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Key Points: The shift from high inflation to low inflation has been a key tailwind for investment returns over the last 40 years – in particular it has allowed capital growth in excess of growth in earnings and rents. A long-term stabilisation in inflation around...
Key Points: With growth of 1.8% in the March quarter, Australian GDP is now back above its pre pandemic level. While uncertainties remain – including around the latest coronavirus outbreak in Victoria – there are seven reasons for optimism that the recovery will continue at...
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...
