Economics

Today’s investors are focused on interest rates, inflation and earnings. A small group are thinking about the issues that could surface in two or three years, such as China annexing Taiwan and the consequences of artificial intelligence’s (AI) birth. An even smaller group are thinking about what lies beyond that. continue…

by Roger Montgomery Posted in Economics, Property.

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Over 11,000 Australian companies entered administration in the 2023/ 24 financial year. The bad news continued with a further 3,300 insolvencies in the September 2024 quarter. This is around four times the quarterly average since the business insolvency data was collated (from 1999). However, when we consider the total number of companies registered with the ASIC, the data doesn’t look that bad. 

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by David Buckland Posted in Economics.

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In his latest newsletter entitled “Shall We Repeal the Laws of Economics”, Howard Marks posited “deficits encourage the economic growth that most people enjoy, and spending more than the government takes in permits officials to give away “free stuff”, thereby gaining votes. But doing this perpetually requires ignoring the laws of economics, running up debts in the apparent belief they’ll never have to be paid. Can it go on without end? We’ll see, but I would think not”. continue…

by David Buckland Posted in Economics.

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A portrait of Australia’s biggest issues in eight charts. Why eight? – it’s a lucky number of course!

I have put together a concise snapshot of the complex economic challenges shaping Australia today.

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by Roger Montgomery Posted in Economics, Editor's Pick, Property.

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In my professional opinion, there’s limited value that can be garnered from historical patterns, especially when those patterns examine the correlation between a single input and its result. Economies and markets are complex adaptive systems, and a myriad of inputs produce the market returns we subsequently experience. Just because something happened five, ten or fifteen times in the past, it is dangerous to conclude it will occur again next time. continue…

by Roger Montgomery Posted in Economics.

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That’s a headline designed to capture your attention. If it has done so, it is highly probable that a crash is one of your fears. And for some people with that fear, the concern is great enough that it has impacted their investing outcomes and returns. For example, they may have held off buying shares in a company that subsequently rocketed higher, simply because you feared the market was due for a correction or crash. You may have also sold a stock too early, even though nothing about the company in which you owned the shares had changed. You simply thought some exogenous event would trigger a broad market correction. And, in a more extreme example, you were right in your prediction about the market falling, but the shares you owned continued to climb. continue…

by Roger Montgomery Posted in Economics, Editor's Pick.

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With two supermarket CEO’s facing off against the Australian Competition and Consumer Commission (ACCC) in the battle for supermarket reputations, I wonder whether we will see vastly different behaviours from the new heads of Coles (ASX:COL) and Woolworths (ASX:WOW) than what we might typically have expected from their predecessors. continue…

by Roger Montgomery Posted in Consumer discretionary, Economics.

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According to several reports, China’s property price index is tumbling. China’s new home prices in 70 cities fell 5.3 per cent year-over-year in August 2024, accelerating from July’s 4.9 per cent drop. This marks the 14th consecutive month of decline and the sharpest since May 2015, despite Beijing’s efforts to stabilise the property market through lower mortgage rates and reduced homebuying costs. The downturn deepened across most major cities, with Beijing (-3.6 per cent vs -3.3 per cent in July), Guangzhou (-10.1 per cent vs -9.9 per cent), Shenzhen (-8.2 per cent vs -8.0 per cent), Tianjin (-1.4 per cent vs -1.2 per cent), and Chongqing (-5.4 per cent vs -4.9 per cent) all seeing further price contractions.

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by Roger Montgomery Posted in Economics, Property.

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Australia is experiencing a population and demographic transformation, with nearly 50 per cent of our population able to claim at least one parent born overseas. George Tharenou of UBS analysed the implications in his recent report entitled “How will a ‘Big Australia’ impact the economy and the ‘intergenerational contract’?” The report dives deep into the effects of Australia’s population boom on the economy, asset prices, productivity, housing, and superannuation. continue…

by Roger Montgomery Posted in Consumer discretionary, Economics, Editor's Pick.

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Working in derivatives trading back in the early nineties, one of the aphorisms that became a gospel-given truth was, ‘volatility is heightened at turning points’. It has been my experience that volatility clusters around turning points, but perhaps I only remember that because I want to. If big moves also occur in the middle of bull and bear markets, my aphorism becomes the product of selective memory. continue…

by Roger Montgomery Posted in Economics.

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