In January for investors to watch as being critical to the investment outlook this year. Put simply, where are they now?
Five ways to turn down the noise and stay focused as an investor
The past financial year saw a spectacular rebound in returns for investors as the focus shifted from the recession to recovery against a backdrop of policy stimulus and vaccines. This note reviews the last financial year and takes a look at the outlook.
News that I and many others were effectively in lockdown from Friday was depressing. It got even more depressing when the whole of Sydney and surrounds was put into a two-week lockdown on Saturday.
The drumbeat of central banks heading towards the exits from ultra-easy monetary policy is getting louder
The shift from high inflation to low inflation has been a key tailwind for investment returns over the last 40 years – in particular it has allowed capital growth in excess of growth in earnings and rents
The Australian economic recovery remained strong in the March quarter with GDP up 1.8% – seven reasons for optimism
Inflation will likely rise further in the months ahead due to base effects, bottlenecks & reopening but it’s likely to fall back again from later this year as these drivers fade.
The 2021 Federal Budget harks back to the immediate post GFC budgets in some ways, with the Treasurer resisting any temptation to start early on the task of budget repair and doubling down on stimulus.
The Government now expects the Federal budget deficit to peak at $161bn this financial year (down from $214bn in October’s Budget) and fall to $107bn in 2021-22.
Geopolitical risks are higher than prior to the GFC reflecting three big themes: a populist backlash against economic rationalist policies; the falling relative power of the US; and the polarising impact of social media.
The Australian housing market is booming. Prices are rising sharply, auction clearance rates are very strong, sales are surging, and housing finance is around record highs.
It makes sense that the cheaper you buy an asset the higher its prospective return will be. However, this is frequently forgotten with investors often tempted to project recent returns into the future regardless of valuations.
Articles and updates. A new age of infrastructure energy and investment is dawning Preparing for the post-COVID recovery in real estate, the bonds market and more...
Global recovery is on track. Vaccines are working. JobKeeper’s end won’t derail Australia’s recovery. Inflation could become an issue in the medium term. Shares are at risk of a correction but are supported by economic and earnings recovery.
RBA on hold and likely to remain easy for a long while yet as full employment gets more of a look in. While the economy is recovering faster than expected. The RBA will likely start to slow its quantitative easing measures through this year though.
The history of cyclical bull markets in shares suggests that the rebound since last March still has a way to go.
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Digital currencies and blockchain technology may have a lot to offer - but that does not mean Bitcoin will be it.
The 40-year downtrend in inflation and bond yields is likely over. But the fundamental backdrop of improving growth, rising profits and still low rates supports the case for solid 6-12 month returns from shares
Expect average Australian home prices to rise 5-10% this year and next as ultra-low interest rates and economic recovery feed through. However, the outlook is divergent...
The super rules change regularly, and this year is no exception.
Many of the mistakes investors make are based on common sense rules of thumb that turn out to be wrong.
Will Airports ever be the same, Real estate rock stars, USA Game changing year and the face of front line responders
Shares are at risk of a short-term correction or consolidation, but investment markets should provide solid returns this year on the back of continuing economic recovery and low interest rates.
Our high-level investment view is that while shares are vulnerable to a short term correction having run up hard since early November, overall investment returns will be solid this year on the back of economic recovery (driven by stimulus and the deployment of vaccines allowing a more sustained reopening) at the same time that interest rates remain low.
US protests are only an issue for investment markets if they significantly impact economic activity
2020 turned out far better for investors than was feared. 2021 is expected to provide solid returns & see a further rotation from pandemic winners to cyclical investments.
Review of 2020, not what it was supposed to be - Outlook for 2021 - Recovery
For some years now Modern Monetary Theory (MMT) has been gaining prominence as a solution to the perceived failure of traditional economic policies to achieve full employment & meet inflation targets, despite at or near zero interest rates.
The US election has been close and final counting as well as legal challenges could still upset the result, but the now highly likely outcome is a Biden Presidency.
The RBA has cut the cash rate to a record low 0.1% & announced a broad-based quantitative easing program.
Despite a 35% or so plunge in share markets earlier this year; on the back of the pandemic and rough patches in 2018, 2015 and 2011, well diversified Australian investors have seen pretty good returns over the last 10 years. The median balanced growth superannuation fund returned 5.8% pa over the five years to August and 7.3% pa over 10 years and that’s after fees and taxes. While that’s dull compared to the double digit returns of the higher inflation world of the 1980s and 1990s, it’s pretty good once low inflation of 2% pa or less is allowed for.
The 2020-21 Australian Budget – spend, spend, spend as the focus remains on recovery and jobs, jobs, jobs
Australia’s “eye popping” budget deficit and public debt blow out – can it be paid off? Does it matter?
In its September board meeting, we saw another move out of the RBA to support the Australian economy through COVID-19, and there could be more to come.
RBA holds – but more stimulus likely as Victorian lockdown to knock at least $12bn from national GDP
Victoria’s tightening lockdown could knock at least $12bn off the Victorian and national economy and delay the return to positive Australian GDP growth to the December quarter.
The thought of various government support measures expiring in the months ahead, causing some sort of fiscal cliff over which economies and share markets will plunge, has caused much consternation. But as with the original fiscal cliff of December 31, 2012 in the US, it’s likely to be tapered into a fiscal slope.
The past financial year was poor for investors as coronavirus knocked economies into what is likely to be their biggest hit since the 1930s. Shares were hit hard, but the blow was softened by a strong rebound in the June quarter. This note reviews the last financial year and takes a look at the outlook.
A serious second wave of coronavirus cases in major developed countries is the biggest risk facing equity markets, and one investors will need to watch closely.
The strong rally in shares since their March lows reflects a combination of economic reopening, signs of recovery, policy stimulus and once pessimistic investors closing underweight or short positions.
Australian house prices starting to fall – collapse likely averted but expect more weakness ahead
There has been much debate about the short-term economic and investment impact of coronavirus – on economic activity, unemployment, interest rates, house prices, shares, etc.
Back in January when the bushfires were raging, I feared Australia’s luck had ran out. But right now, I thank god I live in The Lucky Country!
This is an update of a note I wrote last November, but after the recent plunge in shares and the associated 10% or so loss in balanced growth superannuation funds through the March quarter, it’s particularly relevant now.
After a strong rally, in the short-term shares are vulnerable to bleak economic and earnings news.
Central bank support to ensure the flow of money and credit through economies is an essential part of the global and Australian coronavirus economic rescue
While shares have rallied 15-20% from their March low and may have started a bottoming process
Significant government support is essential to enable parts of the economy to successfully hibernate
Global share markets have fallen into a bear market, but whether this turns out to be long or short depends on how long the hit to the economy from coronavirus lasts.
The Australian housing market is at risk from the coronavirus recession Australia has now entered. A relatively short recession that sees unemployment rise to around 7.5% would likely only set prices back around 5% or so after which prices would bounce back.
Successful investing can be really difficult in times like the present with immense uncertainty around the impact of coronavirus on the outlook.
The rout in financial markets has continued, on the back of coronavirus, made worse by a flow on to oil markets.
The plunge in share markets over the last week has generated much coverage and consternation.
While reported new coronavirus cases in China have slowed, the pickup in cases outside China has led to a renewed sharp fall in share markets and bond yields.
Shares are vulnerable to a short-term correction - Key things to watch out for are recession and much higher inflation.
From bushfires to coronavirus - five ways to turn down the noise around investing
The China coronavirus outbreak has led to concerns of a global pandemic triggering an economic downturn. Our base case is that the outbreak will be contained allowing share markets and bond yields to rebound. However, uncertainty is high given that the coronavirus is more contagious than SARS albeit with lower mortality. Key to watch for is a peak in new cases and contained transmission in developed countries.
Shares are at risk of a short-term correction or consolidation after a strong run over the last year and with sentiment now very bullish. However, this year should still see good returns for investors as global growth edges up and interest rates remain low. > Five key global charts to watch are: global business conditions PMIs; global inflation; the US yield curve; the US dollar; and global trade growth. > So far so good, with PMIs improving a bit, inflation remaining low, the yield curve steepening, the $US showing signs of topping and the US/China trade truce auguring well for some pick up in world trade growth.
The Australian bushfire season that began in September has been horrific with more than 7 million hectares of bush destroyed, more than 25 deaths, significant loss of livestock, estimates of more than a billion wildlife animals killed and more than 1800 homes destroyed. More than 200 fires are still burning. Following the intensification of the bushfires over the Christmas/New Year period attention has now turned to the impact on the economy. This note looks at the key impacts.
Even if you secured a competitive package when you first took out your home loan, it’s worth reviewing each year1 to ensure the interest rates, fees and features continue to meet your needs. By refinancing you may be able to pay off your home loan sooner.
In this month’s issue we discuss how: James Maydew believes that having culture and strategy on the same blueprint is an absolute imperative climate change is impacting the real estate sector, and how leaders and businesses are standing up to the task of tackling it Julie-Anne Mizzi uses her innate passion for investing in infrastructure for those who need it, and the familiar airport retail experience is set for a makeover.
2019 saw growth slow, recession fears increase and the US trade wars ramp up, but solid investment returns as monetary policy eased, bond yields fell and demand for unlisted assets remained strong. 2020 is likely to see global growth pick up with monetary policy remaining easy. Expect the RBA to cut the cash rate to 0.25% and to undertake quantitative easing. Against this backdrop, share markets are likely to see reasonable but more constrained & volatile returns, and bond yields are likely to back up resulting in good but more modest returns from a diversified mix of assets. The main things to keep an eye on are: the trade wars; the US election; global growth; Chinese growth; and fiscal versus monetary stimulus in Australia.
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