their wallets to buy better value foreign made goods anyway. We and many other countries started to realise this in the 1980s and so cut protection. We might have protected lots of manufacturing jobs if we stayed at the levels of protection of 45 years ago, but we would have become a museum piece as would the US.

Fortunately, despite the loss of jobs in manufacturing (from 25% of the workforce in 1960 to around 8% now) other jobs have come along in the services sector where Australia’s and America’s relatively highly-skilled but highly-paid workforce have a comparative advantage compared to workers in less developed countries.

In short, if you want to support your country’s products buy them, but trade barriers don’t work.

Why is President Trump raising tariffs then?

It’s basically about fulfilling a presidential campaign commitment to “protect” American workers from what he regards as unfair trading practices in countries that the US has a trade deficit with – notably China. And he knows this is popular with his supporters but there is also some degree of bi-partisan support for taking on China.

What does President Trump want?

While it’s been feared at times that Trump was willing to get into trade wars with any country that the US has a trade deficit with his main focus is China. Basically he wants China to lower its tariffs, allow better access for US companies, end US companies being forced to hand over their technologies and protect intellectual property of US companies. At a high level he wants a reduction in America’s trade deficit with China. Along the way he has renegotiated the NAFTA free trade agreement with Mexico and Canada and the free trade deal with South Korea and is in talks with Europe and Japan.

Where are we now?

Fears of a global trade war were kicked off in March last year with Trump’s announcement of a 10% tariff on aluminium imports and a 25% tariff on steel imports. US allies were subsequently exempted but China was not. On March 22 Trump announced 25% tariffs on $US50bn of US imports from China. These were implemented in July and August. After Chinese retaliation Trump announced a 10% tariff on another $US200bn of imports from China (implemented in September) which would increase to 25% on January 1 this year. The latter was delayed to March 1 in response to trade talks and then was delayed further as the talks made progress.

Last year’s tariff increases took the weighted average tariff across all imports to the US from around 1.8% to around 3% which took the US above the developed country average of around 2% but not dramatically so.

However, on May 10 the delayed tariff hike from 10% to 25% on $US200bn of imports from China was put in place and the US kicked off a process to tariff the remaining roughly $US300bn of imports from China at 25%. If fully implemented this would take the average US tariff rate on imports to around 7.5%, which is significant (albeit minor compared to the 20% tariff hikes of 1930.) See the next chart.

Average weighted tariff rate across all products


click to enlarge

Source: World Bank, Deutsche Bank Research

Along the way China has retaliated with a 10% tariff on $US60bn of imports from the US and in response to the latest move has announced this will be raised to as high as 25%. Its retaliation has been less than proportional partly reflecting lower imports from the US but it has also so far refrained from retaliating via other means such as selling US bonds (possibly because it could just depress the $US) and making life tougher for US companies.

At the same time the US is considering auto tariffs after a report lodged in February. A decision is due by May 18 but could be delayed given talks with the US and Japan.

What happened to the US/China trade talks?

Up until a week or so ago the trade talks were reportedly going well – with key elements reportedly agreed and only disagreement remaining about when tariffs would be removed and enforcement. But President Trump’s May 5 tweets announcing a resumption of tariff hikes with more to come was supposedly in response to China back tracking on what had been agreed. There has been much speculation about what happened: maybe negotiators agreed more than was politically acceptable to China’s leadership, maybe China saw it as two big a step down given Trump’s often perceived insulting approach, maybe they misjudged what he would agree to, maybe Trump’s resort to threats is just more “Art of the Deal” stuff to get what he wants and to prove that he is standing up for his base. Who knows for sure! But it’s likely that both sides may have become emboldened by better economic data and share markets this year, and so have decided to take risks again. Ongoing or rising tensions around Huawei, North Korea, Iran (with the US ending sanction waivers on China importing Iranian oil) and Taiwan are probably not helping the issue either.

What will be the economic impact?

Contrary to President Trump’s assertions China is not paying the tariffs being collected on imports from China. China will ultimately suffer if there is less demand for its exports but most of the cost is borne by US businesses or passed on to consumers. Taxing all US imports from China at 25% would be a big deal compared to last year’s tariffs and see the impact shift to largely consumer goods as opposed to industrial and intermediate goods in the first tariff rounds. Which in turn could add around 0.2% to core inflation and detract up to 0.75% from US GDP particularly as investment gets hit in response to uncertainty about supply chains. Given the flow on to slower global growth (which is where Australia could be impacted), hopefully the latest tariff hikes will be short-lived and the extra tariffs will be avoided.

What is the most likely outcome?

Our base case remains that the US and China will ultimately reach a deal to resolve the issue before too much damage is caused – once both sides refocus on the economic costs of slower growth, higher consumer prices and potentially rising unemployment. This is particularly relevant for President Trump given his desire to get re-elected next year as rising prices at Walmart and rising unemployment will drive a backlash. However, things could still get worse before they get better.

Why have share markets reacted relatively calmly? Can it last?

Since President Trump’s tweets announcing a resumption of the trade war, US and global shares have fallen about 4.5% and Australian shares have lost 1.7%. Chinese shares have been hit harder reflecting their greater vulnerability. But overall the falls have been benign compared to last year’s sharp falls (and they followed a sharp rebound so far this year). This likely reflects a combination of: investor optimism of a deal to resolve the issue; last years’ experience where the worst case fears of tariff hikes did not come to pass; hopes for more Chinese economic stimulus to offset the negative impact; and perceptions that the Fed is more supportive of growth now compared to last year when it was more worried about inflation. Australian shares have also been helped by their high exposure to defensive high yield stocks and ongoing strength in the iron ore price.

While our view remains that a deal will ultimately be reached and that this will see shares end the year higher than they are now, the risks have ramped up again after the setback in the talks and the associated loss of trust on both sides so investors need to allow that the trade war could again get worse before it gets better risking further short-term weakness in share markets. In fact, sharper share market falls may be needed to remind the US and China of the need for a deal.

What does it all mean for Australia?

Fortunately, Australian’s aren’t having to pay higher taxes on imports like Americans, but the main risk is that we are indirectly affected if the trade war is not quickly resolved and this drags down global growth weighing on demand for our exports leading to unemployment pushing higher than our 5.5% forecast for year end. The risk of this adds in turn to pressure on the RBA to cut interest rates, although we think they will do that anyway.

What to watch?

Key to watch for will be a continuation of trade talks. So far, the indications are mixed. The June 28 G20 meeting in Tokyo may be critical in terms of providing an opportunity for Trump and Xi to get negotiations back on track, with Trump saying that they will meet.

Please call us on |PHONE if you would like to discuss.

 

Source: AMP Capital 13 May 2019

Important notes: While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455)  (AMP Capital) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

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3 simple ways to skyrocket your personal brand

Posted On:May 08th, 2019     Posted In:Provision Newsletter Articles    Posted By:Provision Wealth

By Flying Solo contributor Nick Brogden

Have you ever wondered why some people are able to skyrocket their personal brand more than others?

Quite often it can come down to leveraging your network, branding yourself as an expert, and thinking outside of the box by doing things that others don’t do. Here’s a fresh look at some creative things you can do

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By Flying Solo contributor Nick Brogden

Have you ever wondered why some people are able to skyrocket their personal brand more than others?

Quite often it can come down to leveraging your network, branding yourself as an expert, and thinking outside of the box by doing things that others don’t do. Here’s a fresh look at some creative things you can do to skyrocket your personal brand.

Leverage your personal network

Over the years, I’ve built up a considerable network from working as a principal consultant in one of Australia’s leading marketing companies. But my plan was always to go back to working for myself. As much as I loved the fast-paced agency life it was hard to justify dedicating so much time to an agency I had no ownership in.

But, as you can imagine, the switch from full-time employee back to business owner was quite challenging, and I can account a lot of my success to the skills that I have built up over the years and also the connections that I’ve made.

Reid Hoffman, the founder of LinkedIn says, “One of the challenges in networking is everybody thinks it’s making cold calls to strangers. Actually, it’s the people who already have strong trust relationships with you, who know you’re dedicated, smart, a team player, who can help you.”

I couldn’t agree more with Hoffman’s statement, and the interesting thing here is that as soon as I quit my full-time job to be a solo “business owner,” I’ve had a considerable amount of local SEO job offers come in, with the bulk of these coming via my personal network.

Brand yourself as an expert

Personal branding is all about how you present yourself online and offline. It’s about displaying your expertise in a professional manner that isn’t “screaming self-promotion” but rather identifies you as a knowledgeable person that is backed up by social proof and your connections.

I now use my personal brand as one of my major marketing tools. Take my website for instance, it shows a picture of me speaking at an event. This shot is actually of me speaking at the Powerhouse Museum for a guest lecture I delivered on the fundamentals of SEO and content marketing for a large group of marketing students at the University of Technology Sydney (UTS).

The benefits of guest lecturing are priceless, that’s because they can add new dimensions to your personal brand that simultaneously solidifies your expert status and credibility. Guest lecturing can also lead to other things like being invited to be a panel judge or even being interviewed by journalists on TV.

“Nothing positions you as an authority anymore clearly than being a lecturer at somewhere of the calibre,” says IT Expert Stewart Marshall, a guest lecturer at Sydney University and best-selling author of “Doing IT for Money.”

Think outside of the box

A friend of mine who is a writer for Forbes recently ran a strategic PR experiment on “his own content.” He recently published an article that, he felt didn’t get the attention that it really deserved. So, what did he do? He thought, “how can I turn this into an opportunity.”

So, he emailed approximately 300 journalists from major publications telling them about the article that he had just written, and asked just 2 things:

  1. If you were to republish this, it would not only make my day but my entire year.

  2. And, if you are looking for contributors, I’d love to be considered 

The results: The article went from approximately 500 views and grew to almost 5,000. It was re-published 7 times, and he was offered around 10 opportunities to write for other publications. And, this helped him to grow his personal brand by getting creative and thinking outside of the box.

 

Source : FlyingSolo April 2019 

This article by Nick Brogden is reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100k others.

 

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

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