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Key Points: Inflation will likely rise further in the months ahead due to base effects, bottlenecks & reopening but it’s likely to fall back again from later this year as these drivers fade. Shares face short-term correction risks but as inflation settles the broad trend...
Key Points: The Government now expects the Federal budget deficit to peak at $161bn this financial year (down from $214bn in October’s Budget) and fall to $107bn in 2021-22. The windfall to the budget from stronger growth is being spent on extra stimulus. Return to...
Key Points: Geopolitical issues generate much interest but don’t necessarily have a significant impact on markets. But geopolitical risks are higher than prior to the GFC reflecting three big themes: a populist backlash against economic rationalist policies; the falling relative power of the US; and...
Key Points: Australian home prices are currently in a cyclical upswing which likely has further to go into 2022. However, the longer-term bull market, that has seen above trend growth in property prices since the mid 1990s, may be close to an end as the...
Key Points: Starting point valuations – like yields and price to earnings multiples – are a key driver of potential medium term investment returns. For growth assets it’s often more complicated with, eg, the level of interest rates playing a big role. At present valuation...
Key Points: The RBA left the cash rate at 0.1% at its April meeting. While the economy is recovering faster than expected the conditions for a rate hike – actual inflation sustainably in the 2-3% target zone and wages growth well above 3% - are...
Key Points: Global recovery is on track. Vaccines are working. JobKeeper’s end won’t derail Australia’s recovery. Inflation could become an issue in the medium term. Shares are at risk of a correction but are supported by economic and earnings recovery. Australian house prices are booming...
Key Points: The history of cyclical bull markets in shares suggests that the rebound since last March still has a way to go. But it’s normal for the second 12 months of a cyclical bull market to see slower returns from shares. While shares are...
Key Points: Digital currencies and blockchain technology may have a lot to offer - but that does not mean Bitcoin will be it. Due to extreme volatility, high transaction costs and slow processing, Bitcoin does not cut it as digital cash. But it’s not an...
Key Points: Higher bond yields are normal in economic recovery and should not be a major problem for shares if they are matched by rising earnings. But too rapid a rise in bond yields risks driving a deeper correction in shares. Central banks want higher...