Economics

The income of Australia’s major banks is largely dependent on the economy’s appetite for credit. When credit growth is modest, as it has been of late, the banks must reduce costs in order to maintain earnings growth. But this stage of the credit cycle also presents an earnings tailwind in the form of lower impairment charges, which the banks have been enjoying. continue…

by Ben MacNevin Posted in Economics, Financial Services.

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The US Federal Reserve target rate is one of the most influential interest rates in the US economy, and is applicable to the most credit-worthy institutions when they borrow and lend overnight funds to each other. continue…

by David Buckland Posted in Economics, Foreign Currency, Insightful Insights.

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Let’s suppose you employed someone to flip coins for you because you believed they were a “lucky” flipper. Would you keep employing them, if after 34 years you found that they flipped winners only half the time? Anyone with a penchant for maths or an interest in Martingale may of course be quite satisfied, but the rest of the population would feel the lucky flipper was of little use at all. continue…

by Roger Montgomery Posted in Economics, Insightful Insights.

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In this interview with Peter Switzer, broadcast on Sky Business, David Buckland takes a look at the issues facing investors when it comes to emerging markets and the decline of their currencies.

by David Buckland Posted in Economics, Foreign Currency, TV Appearances.

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Over the course of the last month or so we have been witnessing a coalescing of words, sentiment shifts and policy pronouncements that suggest a bubble is about to be engineered by central banks and governments. The idea that we are in a bubble is thus potentially extremely premature. I am personally becoming convinced that, notwithstanding a few bumps along the way, we may see the inflating of a massive stock market rally that may run hard until 2016. The US credit cycle appears to be only mid way through its typical 5-8 years and the likely Fed heir Janet Yellen is making all sorts of pronouncements suggesting the adjective ‘doveish’ used to describe her is an understatement. continue…

by Roger Montgomery Posted in Economics, Insightful Insights.

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Andrew Huszar managed the first round of the Federal Reserve’s Quantitative Easing program, purchasing $1.25 trillion of mortgage-backed securities from 2009 to 2010. The former Morgan Stanley managing director has penned an opinion piece in the Wall Street Journal that questions the efficacy of the program. continue…

by Ben MacNevin Posted in Economics.

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Bruno Altin recently asked a very interesting question about Australian wages on my Facebook page. Here’s his question, and my response…

Q: Roger, do you think that wages in Australia will fall to be comparable to the rest of the world? And if yes, do you also think Australia will see a period of unprecedented recession like Europe is experiencing due to lower wages and high debt levels? continue…

by Roger Montgomery Posted in Economics, Insightful Insights.

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Australian rugby followers are sick of the New Zealand All Blacks beating Australia mercilessly. That whipping is being extended to agribusiness, and unless the Australian leadership wakes up to itself on the subject of penalty rates, our food manufacturing sector will continue its structural decline at pace! And please don’t blame the high Australian dollar on increased food imports. continue…

by David Buckland Posted in Economics, Insightful Insights.

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As expected the US debt ceiling negotiations went down to the wire, and disaster has been averted for three more months. continue…

by David Buckland Posted in Economics.

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One of the world’s leading experts on debt cycles, Professor Carmen Reinhart, recently warned of a substantial policy mistake if the US Federal Reserve begins to “taper” its asset purchase program. continue…

by David Buckland Posted in Economics.

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