The long grinding economic cycle continues
The pace of the current global expansion is expected to be structurally lower than in previous cycles and this is attributable to high leverage, challenging western world demographic trends and low productivity growth.
And this has certainly been reflected through the commodity complex. We have noted on numerous occasions the very weak price of coal, iron-ore, steel, oil and the value of most commodity countries’ currencies.
Today’s announcement saw Japanese Industrial Production contract by 0.6 per cent month on month in July 2015 with China bound shipments declining by 1.3 per cent from twelve months earlier.
This data provides more evidence of China’s slowdown, which is being exacerbated by their high debt levels, housing bubble and industrial over-capacity – particularly in steel. We know China’s manufacturing wages have risen three fold in the past eight years, or close to 15 per cent per annum, and significant job losses as a result of factory closures could usher in deflationary risks.
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Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
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