We think it is fair to say that 2011 has been a very interesting year, or is that an understatement?
Think back to the significant floods across eastern Australia and disruptive cyclones across northern Australian. Coal production in mid-north Queensland was hampered over much of the year while banana production was decimated again in north Queensland. There were earthquakes in New Zealand & Japan. And it wasn’t just an earthquake in Japan, but it precipitated a tsunami and nuclear disaster. There were also volcanic eruptions in Chile that resulted in ash clouds moving across Australia, disrupting air traffic.
On top of the natural disasters, there was also escalating economic uncertainty. Not only did Australian businesses, investors and consumers have to contend with overseas fiscal and political unrest, there was also the uncertainty caused by the proposed carbon and mining taxes. Is it any wonder that both domestic and overseas markets have been volatile?
Needless to say, much of the volatility has been driven by the escalation of sovereign debts issues in the European Union (EU), heighted political uncertainty and confusion over possible policy responses as well as the significant unsustainable debts with the US. In Europe the markets are still looking to the International Monetary Fund (IMF) and the Europe Central Bank (ECB) for a comprehensive solution to the debt crisis. We believe that the only real solution is to either breakup the EU and return to individual currencies, or establish a full fiscal union (to go with the currency and monetary union).
Unfortunately the task for the Super Committee in the US to find $US1.5 trillion of savings from the Federal Budget over the next 10 years failed. An automatic $US1.2 trillion will now be cut from the budget, 50% of which will come from defence spending. Saying this, of late the US economic data has continued to exceed expectations, but still remaining well below average levels.
We suspect that the European Debt Crisis will continue to dominate over the first few months of 2012. As stated above the ‘end game’ could take a number of forms. We also expect that the US economic recovery will continue (however, slower than some very optimistic economists) and China will ease monetary policy. The Australian market will continue to reflect the macro concerns around the world.
Regardless of what’s happening in the market place, we continue to closely monitor the markets, review potential risks, and consider potential changes to economic markets, growth industries and market sectors to project what is best for our clients in these uncertain times. Where necessary, we will continue to recommend changes, both to investments and strategies, with the continuing view to maximise your situation.
Within our office at Active Financial Services it has been another very busy year. Referrals from our valued existing clients & Professional Partners, as well as the opportunity to purchase 2 smaller businesses have allowed us to welcome a significant number of new clients in 2011. We are looking to build strong relationships with each of these clients and will be in touch early in the new year.
On a personal note, Andrew & his wife Jenny have welcomed the arrival of their first child Calum Rhys Mair Wieman on Wednesday 30th November. Their first Xmas as a family will be an exciting one. For Aileen and the rest of the Active FS team we will be taking a well earned break at home with friends & family.