First, a big thanks for the incredible interest in, and downloads of, our Complexity Premia podcast! We have just published the third episode where we: discuss analysis showing that the government’s fiscal budget is already in surplus and what this means for the looming election; reflect on the heated and... Show More
Today I show how ScoMo has already delivered a $7bn plus budget surplus on a number of the key measures years in advance of what rating agencies and analysts (save yours truly) expected, which is the best budget outcome since 2008. I then present the evidence I used to demolish... Show More
Today I argue that the smartest thing RBA governor Phil Lowe could do is get the banks to cut rates for him---preserving his monetary policy ammunition for a real crisis---and show that substantial reductions in bank funding costs might enable our largest lenders to do precisely that. I also reveal... Show More
Labor’s proposed tax changes could result in investors experiencing a decline in income as many may be unable to redeem surplus franking credits. For such investors holding bank hybrids it is tempting to consider that shifting to bank subordinated debt may be the answer. But is this really the case? Show More
The IMF has just run a massive stress-test on all the Aussie banks, involving a 10% fall in GDP, a 30% drop in house prices, a blow-out in credit spreads and a recession similar to what the US experienced during the GFC. In my column today I discuss their findings,... Show More
Macquarie Group Limited (MQG) has cheekily launched an offer for a new Additional Tier 1 (AT1) capital hybrid security, to be listed under the ASX code MQGPD, which is not refinancing an existing maturity but rather appears to be an attempt to front-run the federal election and tap into cash... Show More
Notwithstanding the franking debate last year, ASX hybrids were the second-best performing asset-class behind long-dated government bonds in 2018 with an attractive 4.9% gross return, smashing the AusBond Floating-Rate Note Index (2.3%) and the Aussie equities market including dividends (down -3.5%). Show More
In my column today I analyse the new NAB hybrid, which was cheap and attracted a monster circa $200m bid from the $70bn goliath Unisuper with CIO John Pearce choosing to fade the ALP election risks and associated franking debate, and possibly to capitalise on a change in the way... Show More
In my column today I argue that to have any hope of divining the prospects for 2019, one has to first solve the Rubik’s Cube that was 2018 in which the most overvalued asset-class on the planet, government bonds, reigned as king—trumping cash—despite this column’s contrarian forecast of four Fed... Show More
In my column today I write that RBA governor Phil Lowe needs to pull his head in. It's fine for him to tell the banks to loosen their lending standards, but he isn't the one being sued by ASIC on the basis of an entirely fallacious interpretation of Labor's 2009... Show More
Here I argue that anyone who tells you they know what's driving markets right now is lying or fooling themselves, which begets opportunity (click on that link to read the full column or AFR subs can click here). Excerpts enclosed: Show More
Today I write that it's not often you come across a major bank hybrid that is genuinely cheap, which CBA’s new Perls XI preferred equity security (ASX: CBAPH) undeniably is given an expected maturity (or “call” date) of 5.36 years (click on that link to read the full column or... Show More
I've written a column summarising our valuation views on NABHA, which are excerpted below (click on that link to read the full column or AFR subs can click here). We look at scenarios where NABHA remains perpetual and others where it is called with both converging around the $85 mark.... Show More
Today I bust a bunch of big myths relevant to the current price action: specifically, I show why bonds are, contrary to popular belief, a terrible equities hedge (the oft-mooted negative correlation is incredibly unreliable and often positive); why the popular low-rates-for-long meme is completely bogus; why you should not... Show More
Today I explain how ScoMo (and Turnbull) saved Australia's AAA rating, and in the process also saved borrowers from a certain 10bps per annum rate hike worth over $10,400 over the life of a typical home loan. Last week S&P shocked the market, but not us, by upgrading Australia's AAA... Show More
In the AFR I discuss the bifurcation between equity and debt, the major banks' funding needs, NAB's unique approach to integrating trading and sales up and down the capital structure, and prospective rating changes for bank subordinated bonds and hybrids (click here to read for free or AFR subs can... Show More
The recent by-elections should serve as a warning to investors reliant on franking credits for income. Significant swings to Labor while the Liberals stand by corporate tax cuts, increase the chance of a Labor victory and, with it, Labor’s stated policy of removing franking credit refunds to investors who do... Show More
In the scramble for customers, some fund managers and superannuation providers are taking on additional risk, investing in a range of assets and deeming them ‘cash’ when clearly they are not. Show More
Two quick charts looking at the risk and return trade-off between ASX equities and ASX major bank hybrids. The first chart considers the current cash (unfranked) and fully franked dividend yield on the ASX200 index versus a range of major bank hybrid yields in both franked and unfranked terms. The... Show More
In my AFR column I argue that Donald Trump's "tape bombs" are the tail wagging the global financial market dog right now, and this volatility begets opportunity (click on that link to read for free or AFR subs can click here for direct access). Excerpt enclosed: Show More