Macro
Damien Wood

First regulators capped how much banks can lend to homeowners. Now, it appears it will be up to the banks to set the limit. Bankers being bankers, they will likely up the size of home loans, chase market share, and crank up lending once again. This is not the only... Show More

Damien Wood

International and domestic economic indicators have turned negative in recent months. Major central banks responded to this and the weak financial markets in late 2018. In fact, policy makers pivoted from “tough love” talk to hints of investor friendly intentions. The central bank “put”(1) lives. Global markets rebounded as a... Show More

Damien Wood

Small and medium-sized fintechs could struggle to compete with Australia’s large banks. However, the global tech giants could cause major problems for the banks - if they targeted wide spread general commercial banking. Show More

Damien Wood

Investment prices keep rising. Valuations are now well beyond long term averages for many asset classes. Pundits are increasingly calling for a big correction. Fears of overvaluation is also found in the corporate bond market. Credit spreads – the extra margin for default risk – are now notably lower than... Show More

Damien Wood

Risk management, or the lack of it, is usually the key difference between the fortunes of banks when times get tough. History books are full of evidence of what went wrong after a financial calamity. That’s the easy part. The hard part is to foresee the problems. The high level... Show More

Damien Wood

The argument usually comes down to Connery or Craig. Both highly popular James Bonds brought different styles to the big screen. The “best” 007 actor, though, maybe more a case of which one best suited the social environment of the time. For investors, the best bond, similarly, largely depends on... Show More

Patrick. Good question. I believe the graph is correct from the data I have. The issue is a consistency of presentation of data from the various national authorities. Some will "look through" the what the mutual funds are investing in and disclose this in various asset classes. Others will simply put "mutual funds". The non-disclosed or unclear will go into "other".

On No corporate bonds? Time to reconsider -

Thanks Patrick. On the question on bank deposits, I believe that the higher the level of retail deposits the better it is for banks from a creditworthiness perspective. Historically and across the globe retail bank deposits tend to be the most "sticky" source of funding during times of financial stress. The key reason for this is there is either explicit or implicit support from governments to support retail depositors. In Australia currently there is a guarantee for deposits up to $250k. Conversely foreign wholesale investors tend to be the least stable source of funding. So the less reliant a bank or banking system is on them the better it tends to be from a credit standpoint. While I agree that concentration of funding sources, at face, is an issue I believe that retail Australian deposits are likely to be the most stable source of funding in the event of a banking crisis.

On No corporate bonds? Time to reconsider -