Large funds have life insurance covered

Most of us don’t have enough life insurance, so it’s good that large superannuation funds provide ”default” death and total and permanent disablement insurance to their members, who otherwise may not have any at all. It is default cover because the fund member receives it whether they ask for it or not. Consequently, almost everyone has life-insurance cover through their fund.
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But life insurance obtained through superannuation funds is getting pricier, with some large funds increasing the costs by up to 50 per cent. The price rises are across all types of super funds – non-profit, retail and corporate. The funds say it’s because they and their insurers are experiencing more disability claims as the economy remains weak and unemployment edges higher.

Insurers are also subject to higher capital-adequacy requirements. The current round of price rises comes after several years of price falls. Super funds are concerned by the underinsurance of their members and have been increasing the level of default cover. That means $1 of premium buys more cover than five years ago.

The amount of cover mainly depends on the member’s age. Most large funds provide the greatest amount of default cover to fund members when their financial responsibilities are greatest – usually between the ages of 35 and 45. This is the default arrangement, but most funds allow their members to decrease the cover if they wish.

Even allowing for the big price rises, life insurance is much cheaper through a large fund than buying the same cover outside super. And large super funds usually accept a fund member’s application for insurance with no questions asked about their medical history, up to the default cover amount.

Applications for cover above the default amount would usually require at least a record of medical history, and cover could be denied. Even if a member encounters health problems later on, they will still be covered up to the default cover limit and pay the same premium as other members of the same age.

Life insurance is so attractive through large superannuation funds that there is talk of self-managed superannuation fund trustees keeping a small amount of money with the large fund they were with before starting their own fund just to retain cheap life insurance with automatic acceptance.

It should be pointed out that ”disablement” is tightly defined under superannuation law. It is ”total and permanent” disablement. To make a successful claim, the fund member usually has to show that because of injury or illness, he or she will never be able to work in ”any” occupation.

There are policies available outside superannuation where the definition is wider. Some of these policies will pay a claim if the person is unlikely to work again in their ”own” occupation. Though easier to make a claim, these policies are more costly.

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How the Y factor turns some stocks into smash-hits

The search for yieldPerhaps the biggest influence on most big superannuation funds is the sharemarket.
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The typical managed fund has about half its assets in shares, so market movements can make a big difference to what is left for members when they hit retirement.

It’s worthwhile, therefore, to think about what’s driving the sharemarket, and whether it’s sustainable.

In the first 10 months of this financial year, rising share prices meant the typical super fund had returned a whopping 15 per cent, even if things cooled off in May.

But you can’t help but notice that these gains came against a weakening economic backdrop, with many companies complaining that things remain tough.

It begs the question: if growth is weak, why did share prices start 2013 so strongly? And, more importantly, can it last?

Most experts agree that shares have risen this year because of the extraordinary measures being taken around the world to reignite growth.

As central banks slash interest rates and pump money into the system, it has lowered the return on government bonds and forced investors such as pension funds to snap up other assets that can provide a good return.

In the jargon, there has been a mad rush for ”yield”, with investors piling into high-dividend stocks such as Telstra and the banks.

You can see this trend in the graph, which comes from Macquarie strategist Tanya Branwhite. It includes a ”high-yield” index of Aussie stocks, such as banks, telecommunication, listed property trusts and utilities. As the graph shows, these high-yields stocks have been a smash-hit with investors, rising 50 per cent since mid 2011, far ahead of the rest of the market. In short, the high-yield stocks have been driving market performance.

But the growing question on many investors’ minds is whether a rally built on a search for yield is sustainable.

In recent weeks, a growing number of experts have been raising doubts. Branwhite says the yield-induced rally is now ”maturing” and it may be time to look at ”growth” stocks, such as BHP.

Greg Perry, a former Colonial First State fund manager who was regarded as the best stock-picker in the 1990s, also describes the search for yield as ”very mature”.

What do they mean by mature? Basically, they are concerned that stocks have become too expensive. If investors are simply pushing up share prices because they are looking for yield, there are risks of bubbles forming.

The Commonwealth Bank, for instance, has been trading at a price of about 15 times current earnings, which analysts say is close to its highest ever level. With little in the way of credit growth, sceptics believe the bank is overpriced.

Even the $87 billion Future Fund, one of the biggest investors in the country, last week warned against chasing yield purely for its own sake.

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Getting super across to all

Imagine standing in the middle of a remote community using the only public telephone, waiting to talk to a person in an office in a far-off city. Photo: Tanya LakeWhile many Australians find super challenging, for those living in rural and remote areas – and especially for indigenous Australians – the difficulties are magnified.
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Imagine standing in the middle of a remote community using the only public telephone and you are on hold, waiting to talk to a person in an office in a far-off city whose everyday language you barely comprehend and whose jargon you absolutely do not understand, in the hope of discussing your super.

You don’t have your tax file number on hand, you’ve moved house a number of times in the 10 years since joining the fund, and don’t recall the address where you lived when you joined. It’s a recipe for disappointment, disengagement and disadvantage.

And financial exclusion is not limited to remote or country areas.

In urban Australia, where one-third of indigenous super members live, many don’t understand how to leave super to their descendants using the nomination process. People may want to leave super to descendants according to indigenous cultural protocols, and fund trustees may struggle to manage claims in a culturally appropriate way.

The Australian Securities and Investment Commission (ASIC) is taking a number of steps to address this disengagement. Recently in Melbourne, it held an industry-wide forum with 25 funds represented, which tried to break down some of the barriers Aborigines and Torres Strait Islanders face when engaging with the super industry. Participants discussed the need to address problems by developing practical measures, including increasing the numbers of indigenous staff employed in the industry, gathering more detailed information on members and their needs, and considering strategies to deal with the documents and information needed.

The commission has also improved financial literacy tools to better meet indigenous people’s need: ASIC’s revised publication gives information on the fundamentals of super in a booklet written in plain English.

Recognising indigenous consumers as a particularly vulnerable part of society, in 2009 ASIC set up an outreach program. Each year, the team visits about 30 communities around Australia to promote financial literacy.

In 2009, ASIC also implemented a Reconciliation Action Plan. As part of that ASIC has hired its first indigenous cadet and sent ASIC staff on short-term secondments in areas including Redfern and the Kimberley .

Similar to the broader Australian workforce indigenous Australians need to engage with the system to make decisions about such things as life insurance, access to retirement funds and beneficiaries.

Helping people make these decisions needs an understanding of their needs and the barriers they face. With industry’s help, ASIC will be able to dismantle these barriers faster.

Robynne Quiggin is ASIC’s senior manager – indigenous outreach.

Have you had difficulties accessing super? Tell us your stories

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Bali Nine members set to have life sentences cut

Four of the Bali Nine drug smugglers are poised to have their life sentences reduced to 20 years, though the decision still has to find approval from a gun-shy central government in Jakarta.
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Martin Stephens, Matthew Norman, Si Yi Chen and Tan Duc Thanh Nguyen applied in May for the sentence reduction. The corrections department in Jakarta has confirmed that prison authorities in Bali have found in their favour.

The final decision, though is up to the Minister for Law and Human Rights, Syamsuddin, who is under pressure from anti-drug campaigners to take a hard line on drug traffickers.

If the four are successful, though, their new sentences will be 20 years. With the eight years they have already spent in Kerobokan prison taken into account, they would have only 12 years left to serve.

Remissions for good behaviour — which in Indonesia are handed out twice a year — could reduce this further so that their likely release date would be 2020 or 2021.

A spokesman for the remission section of the Director General of Corrections in Jakarta said officials were now working on documents of the four, all of whom are serving life sentences without hope of release.

The documents had arrived “a few weeks ago”, the spokesman said. However, without specifying any limit, he said it would take “a long time” before the four to receive an answer.

It’s usual for remissions of sentence to be announced to coincide with Indonesia’s national day in August.

New regulations in Indonesia require drug prisoners, terrorists and others to promise to be “justice collaborators”, and that they express guilt and remorse for their crimes.

Fairfax Media understands that the four prisoners have now met those criteria to the satisfaction of Bali’s provincial authorities and Kerobokan prison leaders.

But in Jakarta the National Narcotics Agency BNN is running a hardline campaign for drug traffickers to be treated harshly. It’s still possible that Syamsuddin or a team of senior bureaucrats who advise him, will be spooked by that campaign and reject the applications.

One Bali Nine prisoner, speaking on condition of anonymity, said: “If they deny it I’ll be so devastated, but I can’t see how they can”.

It is the third time that Stephens, Norman, Nguyen and Chen have applied for remission. The first attempt, in 2011, was stopped with all other remission requests because of a riot in January 2012.

The second was rejected because of the “justice collaborators” regulation. The men made their third application in early May.

As well as expressions of remorse and willingness to cooperate with authorities, the applications include letters showing support from family members, prison guards and other prison officials.

The Bali Nine were convicted in 2005 of attempting to traffic 8.3kg of heroin from Bali to Australia. Two of them, Myuran Sukumaran and Andrew Chan, still face death sentences and have appealed to president Susilo Bambang Yudhoyono for clemency.

Renae Lawrence is serving a 20 year sentence and could be released as soon as 2016. The others are serving life. Michael Czugaj is appealing his sentence, and Scott Rush has exhausted his appeals, and has not yet lodged a bid for sentence remission.

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Manning a ‘broken soul, emotionally fractured’

Fort Meade, Maryland: A counterpoint to the enormity of Bradley Manning having dumped 700,000 classified US documents into the public domain is the fractured and confused nature of the young US Army private which surfaced in testimony at his court martial on Tuesday by Adrian Lamo, a convicted computer hacker in whom the army private confided.
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Under cross-examination Mr Lamo revealed a side of the leaker at odds with the prosecution claim that he had deliberately set out to put the top secret files of the US Government in the hands of Osama Bin Laden helping the enemy, as the most severe charge against Private First Class Manning is paraphrased.

The hacker’s account squared with evidence earlier in the day by a forensic digital examiner on contract to the US military, Mark Johnson, who said that none of the material found on PFC Manning’s computer related to terrorism or indicat[ed] a hatred of America.

The hacker Mr Lamo told army prosecutor Major Ashden Fein that PFC Manning had first

contacted him online on May 20, 2010 and that within 24 hours he had reported the soldier

to military intelligence, briefing agents on his dialogue with PFC Manning and in particular, on his references to Julian Assange, whose WikiLeaks anti-secrecy entity was the conduit by which the files became public.

The 30-something Mr Lamo was tight-lipped on the witness-stand, mostly agreeing with or slightly modifying statements put to him by the prosecution and defence lawyers.

Describing himself as a threat analyst and a grey hat, a hacking term, Mr Lamo confirmed that in 2004 he had pleaded guilty to computer fraud charges after he had hacked the networks of The New York Times and Microsoft, among others. On conviction, he had been sentenced to six-months home detention and two years probation.

But in response to questions by David Coombs, PFC Manning’s counsel, Mr Lamo said there had been no suggestion by PFC Manning, whose online identity was Bradass87, that he intended the leaked documents to aid the enemy.

Coombs: At any time, did PFC Manning ever say he wanted to help the enemy?

Lamo: Not in those words, no.

Coombs: At any point, did he say that the American flag doesn’t mean anything to me?

Lamo: No.

Relying on purportedly tamper-proof, real-time recordings of their several chats which were retrieved from Mr Lamo’s computers, Mr Coombs drew out the fragile nature of his client, who had told Lamo he had made a huge mess of his life.

Suggesting he was suicidal, PFC Manning had described himself as a “broken soul emotionally fractured.”

PFC Manning chatted about seeing incredible things, awful things” in classified files, “things that belonged in the public domain, and not on some server stored in a dark room in Washington DC.” He had told Mr Lamo the files revealed how the first world exploits the third, in detail, from an internal perspective showing diplomatic scandals wherever there was a US mission.

“I don’t believe in good guys versus bad guys anymore,” PFC Manning told him.

“Only a plethora of states acting in self interest.”

Mr Lamo told the court martial that he could appreciate, yes, a claim by PFC Manning that he needed to investigate to find out the truth. He confirmed having asked why PFC Manning was not selling the files to Russia or China to which PFC Manning had replied that the information “belongs in the public domain.”

As Mr Coombs itemised the particulars of PFC Manning’s life, Mr Lamo observed that the irony of the parallel with his own circumstances was not lost on him.

PFC Manning had sought him out because of his hacker’s notoriety, but also because of his activism in the lesbian, gay, bisexual and transgender community.

Mr Lamo was 22 when he was arrested in 2004, the same age as PFC Manning at the time of his arrest. And as PFC Manning had, Mr Lamo also had claimed to be motivated by public good.

Both suffered anxiety and depression. PFC Manning had shared with him his gender identity disorder and he — Mr Lamo — had Asperger’s syndrome.

Another irony was that the Manning-Lamo dialogue which led to PFC Manning’s arrest might not have happened.

Explaining that the soldier s initial approaches were a series of encrypted emails from both his personal and US military addresses, Mr Lamo said that he had ignored them because they were just more of the high volume of messages he received from strangers.

He had responded only on registering that one of the addresses was military and Iraq-based.

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Beat that bad boss!

Bad bosses are ruining lives. But you can manage the situation so yours doesn’t crush you.
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Last year the Harvard Business Review published examples of bad boss behaviour, including remarks such as “If I wanted to know what you thought, I’d ask you”. Another boss noticed a staff member throw a paperclip in the bin and, in front of his 12 subordinates, admonished him for being wasteful. He also made him retrieve it.

Psychologist and workplace trainer Michelle McQuaid says the effects of a bad boss on the employee can be serious. Anxiety and depression, susceptibility to colds and flu, lack of confidence and poor job performance are just some of the side-effects of a bad boss.

We’re also prone to retaliation if we have a bad boss, including being rude, stealing time from the job and backstabbing.

Plus, research by Bayer University in the US shows people dealing with a difficult boss are more likely to have relationship stress at home.

“As a boss, is that the legacy you want to leave your employees?” McQuaid asks.

But despite the strain a bad boss causes, we don’t rush to resign. McQuaid says 22 months is the average time it takes a person to leave a job where their boss is behaving badly. “They think, ‘Oh they’re the boss’ or ‘I don’t know if I can find another job’ and they kind of stick at it thinking it will get better.”

It can be hard to change the behaviour of a bad boss, especially if they don’t want to change, McQuaid says. But we can all learn techniques to understand and manage our boss’s mood triggers and stay resilient.

Here are McQuaid’s tips for managing a bad boss.

1. Reduce the stress it’s causing you.

“The stress is your enemy more than the boss,” McQuaid says.

“When you’re under stress, you see less of the world, your peripheral vision narrows, you only see the thing right in front of you, which is often your boss.”

McQuaid suggests building positive “jolts of joy” into the day to break the cycle: go for a walk, listen to your favourite song or watch a funny clip on YouTube to decompress.

2. Figure out what your strengths are.

Does your boss enjoy telling you you’re useless? Then spend 10 minutes a day working on your strengths. This will make you more productive and feel better about life. It builds your confidence and gets your mind off your boss.

3. Be nice to your boss and others.

When you do something kind or appreciative for another person, the natural tendency is to return the favour. “If you can, do this towards the boss: offer to get them a coffee, or lunch while you are out. If not the boss, then maybe other colleagues,” says McQuaid.

4. Figure out what triggers their worst behaviour.

If you understand what triggers your boss’s bad behaviour you can pre-empt and even try to diffuse the situation. Or at least you’ll know when a rant is coming and you won’t be caught off-guard.

5. Have a conversation.

“Think about what a win-win situation will look like. We’re often good at articulating what we’d like them to do differently but not good at saying what we would like to see more of – and how you and the boss can work to make that happen. A win-win makes the boss feel safer and helps them see why it’s in their interests to change.”

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Still working at midnight? 1am? 3am?

Do you work in the middle of the night? Then chances are, you’re running your own business. Photo: iStockLike all businesses trying to understand its clients better, Bigcommerce, an e-commerce platform for retail start-ups, was recently analysing the time-of-day work patterns of about 1,800 of its Australian customers.
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Some things were not surprising, for example that peak activity was around midday when more than 80 per cent of online retailers were working on their stores.

But one thing stuck out a mile – almost half of the retailers were working at midnight. At 1am more than a third of the retailers were stuck in and at 3am nearly 20 per cent were still at it.

To understand what’s behind those statistics you need to speak with people like James Hopkins and Rebecca Guest. They don’t know each other but they have one important thing in common – they are both living the dream of running their own booming e-commerce businesses. But they are doing it the hard way by piggybacking on day jobs.

Hopkins is founder of iCoverLover, which sells fashion-forward accessories for smart phones. He’s also a middle manager for a broadcast media company, a full-on job that leaves him only evenings and weekends to work on the retail business.

His site, icoverlover南京夜网.au, first launched in December 2010. Hopkins’ business exceeded expectations so much that his partner and co-director, Lana, quit her own day job as a marketing executive in September 2012 to work on iCoverLover full-time.

It was a huge step for Lana to take the plunge and go full-time but so far the decision has been vindicated. The business has been thriving not just because of demand for the product but also because of perks they offer, like same-day delivery in the Sydney metro area.

“A lot of our customers want instant gratification,” says James. “We have the orders couriered to them at the home or office.” This kind of service is not available from most retailers.

James himself usually works on the site from about eight in the evening until midnight but he admits that sometimes he can’t drag himself away until the wee hours of the morning. He estimates that both he and Lana put in 80-hour work-weeks – she exclusively on the e-commerce business and he on the business and his full-time job.

Rebecca Guest is another Sydney resident who burns the candle at both ends. She went on maternity leave in 2012 and then traded in her full-time marketing job for a part-time one that keeps her busy for three days a week. Between job and infant she’s flat chat and you wouldn’t think there’d be much time left to run an e-commerce business. Yet that’s exactly what she does.

Unable to work at it for more than an hour here and an hour there at odd times of day, it took her about eight months of business development to get to the point where she was able to launch her site, Mint Green, which offers a curated selection of home products.

“If I had been able to work on it full-time I could have had the site up and running lightning-fast,” Guest says.

It’s early days yet for Mint Green. Volumes are growing but overheads are significant. Guest has to maintain a full inventory in a storage facility since most wholesalers will not drop-ship. That’s a significant financial commitment for a retail business that is being exclusively self-financed.

Guest’s other challenge is that she knows the home furnishings business is a crowded space, particularly with international brands like Williams-Sonoma now muscling in on the Australian market. She needs to differentiate Mint Green from the rest of the pack. Her answer is to be a curator, or editor, of merchandise that represents her own personal point of view rather than a plain vanilla homewares store. She is also hoping that as a savvy user of social media she will be able to build bridges to her customers that the bigger players cannot.

Money is not the sole motivation for night owls like Rebecca Guest and James Hopkins. They will both be quick to tell you that working on their own e-commerce businesses on top of day jobs and domestic responsibilities is also about doing something you love and taking some control of your own professional destiny.

These toilers of the night are not to be pitied – they’re really loving every minute of it.

Michael Baker is principal of Baker Consulting and can be reached at [email protected]南京夜网 and www.mbaker-retail南京夜网.

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Dramatic rise moves IAG upwards

Insured against loss?As interested investors will appreciate, the financial sector has been strong in recent times, but most of the commentary has focused on the banks, the big four in particular.
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Another component of the financials index, insurance, has also been doing well. Suncorp is up 50 per cent in a year. QBE has had similar rises since its price collapsed late last year.

Insurance Australia Group (IAG) has done even better, with its price up about 90 per cent in a year. The chart, produced by Paul Ash, Victorian president of the Australian Technical Analysts Association, compares IAG’s progress with that of the Financials (Insurance) Index. The index is in an uptrend, but its progress has not been as steady as IAG’s, mainly due to QBE’s gyrations last year.

Ash observes that IAG has been in a strong uptrend since June 2012. But since March it moved into a trading channel between $6 and $5.50, with the lower support line holding during that period. IAG has reached an important moment, with the horizontal support line reaching the upward trend line.

That means the price needs to turn up again for the upward trend pattern to remain in force. Ash says that given the support line has held up recently, and there is good support for the stock and significant momentum in the sector, IAG should move back towards $6 in the near future. For it to kick above that level, the broader market would need to take a strong step up, he says.

On the fundamental side, IAG has a price-earnings ratio of 13.7 times compared with the sector average of 14.6 times. Its dividend yield is 4.5 per cent, just shy of the industry average, but both dividends and earnings per share are tipped to grow strongly in the next two years. Earnings growth is an impressive 24 per cent.

Its underlying performance in the December half was driven by a 7.7 per cent rise in gross written premiums and an increase in the insurance margin to 23.1 per cent.

This column is not investment advice. [email protected]南京夜网

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Joining Ichimoku with an Advanced Candlestick to Stay With the Trend

Joining Ichimoku with an Advanced Candlestick to Stay With the Trend Joining Ichimoku with an Advanced Candlestick to Stay With the Trend
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Joining Ichimoku with an Advanced Candlestick to Stay With the Trend

Joining Ichimoku with an Advanced Candlestick to Stay With the Trend

Ichimoku helps traders see a worthy set-up in one glance but once in the trade, Heikin-Ashi candles can help you see when it’s smart to stay in. Article Summary: Staying in a good trade is one of the hardest aspects of trading well. Heikin-Ashi is a modified candlestick that rearranges how price is displayed so traders can see when it is prudent to stay in a well-entered trend. This article will teach you about Heikin-Ashi so you can decide if you’d like to add it to your Ichimoku repertoire. In trading as in life, when you change the way you look at things, the things you look at change. Many traders utilize candlestick analysis to pinpoint reversals or continuation patterns in real-time. While this is helpful for deciding when to enter a trade once you’re in, a new candlestick view can be of major assistance to you. The new candlestick (not really new in general but likely new to you), is called the Heikin-Ashi or “average pace of price” candles when translated from Japanese and is available as a default indicator on FXCM’s charting package. Heikin-Ashi is simply an offshoot of what you’re likely accustomed to when reading candlesticks with their true display of the Open-High-Low-Close price. What’s altered is the open and close so you can get a better feel for the trend’s likeliness to continue. Learn Forex: Regular Candlestick Presented by FXCM’s Marketscope Charts Learn Forex: Heikin-Ashi Candlestick Applied Presented by FXCM’s Marketscope Charts Heikin-Ashi’s Smoothing Ability & CalculationAs you can see from the second chart, directional moves are smoothed out in a way absent from the first chart. What makes Heikin-Ashi an effective tool is that it doesn’t adjust price but only the way price is displayed in terms of the open and the close. Specifically, the open of an Heikin-Ashi candle is the average price of the previous bar , and the close of the Heikin-Ashi candle is the average price of the current bar while the high and low are unchanged. Here is the Heikin-Ashi CalculationOpen = (open of previous bar + close of previous bar) / 2Close = (open+ high+ low+ close)/ 4High = maximum of high, open, or close (whichever is highest)Low = minimum of low, open, or close (whichever is lowest) How Heikin-Ashi Helps TradersThe important point about this display of price action is that if the price of the current candle is above the average price of the previous candle (current candle’s open with Heikin-Ashi) then you’re in an uptrend. By representing the average pace of price, you can easily see with Heikin-Ashi when you should be in a trade that is trending and when it’s best to be on the side-lines. If Heikin-Ashi helps you stay in big moves longer that are in your favor, then this addition to your trading may be one worth using. The main thing traders want to look for is a shaved or wickless candle opposite the trend. In other words, if the trend is up and price is above the Ichimoku cloud, then Heikin-Ashi candles with no lower wicks show you a very strong trend to the upside. When there is no counter-trend wick, then there is no reason to exit the trade at this time unless your profit target is hit and you’re happy to exit. Learn Forex: Side by Side Comparison of Ichimoku with Heikin-Ashi Applied & Left Off of USDCHF Presented by FXCM’s Marketscope Charts Heikin-Ashi Combined With IchimokuHeikin-Ashi is best applied after a clear entry is identified with Ichimoku. Contrary to typical candlesticks, a large body with Heikin-Ashi and one wick displayed in the direction of the trend signifies the strength of trend. However, wicks on both sides of the candle show a choppy trend and gives off hints that the trend is weakening because price is breaking the average price of the prior candle. In closing, it’s important to note that Ichimoku is also used to filter out the noise in that the cloud gives us our starting point for building a bias with the trend. Adding Heikin-Ashi filters the noise out even further from candle to candle so that you’re focusing on the average pace of price as opposed to potentially worrying about each candle. If you decide to use them together, Heikin-Ashi candles can help you stay in the trend longer after Ichimoku has helped you identify specific entry points. Ichimoku Weekly Trade: Buy AUDCAD on A Clear Break of the Lagging Line through the Cloud Presented by FXCM’s Marketscope ChartsIchimoku Trade: Buy AUDCAD If Lagging Line Breaks Through As Price Remains Above the CloudStop: 0.9950 (Support at the Base Line)Limit: 1.0200 (Near Weekly R2 on Classic Pivot)If this is your first reading of the Ichimoku report, here is a recap of the rules for a buy trade:-Price is above the Kumo Cloud-The trigger line (black line on my chart) is above the base line (baby blue line) or has crossed above-Lagging line is above price action from 26 periods ago (above the cloud is the additional filter)-Kumo ahead of price is bullish and rising (displayed as a blue cloud). This is currently not fulfilled.This trade was picked because of the recent breakthrough of the cloud by AUDCAD. Trading trends is like planting a tree in that the best time to plant a tree is yesterday and the best time to enter a trend trade is as soon as it’s identified. Please note however that this is a heavy news week for both pairs so keep an eye on the DailyFX economic calendar if you prefer to incorporate fundamentals with your trading.Happy Trading! —Written by Tyler Yell, Trading Instructor To contact Tyler, email [email protected]南京夜网 . To be added to Tyler’s e-mail distribution l ist, please click her e . Would you like dozens of trade ideas every day with updated charts to identify major levels support and resistance on the currency pair you’re trading? If you’d like to learn more about our Technical Analyzer on DailyFX Plus, click here .

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Stevens’ reserve on rates misplaced

Tim ColebatchG
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lenn Stevens has never had less to say. His statement on Tuesday to explain why the Reserve left interest rates on hold was just 383 words. It said nothing about the biggest influence on our economy, China, or the industry that has dominated the economy’s growth since 2010, mining.

And, in part, that’s because the Reserve, too, is more than usually unsure what lies ahead. It wants to keep its options open.

Last month, it opted to try to make a difference. It cut its cash rate from 3 per cent to 2.75 per cent, taking the markets by surprise. Within three weeks, the Australian dollar tumbled more than 5 per cent to sink below parity with the $US – and, so far, to stay there.

There were other factors in that. The US economy is looking healthier, and Fed governors have hinted that its stimulus might be scaled back, or even reversed. Australia’s export prices continued falling. But the Reserve’s move played a part.

Time will tell whether Stevens and his board on Tuesday missed an opportunity to reinforce that trend and to deliver a second rate cut that would help the dollar fall sooner and faster.

Since 2010, mining investment has provided roughly half the growth in Australia’s economy. The rest of the economy has grown more slowly than our population. But that phase is over. Mining investment is either about to peak, or is already past its peak. Last week’s capital expenditure data suggests the latter.

The key issue for policymakers is how to lift quickly the growth of non-mining investment and net exports that we will rely on to take over the baton of growth as mining investment declines.

That is not possible while the dollar remains so overvalued. When it was above parity, the International Monetary Fund estimated that the cost of producing goods and services here was the third highest in the advanced world. And while part of that is due to our higher inflation rates, most of it is the byproduct of an overvalued dollar.

The gap between yields in Australia and yields overseas is clearly a factor in that overvaluation. Unless you think that a rate cut now would result in the economy overheating within a year or two, and inflation getting out of the Reserve’s control, why not trim that gap a bit more, and bring the dollar down closer to where you think it should be?

Stevens’ statement gives few clues as to why the Reserve chose the course it did. Much of his statement would read equally well had it decided to cut rates again.

It notes that growth in Australia remains ”a bit below trend”, and forecasts ”a similar performance in the near term”. Stevens concedes that ”unemployment has edged higher in the past year”. The Reserve last month forecast growth of just 2 to 3 per cent in the year ahead, with unemployment ”drifting higher”. Clearly, that is still its view.

Unlike some commentators, the Reserve has noticed the stunning fall in wages growth reported in recent data. The Bureau of Statistics estimates that the economy’s wage bill rose just 2.9 per cent in the year to March, down from 7.4 per cent a year earlier. Wages and profits combined have grown just 2.3 per cent in a year. Don’t be surprised if Wednesday’s GDP figures come out lower than the markets have forecast.

Stevens and his board are still not happy with the dollar. While the trade-weighted index has fallen 8 per cent since peaking on April 12, Stevens implies it’s not enough, adding: ”As the board has noted for some time, it remains high, considering the decline in export prices … over the past year and a half.”

Moreover, they see no problem with inflation. Nor should they. Take out the impact of the carbon tax and in the year to March, underlying inflation would have been 1.8 to 1.9 per cent, below the Reserve’s target of 2 to 3 per cent.

The bank retains its bias towards easing: Stevens’ closing comment is a hint that the next rate move is more likely to be down than up. OK, the Reserve thinks the economy is underperforming, the dollar overvalued, and inflation below target. So why not cut interest rates again?

The only explanation given is that Stevens sketches an optimistic scenario ahead. While global growth is now ”running a bit below average”, he says, there are ”reasonable prospects of a pick-up next year”. Similarly, he puts a lot of faith in the so-called ”green shoots” of growth in demand for new houses, home lending and, arguably, retailing.

The rate cuts to date have ”supported interest-sensitive areas of spending”, he says, have changed the behaviour of savers and investors, and have generated ”some signs of increased demand for finance by households”. His conclusion is the key sentence: ”Further effects can be expected over time.” Well, maybe. But will they be enough to offset the impact on the economy as mining investment turns negative?

Tim Colebatch is the Age economics editor.

This story Administrator ready to work first appeared on Nanjing Night Net.