Economics
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The OECD says core inflation remains persistent in many countries
David Buckland
September 22, 2023
With forecasters failing to predict the acceleration of inflation from 2021, and its subsequent persistence, it is unsurprising that the U.S. ten-year treasury bonds now exceeds 4.4 per cent, the highest yield recorded in 16 years. continue…
by David Buckland Posted in Economics, Market commentary.
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Economic insights from reporting season
Roger Montgomery
September 18, 2023
In this week’s video insight, I review the question of whether a recession is imminent. There has been no shortage of talks of a recession lately, although if we dive deeper into what we have seen in markets over August and September a compelling counterpoint to this narrative is visible. continue…
by Roger Montgomery Posted in Economics, Market commentary, Video Insights.
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China wakes up, but is the nightmare just beginning?
Roger Montgomery
August 28, 2023
I have long ignored the reported vicissitudes of China’s economy, unable to reconcile the fact their gross domestic product (GDP) data – obtained from an impossibly large and disparate country – is released more quickly at the end of each month than the U.S. and the data is rarely, if ever, subsequently amended or adjusted. They get it right the first time, every time. A quick look at the piles of junked Chinese products at the local waste disposal centre quickly disabuses one of any belief in China’s systems producing data that is right the first time every time. continue…
by Roger Montgomery Posted in Economics, Editor's Pick, Global markets.
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- POSTED IN Economics, Editor's Pick, Global markets
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Barrenjoey issues its economic outlook – and it’s all a bit grim
Roger Montgomery
April 24, 2023
Recently, our small-cap team listened to Barrenjoey Capital’s chief economist, Jo Masters, discuss the prospects for the Australian economy. In brief, Masters forecasts the economy to slow rapidly and unemployment to rise to five per cent, with a recession the most probable outcome. She also foresees persistent inflation, which will force the RBA to hold interest rates at the current level until May 2024. If she’s right, investors are in for interesting times ahead. continue…
by Roger Montgomery Posted in Economics, Market commentary.
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Hello 2023
David Buckland
January 3, 2023
Many commentators point to the twelve months to December 2022 as being one of the toughest annual periods for the performance of the share market and the bond market for several decades. This was led by the severe sell-off in Government Bonds, aggressive tightening of most Central Banks’ official cash rate and the 33.1 per cent decline in the US-tech heavy Nasdaq Index. continue…
by David Buckland Posted in Economics, Market commentary.
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WHITEPAPER
INTEREST RATES, THE BEST IT GETS. IT’S TIME TO DEPLOY CASH
Curious about the investment landscape in 2024? It appears that the current market offers a plethora of enticing opportunities for investors, a rarity not experienced since pre-pandemic times. This unique scenario stems from a confluence of factors, including elevated yields and comparatively rational equity valuations.
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Why the Fed’s war on inflation could lead to bargains for investors
Roger Montgomery
August 30, 2022
On Friday at Jackson Hole in the U.S., Federal Reserve Chairman, Jerome Powell, spoke for eight minutes and 38 seconds reinforcing the idea that restrictive monetary policy is likely to be maintained for some time – all in the name of fighting inflation. World markets quickly went into reverse. The good news is that savvy investors may now get another chance to buy quality businesses at attractive prices. continue…
by Roger Montgomery Posted in Economics, Market commentary.
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Get set for weaker employment data
Stuart Jackson
July 19, 2022
Australia is currently enjoying the most buoyant labour market conditions since the 1970s. But how long can the low unemployment rate persist? As the saying goes, if something can’t go on forever, sooner or later it must stop. And with consumer and business sentiment both waning, surely it is just a matter of time. continue…
by Stuart Jackson Posted in Economics, Market commentary.
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RBNZ – fifth tightening since October 2021: 0.25 per cent to 2.0 per cent
David Buckland
May 26, 2022
As I have detailed previously, the Reserve Bank of New Zealand (RBNZ) has been relatively pro-active in its tightening cycle, commencing on 6 October 2021 and taking their official cash rate from 0.25 per cent to 2.0 per cent. continue…
by David Buckland Posted in Economics, Financial Services.
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New Zealand; The canary in the coal mine
David Buckland
May 16, 2022
I have been impressed by the relative proactive leadership of the Reserve Bank of New Zealand (RBNZ) in commencing their official cash rate tightening cycle well ahead of most other countries. Commencing on 6 October 2021 (as well as 24 November 2021, 23 February 2022, and 13 April 2022), the RBNZ have increased their cash rate from 0.25 per cent to 1.50 per cent on four separate occasions. continue…
by David Buckland Posted in Economics.
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Higher interest rates equal lower PEs
David Buckland
May 3, 2022
When I joined the financial market in the 1980’s as a young graduate, I was given a simple rule from an old-timer which went something like this: “Son, the market PE plus long-term inflationary expectations should equal 20.” At the time, Australia’s inflation rate was coming down from 12 per cent, and the market PE approximated 8x. continue…
by David Buckland Posted in Economics, Market commentary.
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