Editor’s Pick

Jack Cowin, who brought KFC to Australia, founded Hungry Jack’s and is Chairman of Domino’s Pizza Enterprises, recently shared his thoughts on interest rates:

“I was around in the 1970s when corporate interest rates were in the mid-20 per cent range, so this is a picnic. And in the 1980s or 1990s we had similarly high interest rates, so I’m somewhat bemused by the degree of concern people are expressing versus what it has been in the past…the reality is the sun will come up in the morning. The economy is cyclical, and things will rise, they will solve the problems, and the sun will come up.” continue…

by David Buckland Posted in Economics, Editor's Pick, Insightful Insights, Market commentary.

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As the blame game erupts within Republican ranks over the midterms rout, what was an extraordinary day in Washington saw a remarkable rally on Wall Street. The best day in 20-months for the Dow Jones Industrial Average, while tech stocks rose on the Nasdaq. But Elon musk’s Tesla and SpaceX took a hit. The billionaire spending hundreds of millions of dollars unsuccessfully backing Republicans in the midterms.

I believe the clean sweep by the Democrats raises questions about Starlink’s government grants and contracts, as well as those involving SpaceX and Tesla.

The oil price slump also appeared to boost global stock markets, but I remain unconvinced the optimism will last. While investors may expect a less antagonistic U.S. foreign policy towards the Middle East, Donald Trump remains a lame duck president with the power to issue executive orders that could continue to destabilise markets. continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Feature Article, Global markets, Insightful Insights, Market commentary, Market Valuation, TV Appearances.

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Until now, Wall Street has been treating generative artificial intelligence (AI) as a license to justify virtually any valuation, no matter how lofty.

Aggressive spending today to dominate the architecture of tomorrow’s economy has led equity and bond investors to fall over themselves to avoid missing the next transformation of humanity.

However, over the last 24 hours, the market’s patience seems to have cracked. continue…

by Roger Montgomery Posted in Companies, Editor's Pick, Global markets, Insightful Insights, Market commentary.

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In my latest article for The Australian, I explore why government bonds are becoming increasingly attractive after more than a decade of low yields and market volatility. I examine the forces driving U.S. Treasury yields, including economic growth, interest rate expectations and demand for safe assets, and explain why a slowing economy could create opportunities for bond investors through both income and potential capital gains, while presenting challenges for equity markets.

Download the article here: Bonds were down and out – now they could beat stocks continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Global markets, In the Press, Insightful Insights, Investing Education, Market commentary.

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On Ausbiz, I discussed the mounting pressures facing Australian retailers, using David Jones’ financial difficulties as a reflection of broader challenges across the sector. We also explored the potential flow-on effects for Australian brands, employment and shopping centres, as rising costs and weaker consumer spending continue to weigh on retailers.

You can watch the episode here: David Jones’ woes and the domino effect. continue…

by Roger Montgomery Posted in Companies, Consumer discretionary, Economics, Editor's Pick, Market commentary, TV Appearances.

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For two years, Silicon Valley and global equity markets agreed that artificial intelligence (AI) is an uncapped frontier where aggressive capital deployment and unchecked spending would automatically yield exponential returns. Or, perhaps, equity markets believed the spin coming out of Silicon Valley. 

Whichever scenario is true, reported operating results over the past week have confirmed the shift in sentiment toward AI.

Slowing revenue, public market pullbacks, and fluid enterprise strategies suggest the market’s appetite for unconstrained AI spending is finally hitting a ceiling. Investors have well and truly moved past the honeymoon phase and are demanding proof of a sustainable economic model. continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Insightful Insights, Manufacturing, Market commentary, Market Valuation, Technology & Telecommunications.

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I just returned from an inspiring presentation on artificial intelligence (AI) by Alan Finkel AO, Australia’s Chief Scientist from 2016 to 2020, only to read that the Reserve Bank of Australia’s (RBA) 2,200 staff had rejected a 9.5 per cent pay rise, over three years. The proposal included a 3.5 per cent increase in the first year, followed by a 3.0 per cent increase in each of the next two years. 

Together with the Head Office renovation, now expected to cost $1.2 billion, this seems like a “joke”, particularly when we consider that total RBA staff numbers have increased by around 800, or 57 per cent, over the past five years. And this doesn’t include the RBA’s fiscal 2025/26 accounting loss of A$8.5 billion on the unrealized value of its government bond and foreign exchange portfolio. continue…

by David Buckland Posted in Economics, Editor's Pick, Insightful Insights, Market commentary.

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I can’t tell you how many times I have heard the expression, “Australian residential Property prices never fall”.  Admittedly these “experts” have enjoyed an enormous 40-odd year bull market. However, they don’t believe that asset prices can be cyclical, and they likely missed the 1993 London headline which read “One million homes in negative equity”.

As Australia’s unemployment rate hits 4.7 per cent, a five year high, and inflation reaches 4.0 per cent in the 12 months to August 2026, it appears a period of stagflation – slow or negative real economic growth per capita, higher unemployment and persistent inflation – will likely be with us for the foreseeable future. continue…

by David Buckland Posted in Editor's Pick, Feature Article, Insightful Insights, Market commentary, Popular, Property.

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ASX (ASX:ASX) is a high-quality market infrastructure business with strong competitive advantages across listings, cash equities, derivatives, clearing and settlement and data services. Historically, these businesses generated attractive margins and relatively resilient earnings but the investment case deteriorated as years of underinvestment in technology became increasingly apparent. The most visible failure was the original CHESS (Clearing House Electronic Subregister System) replacement program, which was abandoned in 2022 after significant delays and write-offs, while subsequent operational incidents and regulatory scrutiny further damaged confidence in management and execution. The company also went through considerable leadership turnover with the most recent appointment being ASX’s third CEO in relatively quick succession. continue…

by Sean Sequeira Posted in Editor's Pick, Feature Article, Financial Services, Market commentary, Market Valuation, Popular, Stocks We Like.

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In my article for The Australian, I explore why global bond yields continue to rise while equity markets remain largely unfazed. From persistent inflation and geopolitical tensions to growing government debt and artificial intelligence (AI) infrastructure spending, several forces are keeping interest rates elevated. I also examine whether expectations of AI-driven earnings growth can continue to support share prices, or whether higher borrowing costs will eventually weigh on equity valuations.

Download the article here: High interest rates and bond yields threaten global sharemarket rally continue…

by Roger Montgomery Posted in Economics, Editor's Pick, In the Press, Insightful Insights, Market commentary, Market Valuation.

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