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While speculating on the future direction of interest rates, currencies, and monetary policy can generate great headlines, it often raises the question; ‘what does this mean for investors?’ Understanding the implications of the macro environment drives asset allocation decisions, which according to research by Robert Ibbotson and Paul Kaplan, accounts... Show More
Macro
As expected the Reserve Bank of Australia (RBA) cut interest rates by 25 basis points on Tuesday, taking the cash rate to 1.25%. We take a look at the economic indicators in conjunction with Governor Lowe’s comments to help determine what the most likely action is for the RBA. Given... Show More
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For more than a year now, fears of a housing-led recession have been building in Australia. First, auction clearances fell in a hole, then house price declines, falling credit growth and building approvals, and finally, unemployment began to rise. A month ago, further falls seemed inevitable. Then Australian woke up... Show More
Macro
The Australian Bureau of Statistics has released its latest Construction Work Done figures for the December quarter. Not surprising, residential housing activity looks to have peaked and should soon begin to decline. Broadly speaking, it’s fair to say that the story we have been telling on house prices hitting the... Show More
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A good chart distils terabytes of data into a small image that delivers a big message. And to cherry-pick the messages investors need to hear most right now, we asked some of Australia’s top managers to nominate one chart above all others. Mik Case from Schroders and Chris Rands at... Show More
Macro
The Australian economy performed well during 2018 with rising GDP, lower unemployment and stable inflation. Despite this, the outlook for 2019 is not as positive, as a number of factors are beginning to point to downside in the Reserve Bank of Australia (RBA) achieving their policy mandate including low inflation,... Show More
Over the past year, Australian house prices have seen 12 consecutive months of decline, the longest streak of persistent falls in over 20 years. House prices are now ~4% lower than this time last year — the weakest performance in the housing market since 2012. Show More
In part one of this deep-dive, we analysed the economic impact a demographic headwind can have using Japan as a case in point. In part two, we looked at how an ageing population can impact government debt. To conclude this series, we discuss the impact demographics may have on inflation,... Show More
In part one of this deep-dive, we analysed the economic impact a demographic headwind can have using Japan as a case in point. In part two, we look at how an ageing population can impact government debt. Show More
In 2011 a dramatic shift occurred throughout the developed world — working-age populations began a multi-decade decline. Demographic shifts in an economy like this can have profound effects on economic factors, leading to changes in growth and debt metrics. This three-part series explores: Show More
Hi Malcom and Wolfgang, This analysis was really meant to be focused on Developed Countries, but you are both correct in pointing out that the trajectories of China and India are going to be very important for the world. I am actually already in the process of looking at China's aging demographics and what factors could offset its effects. This should be ready over the next few weeks.
Hi Romayne, Yes, this is an idea that I addressed in Part Two of this series, which you can find a link to above. Declining working age populations introduces a challenge for governments on how to fund the increasing costs associated with an aging society. For example, the Australian Bureau of Statistics (ABS) reports that approximately 40% of Australian taxation revenues come from income taxes on individuals, so continuing to increase employment is a good way to fund the challenge without having to find new sources of revenue. Having said that, the link to GDP growth is probably a little more complicated. The simplest way that I like to think about this is that the more people there are in the economy, and in particular those who are working, the greater consumption can be. Where that growth comes from is another question, but given government debt levels are high globally, it’s a valid question to ask what this means for growth in the future and whether they can grow their way out of the problem.