How Moody’s, Standard & Poor’s and Fitch Rate The World

These days it can be all so confusing trying to follow which countries are investment grade (not Greece) and which countries are looking a wee bit risky.

It doesn’t help that the Big Three ratings agencies Moody’s, Standard & Poor’s and Fitch can vary in their outlooks.

Anyway, to try and help you to have an overview of the current state of play we found this interactive map at Chartsbin. Choose the agency you want from the dropdown box and just move your mouse over the country of your choice.

Enjoy!

 


via chartsbin.com

 

Pundits Pushing RBA To Cut Rates

Pundits Warning Australian Economy Needs RBA ActionAhead of the RBA’s meeting this week pundits are calling for the central bank to cut rates to help Australia’s two-track economy.

One of the most outspoken critics of the RBA’s fiscal policy is Tim Colebatch, economic editor of The Age. Writing in today’s Sydney Morning Herald, Colebatch argues

“Even a 0.5 percentage point cut – assuming the banks pass it on – would still leave rates too high.”

So, all eyes tomorrow on the Reserve Bank Board.

 

Read Tim Colebatch’s article here:
 
 

Market update – September 2011

The past month has been a wild ride. Global shares were sold off sharply, and high-quality bonds and gold snapped up by investors nervous about slower global growth and Eurozone debt. While volatility may well persist into 2012, at current asset price levels the panic looks to be overdone, with bond yields at unsustainably low levels and share prices discounting a weaker world economy than seems likely considering the strong growth of the emerging economies. The Australian economy remains in good shape by international standards.

 

Australian Equities – Outlook

The most recent assessment of the state of the Australian economy came from Reserve Bank Deputy Governor Ric Battellino. The gist of his speech on 23 August 2011 was that the two-speed economy is more pronounced than it looked at first. The resources sector has been even stronger than expected, with higher prices and greater investment than predicted, but the rest of the economy has been weaker, due to a combination of household caution on spending and the impact of the exchange rate on domestic producers. The overall effect has been slower growth than earlier thought.

The latest economic indicators have pointed in the same direction. Consumer confidence has weakened a bit further (in the August Westpac/Melbourne Institute survey), and employment growth has dropped away (there was a marginal fall in jobs in July, and a small rise in the unemployment rate). But this slowdown needs to be seen in context. Australia still looks likely to achieve respectable growth by developed economy standards over the next two years: the Bank is picking four percent growth in 2012 and 3.75 percent in 2013, similar to private forecasters’ views.

 

International Equities – Outlook

Outbreaks of market volatility always looked likely to be a key theme for 2011, but the events of the last month created a coincidence of events that made for an especially turbulent marketplace. At least three strands of concern came together at once.

First was the alarming political brinkmanship in the US over the raising of the Federal government’s debt ceiling: the process itself, the indifference to the collateral damage caused, the loss of the AAA credit rating, the unsatisfactory nature of the eventual ‘resolution’, and the certainty that the whole ramshackle process will need to be revisited at regular intervals.

Second was the re-emergence of the Eurozone debt crisis, which had appeared to have been quarantined to Greece, Ireland, and Portugal, but now had investors looking increasingly askance at Spain, Italy – and even France. Again, the political response by Eurozone governments, while not in the same shambolic league, was widely seen as short of an effective performance. And thirdly, expectations of economic growth, particularly in the US and the Eurozone, were revised down. Various forecasters raised the probability of the dreaded ‘double-dip’ recession in the US, while in the Eurozone the economy that had been touted as the locomotive for the others – Germany – slowed down to almost zero growth in the June quarter. It is still arguable that the reaction to the past month’s events has been overdone. While there is certainly scope for the fiscal problems of both the US and the Eurozone to cause further concerns, the scale of the latest issues is not on a par with the initial onset of the global financial crisis. The Eurozone has a number of potential policy interventions up its sleeve.

Fears about a radical slowdown in growth prospects may also be overdone. It is certainly true that prospects are being revised downwards, and reasonably significantly. In the US, for example, the August Wall Street Journal poll of forecasters showed that the average forecast for US GDP growth in 2011 had been cut to 1.60 percent, from the 2.60 percent forecast in the July poll. This was a substantial revision within the space of a single month. But it may also be an overreaction to the political dramas of the debt ceiling debate and to two particular straws in the wind, the weak Philadelphia Fed survey of manufacturing, and a fall in sales of existing homes. For the most part the ‘hard’ data on actual US economic performance (including retail sales, industrial production, and new jobs) is more positive: the US may well be growing more slowly than expected, but looks to be clear of recession. Even in their current more pessimistic mood, forecasters are picking a gradual pick-up in growth, expecting 2.50 percent in 2012.

It’s also important not to take an overly US-centric or Eurozone-centric view of the world. Outside the US and Europe, where growth prospects are more modest and more questionable, the outlook is markedly brighter. Although the disruption caused by the Japanese earthquake, tsunami, and nuclear disasters has been extensive and prolonged, and has caused supply chain repercussions globally, Japan is moving into reconstruction mode, its economy expected to grow by 2.50 to three percent next year.

And growth is still proceeding apace in the large developing economies. Within the key ‘BRICS’ grouping, both China and India are expected to grow by eight to nine percent next year, while the other three are likely to achieve four to five percent growth.

Volatility, nervousness, and downside risk may well continue to dominate world sharemarkets in coming months, especially as there are no instantaneous silver bullet fixes when it comes to righting governments’ fiscal and debt problems. These require multi-year programs. But there is a better underlying story about ongoing global growth than the current sharemarket pessimism is allowing for.

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This article is reproduced with permission from the Morningstar Economic Update August/September 2011.

The information within this article contains general financial product advice and factual information only and is not intended to constitute personal financial advice. It has been prepared without taking into account the personal circumstances, financial needs or objectives of any one person. Individuals are advised not to rely on this information when making their own investment decisions. Instead, they should seek professional advice. Where appropriate, you will be provided with a Product Disclosure Statement in relation to the product recommended. You should consider this document before making a decision to acquire the product in question. Whilst all care has been taken in the publication of this article (using sources believed to be reliable and accurate), no person, including Wealthwise or Financial Wisdom or any other member, accepts responsibility for any loss suffered by any person arising from reliance on this information.

Market update

Australian shares

Early in the month, the Australian sharemarket maintained its positive momentum from late March, but the rally dissipated in the second half of the month. The market was little changed in the month as a whole, with the S&P/ASX 200 Accumulation Index declining 0.3%.

There were some concerns that Chinese inflation would prompt authorities to introduce tightening measures, which could have negative implications for Australian exporters. Australian economic data has an important influence on the domestic sharemarket but data in other key economies, such as China, can also have an influence on investor sentiment. Investors also kept a close eye on the release of US economic data, and the subdued housing data affected sentiment towards Australian companies in the construction sector.

Risk aversion among investors resulted in further strength in the gold price. The commodity rose to new all-time highs during the month. One of the biggest drivers of the Australian equity market in April was the sharp rise of the Australian dollar. The rapid rise holds back earnings for a number of Australian companies and also deters offshore investors from investing in the Australian market. Some companies have recently updated earnings guidance and some downgrades have been evident due to the Australian dollar.

Global shares

Global equity markets recorded positive returns in April, buoyed by positive earnings results and M&A activity. At the end of April around 60% of S&P 500 companies had reported earnings, with more than 70% beating market expectations. Most of this was from cost improvements, although there are signs of revenues growing and beating expectations. The MSCI World Net Index rose 4.0% in US$ terms but fell 1.5% in A$ terms, due to the strong gains in the Australian dollar.
The Dow rose 4.0%, the S&P 500 was up 2.9% and the NASDAQ rose 3.3%. Similar to Australia, the Canadian equity market was held back by a strong currency despite higher commodity prices (particularly gold which rose 9.2%). The S&P/TSX Composite Index recorded no change and underperformed the broad global equity market index.

European markets recorded gains despite the ECB lifting interest rates for the first time since the financial crisis and Portugal seeking a bailout from the IMF and EU. Both events were widely anticipated by the market. Germany (+6.7%), Spain (+2.9%) and France (+3.0%) all rose and Portugal (-0.5%) fell. The UK FTSE rose 2.7%, after falls in March.

In Asia, Japanese equity markets recorded mixed results. The Nikkei finished the month up 1.0%, while the Topix fell 2.0%. Economic data for March is now being released, showing a sharp fall in economic activity post disasters.
Asia ex-Japan also recorded mixed results with South Korea (+4.1%), Thailand (+4.4%) and Taiwan (+3.7%) recording the strongest gains in the region. Singapore (+2.4%) and Hong Kong (+0.8%) also recorded solid gains while Malaysia fell 0.7%.

In terms of sector performance in April, Healthcare (+7.1%) was the strongest performer followed by Consumer Staples (+6.0%) and Materials (+4.9%). While all sectors returned positive gains, Telcos (+2.5%) and Energy (+2.2%) were more modest.

Source: www.colonialfirststate.com.au

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Wealthwise Pty Ltd ABN 70 104 359 211 is an authorised representative of Financial Wisdom Limited ABN 70 006 646 108 AFSL No. 231138. The information within this newsletter contains general financial product advice and factual information only and is not intended to constitute personal financial advice. It has been prepared without taking into account the personal circumstances, financial needs or objectives of any one person. Individuals are advised not to rely on this information when making their own investment decisions. Instead, they should seek professional advice. Where appropriate, you will be provided with a Product Disclosure Statement in relation to the product recommended. You should consider this document before making a decision to acquire the product in question. Whilst all care has been taken in the preparation of this newsletter (using sources believed to be reliable and accurate), no person, including Wealthwise or Financial Wisdom or any other member, accepts responsibility for any loss suffered by any person arising from reliance on this information.