10 years into the recovery, and with valuations close to or at historical highs, there’s little denying that we’re getting late in the cycle. However, Amit Lodha, Portfolio Manager at the Fidelity Global Equities Fund, says that valuations are only half the story. Show More
In some ways the regulatory response that followed in the years after the collapse of Lehman Brothers has been a success. The days of racy balance sheets chasing outsized profits on wafer thin capital are largely over; replaced by a mantra of prudence and bread-and-butter lending to the real economy. Show More
For years now, many have told us that Australia is heading for an imminent recession. By contrast official forecasts have long been looking for several years of above trend growth. In the event neither has happened and we don’t see them happening anytime soon. Against this backdrop there are five... Show More
When a young Charlie Jamieson arrived at work in London on September 11th, 2001, little did he know how much that day would affect his views on markets. At the time, he was trading US Dollar bonds from Merrill Lynch’s London office, having just left the New York office three... Show More
A group of factors that supported the equity bull market for almost a decade, including excess liquidity, low volatility, and low rates, are now unwinding in a synchronised fashion. Show More
In response to the calamity caused by the GFC, interest rates were cut to near zero and we doubled the amount of debt outstanding. Fast forward and interest rates are now rising at the same time that ~$18 trillion of stimulus is being withdrawn. Show More
The US economic expansion has just become the second longest on record. If it continues beyond mid-2019, it will be number one. Its longevity is probably due to a mixture of circumstances, judgement and luck. The severity of the recession following the global financial crisis (GFC), coupled with the slowness... Show More
The prospect of a trade war has become more significant again. While China may fare worse than the US in this scenario, there are some broader implications that could enhance China's power on the global stage, not least via the One Belt One Road initiative. Here I discuss this and... Show More
The Trump trade wars threaten the global economy. This is not an exaggeration or headline-grabbing claim, but an economic slump based on a US-inspired global trade war is a distinct and growing possibility as it would dislocate global trade flows, production chains and bottom line economic growth. Show More
Australia has just celebrated 26 years without a recession and the Government as well as the Reserve Bank of Australia (RBA) are cheering the ongoing growth. In fact, the common consensus amongst these authorities is that growth is set to rebound from its current 1.9% year on year rate and... Show More
Back in 2007, a US economist called Edward E. Leemer published a paper entitled “Housing IS the business cycle”. In this paper he studied the causes of every US recession since World War 2, of which there had been 10. What he discovered was that 8 out of the 10... Show More
In 2016 the local index was held ransom by a run of unpredictable political and macro economic events. The ASX200 climbed an unremarkable (but tidy) 7%, which belies the volatile, circa 1000 point trading range that it traversed. The influence of these events was not lost on equity investors, Macquarie... Show More
The FTSE 100 share index is now up 30% over five years, while earnings have fallen by 80%. On an earnings yield of 1.6%, the stock market could fall by 80% and, provided profits did not fall, would be on a 13x P/E multiple. The Bank of England is proud... Show More
Investors and the media have a tendency to focus on real (inflation-adjusted) GDP growth, but after two decades of low inflation, Sam Ferraro, Founder of Evidente, says it’s nominal GDP we should be watching. Fund managers and analysts forecast nominal cashflows and households earn nominal wages, not inflation-adjusted wages. "It's... Show More
Western Australia is in a deep and increasingly nasty recession. There are no signs that the economy is near a bottom which is disconcerting. The plunge in mining investment and the slump in commodity prices have hit WA hard and the economic scorecard is, quite simply, miserable. During 2008, the... Show More
They will call it something else but “helicopter money” is coming. With interest rate cutting and quantitative easing reaching the limits of their effectiveness, central banks are pressed to come up with new tricks. If this does in fact come to fruition, there will need to be a number of... Show More
My column this week in The Australian Financial Review explaining a new and previously overlooked risk in bank hybrids in which there may be income payment default if a bank's equity capital ratio falls below the relatively high level of 8%---way above the 5.125% default threshold that hybrid investors have... Show More
Harry Colvin, Director & Senior Economist at Longview Economics, has some serious concerns about the state of the US and global economies. “CapEx is shrinking, global earnings are shrinking, manufacturing globally is broadly in recession. There’s weakness spreading from emerging markets across the world and it’s feeding back into the... Show More
Nobody wants a recession but sometimes recessions can be better than the alternative policies which not only destroy incentive structures but also create wrong price signalling, which in fact creates more mayhem as production reacts to misleading signalling, and ultimately leads to governments becoming even more involved in the economy.... Show More
Mark Burgess the former CEO of Australia’s Future Fund shares his assessment on the recent sell off in risk assets. Specifically he believes markets are flagging the prospect of a deflationary recession – a scenario foreign to many investors. “What happens when you are dealing with deflation and excess supply,... Show More