Economics

On Monday the S&P/ASX 200 tumbled two per cent, led by a sell-off in tech stocks. It’s now down about seven per cent over the past month. Concerns about the end of the interest rate cycle in Australia, a lack of information on Wall Street and the forever present geopolitical fears seem to be weighing on investors.

On Fear & Greed, with Sean Aylmer, I explained that stretched valuations and a cooling of artificial intelligence (AI) optimism are prompting a shift in sentiment – but this isn’t a time to panic. It’s a reminder to rebalance, trim what’s run hard, and look to genuinely diversified, uncorrelated opportunities.

Tune in to the episode here: Q+A: What’s next after yesterday’s market tumble? continue…

by Roger Montgomery Posted in Economics, Market commentary, Podcast Channel.

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For every equity that trades, there is a buyer and seller. Often there are functional reasons for selling, such as paying down a loan, paying tax, distributing an inheritance, or meeting retirement spending needs. Putting those aside, another reason for selling is the harbouring of a negative outlook on the share market in general or the sector or individual stock. But there is also a buyer on the side, who may hold the polar opposite view and outlook.

And if we assume both investors have access to the same information, the difference in outlook can only be attributed to a difference in perception.

Take for example the spending by artificial intelligence (AI) hyperscalers on their infrastructure buildout, estimated to be US$3 trillion by 2029. continue…

by Roger Montgomery Posted in Economics, Insightful Insights, Investing Education, Market commentary.

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I joined Niav Owens on ABC Newcastle Mornings yesterday to discuss why cash is making a comeback – despite the rise of digital payments – and why it still plays an important role in budgeting, privacy, and accessibility. We also touched on the trillions being poured into artificial intelligence and whether those investments can truly deliver the returns investors expect.

You can listen to the full episode from 14:13 here: ABC Newcastle Mornings.  continue…

by Roger Montgomery Posted in Economics, Global markets, Radio.

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by David Buckland Posted in Economics, Global markets, Video Insights.

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Central banks across the Western world have been busy recalibrating policy settings, with interest rate cuts a common theme over the past 12-15 months. But the reasons for these moves, and the consequences, vary widely between economies. In the following analysis, I examine the recent cash rate changes across Australia, the U.S., the UK, Europe, Canada, and New Zealand, and place them in the context of each nation’s inflation and unemployment trends. Together, these snapshots highlight the mixed progress in taming inflation, the trade-offs being made, and the signals for both savers and borrowers in the year ahead.

I have tabled the cash rate movements from the Central Banks of these six Western World economies, accompanied by some brief economic observations. continue…

by David Buckland Posted in Economics, Global markets.

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If you’re tracking equities, it’s vital to keep an eye on the bond markets, as they’re signalling genuine unease. That nervousness is now rippling through global economies. continue…

by Roger Montgomery Posted in Economics, Global markets, Market commentary.

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In April this year, as U.S. equity markets fell – dragged down by Trump tariff headlines and inflation fears – long bond yields, arguably, should have declined as investors fled to safety. At first, the 10‑year Treasury yield dipped to 3.86 per cent on April 4, but by April 9, rather than continuing to fall, yields surged, with the 10‑year up to around 4.50 per cent and the 30‑year jumping 54 basis points – breaking the usual inverse correlation between stocks and bonds. continue…

by Roger Montgomery Posted in Economics, Market commentary.

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The Magnificent Seven; Alphabet (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and Tesla (NASDAQ:TSLA), which rose by an average 111 per cent over calendar 2023, continued its strong upward trajectory, increasing a further 63 per cent, on average, over calendar year 2024. continue…

by David Buckland Posted in Economics, Editor's Pick, Foreign Currency, Market commentary.

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The global economy faces a complex landscape as trade tensions between the United States and China persist, threatening economic stability. This week, Ric Deverell, the highly regarded Chief Economist at Macquarie, shared insights on the potential for a U.S. recession, the resilience of China’s economy, and the ripple effects on global markets, including Australia and Europe. Our interpretation of his comments follows, and where data is independently available, we have provided that data along with sources. continue…

by Roger Montgomery Posted in Economics, Foreign Currency, Global markets, Market commentary.

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Labor’s resounding victory at the weekend’s Federal Election, securing a second term with a strengthened parliamentary majority, defied predictions of a close contest, possibly reflects the idealism of a new generation of voters, and grants Labor a mandate to advance a socialist policy agenda.

Victoria’s fiscal challenges however are the result of a long-term Labor government running a socialist agenda that has now run out of other people’s money. continue…

by Roger Montgomery Posted in Companies, Economics, Market commentary.

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