Client Briefing Updates
1 July 2020
Investor focus on the US election waned earlier this year after socialist Bernie Sanders dropped out of the Democratic primary race in favour of moderate Joe Biden. At the same time coronavirus became the main focus for markets. However, markets may soon start to pay more attention as the election is rapidly approaching, while Joe Biden is a moderate, he is proposing higher taxes... Read More..
Macquarie Wealth Management: 25 June 2020 Research - Without A Vaccine, The Road To Recovery Will Remain Rocky
25 June 2020
The rally in equity markets has been closely linked to a bottoming of infection rates and the reopening of economies. The size and pace of the rebound can, inlarge part, be attributed to an unwinding of overlypessimistic growth expectations alongside an openended commitment by policy makers to support liquidity requirements of consumers, business and financial systems. Read More..
19 June 2020
The past week has seen a flurry of concerns about a “second wave” of coronavirus cases. It started when US infectious disease expert Anthony Fauci warned the coronavirus outbreak is not over and media started to focus on more than 20 US states seeing a rising trend in new cases, and then over the weekend, China reported a cluster of cases in Beijing around a market. Mass anti-racist protests have probably added to the renewed unease. Read More..
11 June 2020
After a roughly 35% plunge from their February high point to their lows around 23 March on fears regarding of global recession on the back of the coronavirus shutdowns, share markets have since rebounded sharply, led by US shares. The rally has pushed the Australian ASX 200 back through 6000 for the first time since March. Read More..
Shane Oliver Updates: Australian House Prices Starting To Fall – Collapse Likely Averted But Expect More Weakness Ahead
5 June 2020
Back on 19th March when we first looked at the impact of the intensifying shutdown of the Australian economy on the housing market we concluded that the impact would depend on how high unemployment rose. Our base case was a recession that saw unemployment rise to around 7.5% and would push average home prices down around 5%, but the risk was that a deeper downturn with say 10% unemployment could see a 20% fall in prices. Read More..
Macquarie Wealth Management: 28 May 2020 Research - Breathing Life In Value Stocks – Equity Rotation Just Getting Started
28 May 2020
Equity markets have been on a tear with positive momentum picking up substantially in recent days. We turned more constructive on equities in early April and have continued to push back on concerns that the rally was a bear market bounce, that risk assets were becoming overly disconnected with fundamentals or that valuations would be a short term constraint. Read More..
Macquarie Wealth Management: Asset Allocation 27 May 2020 - How To Boost Income In A Falling Yield Environment
27 May 2020
The coronavirus is driving a perfect storm for income investors. Those focused on income are suffering from a dramatic decline in bond yields and dividend income and for those investments where yields have spiked (i.e. credit, emerging market debt), it has come with a substantial increase in volatility. Read More..
26 May 2020
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. However, the magnitude of the shock means it will have medium to longer-term implications as well. Of course, there is a danger in placing too much weight on current circumstances in assessing the future. Read More..
Macquarie Wealth Management: 25 May 2020 Research - Will Rising Political Uncertainty Threaten The Recovery?
26 May 2020
The last few weeks have seen political developments (primarily China related) come back into focus for with the start of the National People’s Congress, rising tensions in Hong Kong and a deteriorating US-China relationship. This has seen political uncertainty rise at a time when growth risks are already high. We analyse some of the key Chinese political developments and their implications for investors. Read More..
25 May 2020
APN Property Group just released their latest Investor Update titled “APN AREIT Fund: Eight big questions” which was underpinned by the most common questions that they’ve been recently vetting from financial advisers. From queries regarding the distribution rates for the Australian REIT Funds being cut, to the changes in the retail sector after COVID-19, this update will answer all these and more. Read More..
Macquarie Wealth Management: 19 May 2020 Investment Strategy Update: Why We Are Less Worried About Valuations
19 May 2020
The Australian equity market’s (12-month forward) P/E multiple has surged during the recent market rally to almost 18x (from its 23rd March low of 12.3x) and is closing in on its recent market peak P/E of 18.7x. This has led to calls that the market is overvalued and that the “disconnect” with economic and earnings fundamentals will need to be corrected by a market decline. We don’t agree with this simple assessment. Read More..
15 May 2020
The lockdowns associated with the COVID-19 pandemic have caused a sharp slowdown in global growth. For most businesses navigating this environment, the immediate focus is on financial survival with sustainability taking a back seat, albeit we believe temporarily. As we move past the survival phase, those companies that have the financial capacity are likely to demonstrate an increased focus on their social responsibility credentials. Read More..
Shane Oliver Updates: The Coming Surge In Australia’s Budget Deficit And Public Debt Due To Coronavirus – Can We Afford It?
14 May 2020
Last night would have been Budget night and the Australian Treasurer would have been announcing budget surpluses. Of course, coronavirus intervened, and the surpluses rightly had to be sacrificed to support Australian households, businesses and jobs. And it makes no sense to provide detailed budget forecasts given the extreme uncertainty about the impact on the economy and hence the budget for the coronavirus shutdown. Read More..
Shane Oliver Updates: Nervous About Superannuation? This Isn’t The End Of Days For Retirement Savings
13 May 2020
Superannuation is locked away for a reason, it is a long-term investment. That simple fact can be hardest to accept when markets are in turmoil and balances are taking a hit, but in our view, history works in favour of applying a long-term lens when everyone is heading for the exit. Anyone could be forgiven for thinking an argument for holding your ground with superannuation during this period of turmoil is marketing spin. Similarly, the urge to flock to ‘safe’ assets like cash is understandable, as equities exposures in superannuation portfolios take a hit. Read More..
Shane Oliver Updates: The Lucky Country - Three Reasons Why Australia May Come Through This Period Of Global Misery Better Than Most Countries
7 May 2020
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! Donald Horne’s original conception of the term in the 1964 book of the same name about Australia being run by “second rate people who share its luck” always seemed a bit too negative to me. Sometimes it may seem that way for a patch and yes mistakes are made, but when it really matters, I reckon we are led pretty well. Read More..
1 May 2020
The rally in global equity markets (the US in particular) but including Australia, is starting to reach pain trade levels for anyone who is below benchmark. US equities are now less than 15% from their all time highs while Australian equities are a little further behind at around 25% from their YTD peak. Read More..
Shane Oliver Updates: Why Super And Growth Assets Like Shares Have To Be Seen As Long-Term Investments
29 April 2020
When share markets plunge as they did into March the standard questions are: What caused the fall? What’s the outlook? And what does it mean for superannuation? The correct answer to the latter should be “nothing really, as super is a long-term investment and share market volatility is normal.” Read More..
23 April 2020
The blanket coverage of coronavirus and its impact on the economy can lead to a lot of confusion right now. Some reports are hopeful of anti-viral drugs, others say a vaccine is at least a year away. There is talk of curve flattening but still rising cases and deaths. There is news of an easing in lockdowns but also worries about “second waves”. All this against a backdrop of collapsing economic data and surging unemployment. Read More..
Shane Oliver Updates: Magic Money Tree – QE & Money Printing And Their Part In The Coronavirus Economic Rescue
17 April 2020
Along with massive fiscal stimulus globally to deal with the impact of coronavirus shutdowns on the economy, the last month or so has also seen massive monetary easing – with the latest being the US Federal Reserve expanding its emergency lending program to $US2.3 trillion. Read More..
15 April 2020
The Fed has exceeded all expectations around the quantum of its policy support. The corollary of its actions is positive for equities even if its generosity has stopped short (at this stage) of adding this asset class to its balance sheet. Monetary policy actions cannot change the speed at which containment policies are removed and this suggests periodic bouts of disappointment relating to the economy and health crisis will continue. Read More..
14 April 2020
Led by the US, global equities shrugged off economic concerns and instead focused on the potential peak in US infection rates and the first signs of a tapering off in key European epicentres (Italy) over the past week. As at Wednesday, US equities had risen over 10% for the week and are now up a staggering 28% from the low hit on March 23rd. Read More..
9 April 2020
After a roughly 35% plunge from their February high point to their lows around 23rd March, global and Australian shares have had a 15-20% rally. What’s more this rally has occurred despite increasingly bleak economic data ranging from plunges in business conditions surveys or PMIs (see the next chart) to a record 10 million surge over two weeks in claims for unemployment payments in the US. Read More..
7 April 2020
Despite calls from some commentators that markets will retest their lows, at this stage policy makers have successfully subdued the panic that characterized the first 3-4 weeks of the sell-down. Caution is high and sentiment still fragile, but we think investors are now more focused on determining the fundamental impacts of the economic hit rather than selling risk and raising cash at any costs. Read More..
Macquarie Wealth Management: 6 April 2020 Investment Strategy Update: Bank Dividends – Will They Remain Sacrosanct?
7 April 2020
The coronavirus is driving a perfect storm for all types of investors. Those focused on capital appreciation have suffered as risk assets have been subjected to one of the fastest bear markets in history. Those focused on yield are also suffering as the outlook for corporate earnings signals a substantial decline in dividends is on the way (not helped by substantial capital dilution that is working its way across the market). Read More..
6 April 2020
It was another mixed week for global equity markets as the now familiar tug-o-war between “government support” and the “virus infection rates” continued. In the end, the virus appears to have come out on top with a raft of unfortunate records being set on rising infection rates as well as deaths and markets marginally lower for the week. Read More..
Shane Oliver Updates: The Coronavirus Pandemic And The Economy – A Q&A From An Investment Perspective
3 April 2020
Along with the horrible human consequences, the coronavirus pandemic is having a huge impact on the way we live and as a result investment markets. This note provides a simple Q&A for most of the main issues from an economic & investment perspective. To the extent simple answers are possible in this environment! Read More..
2 April 2020
Many businesses have been struggling to retain their employees amidst the economic impacts posed by the coronavirus. In light of this, the Government has announced the JobKeeper payment program which will provide assistance to businesses severely impacted by the coronavirus outbreak to continue paying their employees. The JobKeeper payment program is designed to support employees and businesses affected by COVID-19. Businesses will now have the chance to keep people in their jobs, and, employees can continue to earn.... Read More..
1 April 2020
The coronavirus is driving a perfect storm for all types of investors. Those focused on capital appreciation have suffered as risk assets have been subjected to one of the fastest bear markets in history. Those focused on yield are also about to suffer as the outlook for corporate earnings signals a decline in dividends is on the way. Read More..
Shane Oliver Updates: Is Coronavirus Driving A Recession, Depression Or An Economic Hit Like No Other? What Does It Mean For The Bear Market In Shares?
1 April 2020
Global and Australian shares have fallen well beyond the 20% decline commonly used to delineate a bear market. From their highs to their recent lows major share markets have had roughly 35% falls as investors have moved to factor in a big hit to growth from coronavirus shutdowns. Read More..
27 March 2020
Markets don't go from "Destruction" to "Recovery" without passing through a "Consolidation" phase. Macquarie Wealth Management releases their latest Research on Equity Markets, the Market's Consolidation Phase, and how Investors should approach the current Market Situation. Read More..
25 March 2020
A number of measures have been announced to support Australians and the economy in response to the Coronavirus. We have put together some information to summarise the key measures and to assist you in understanding the help that could be available to you. Read More..
25 March 2020
Over the weekend, the Australian Government announced its economic support package to help Australians who are under financial stress as a result of the Coronavirus. Two of the support measures announced include the early release of superannuation for those financially affected by the Coronavirus and temporarily reducing minimum pension payment requirements for retirees. Read More..
24 March 2020
The Australian housing market was boosted from mid-last year by the combination of the Federal election removing the threat of changes to negative gearing and capital gains tax, rate cuts and regulatory easing. So, after a 10% drop in average capital city prices into mid last year - the biggest fall in property prices for at least 40 years - they have since rebounded by 9%. Read More..
19 March 2020
Magellan's Hamish Douglass releases their Global Portfolio Update which tackles the latest reports on the COVID-19 virus, the world’s economy over the next two to six months, the shape of the economic recovery, and, the numerous advantages of their portfolio amidst the global pandemic. Read More..
19 March 2020
The coronavirus crisis is first and foremost a human crisis and my thoughts are particularly with those on the front line of this battle. But, of course, its impacting many aspects of life at present, including investment markets. Read More..
Shane Oliver Updates: The Increasing Economic Threat From Coronavirus - What To Watch For And What Should Investors Do
11 March 2020
Coronavirus continues to rattle investment markets as the number of new cases outside China continues to rise posing increasing uncertainty over the impact on economic activity. And its impact has intensified following the collapse of OPEC discipline causing a further plunge in oil prices raising concerns about debt servicing for oil producers. From their highs global shares and Australian shares have had a fall of around 20%. Read More..
3 March 2020
The plunge in share markets over the last week has generated much coverage and consternation. This is understandable given the rapidity of the falls – with US shares having their fastest 10% fall from an all-time high on record - and the uncertainty around the coronavirus (Covid-19) and its impact on economic activity. Read More..
Shane Oliver Updates: The Increasing Spread Of Coronavirus – Updated Economic And Investment Market Implications
26 February 2020
The past week has seen a renewed escalation in concern that the coronavirus outbreak (Covid-19) has become or is becoming a global pandemic. This is first and foremost a human crisis and our thoughts are with all those affected and those trying to combat the outbreak. Read More..
21 February 2020
Share markets are at or around record levels despite lots of worries, particularly around the coronavirus (Covid-19) outbreak. A common concern is that this is because central banks (like the Fed and the RBA) are distorting market forces and just want higher asset prices. And flowing from this its argued that prices for assets like shares and property are overvalued, record highs are artificial, and a crash is inevitable. Read More..
Shane Oliver Updates: From Bushfires To Coronavirus - Five Ways To Turn Down The Noise Around Investing
14 February 2020
2020 has seen a very noisy start to the year with one major event with significant human and investment market implications after another. For Australia it started with an intensification of the bushfires but moved on to a significant ramping up of US/Iran tensions where, according to President Trump, war came “closer than you thought” and now the coronavirus outbreak is creating fears of a global pandemic and a big hit to global economic activity.Read More..
6 February 2020
The last few weeks have seen escalating concern that a new coronavirus (called 2019 novel coronavirus or nCoV) originating in the Chinese city of Wuhan in Hubei province will become a global pandemic. Concern has been heightened after the World Health Organisation (WHO) declared the outbreak an “international public health emergency” on 30 January and the number of cases has continued to escalate.Read More..
30 January 2020
Our high-level investment view for this year is that a combination of improving global growth boosting profits and still easy monetary conditions will help drive reasonable investment returns, albeit more modest than the very strong gains of 2019. This note revisits five charts we see as critical to the outlook.Read More..
22 January 2020
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. Read More..
29 October 2019
The world of investing can be confusing and scary at times. But fortunately, the basics of investing are timeless and some investors (often the best) have a knack of encapsulating these in a sentence or two that is insightful and easy to understand. In recent years I’ve written several insights highlighting investment quotes I find particularly useful. Here are some more.Read More..
May 17, 2019
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.Read More..
May 8, 2019
We appear to be moving closer to a resolution in the China and US trade war. But should investors now be worried about Trump declaring a trade war against Europe? Read More..
16 April 2019
Global share markets fell slightly over the last week on global growth concerns and renewed US/Europe trade war fears. Australian shares rose though playing catch up to the previous week’s rally in global shares with energy, tech and real estate stocks being the main drivers. Bond yields were flat in the US but fell elsewhere. Read More..
10 April 2019
Australian companies do, of course, pay out more of their earnings as dividends than overseas companies. That’s great for Australian shareholders, but some are arguing it’s drag on the growth potential of the Australian economy; they say companies are paying out dividends rather than paying workers and investing in capital expenditure for the future.
The 2019-20 Australian Budget – The Long-Awaited Surplus And The Promise Of More Tax Cuts Ahead Of The Election
3 April 2019
We explore the issue of the wealth effect in this Econosights, particularly as it relates to housing assets and its impact on the Australian economy.Read More..
28 Mar 2019
The 2019-20 Budget had three aims: to cement the Government’s fiscal credentials by delivering the long-awaited return to budget surplus; to provide fiscal stimulus to an ailing economy; and to help get the Government re-elected.
We explore the issue of the wealth effect in this Econosights, particularly as it relates to housing assets and its impact on the Australian economy.Read More..
Shane Oliver Updates: Five Charts And A Table That Might Be Critical To Look At With Regards To The Global Economy And Markets This Year
1 Mar 2019
Nobody really knows for definite so this note revisits the five charts we come across as critical by which way it will inevitably go on and adds a table on US financial crisis risks to watch.Read More..
2019 is likely to be an interesting year for the Australian economy. Some of the big drags of recent years are receding but housing is turning down, uncertainty is high around the global outlook and it’s an election year, which will add to uncertainty.Read More..
Australian motorists have recently had some relief from higher petrol prices, but we can’t be certain that trend will continue. Read More..
Shane Oliver Updates: Rising US Interest Rates, Trade Wars, The US Midterm Election Results, Etc - Should Investors Be Worried?
Our view remains that recent turbulence in share markets is a correction or a mild bear market at worst (like 2015-16) rather than the start of a deep bear market like the global financial crisis. This note reviews the key recent worries for shares and why they are unlikely to be terminal. Read More..
US shares rose 2.4%, Eurozone shares gained 3%, Japanese shares rose 5%, Chinese shares rose 3.7% and Australian shares gained 3.2%. Reflecting the risk on tone and a strong US jobs report for October bond yields rose. Read More..
With markets a bit more stable this week, and prices having bounced, it’s a good time to take a pause and reflect on where things are at. But to particularly address the main question investors have: is this the start of a bear market or just another correction? And what does that mean for their portfolios?Read More..