Giddy on Trump tequila, shares ignore rates re-set

Christopher Joye

Coolabah Capital

In The Australian Financial Review I argue that the equities market has embarked on a one-eyed, crazy-brave rally intoxicated by Trump tequila that ignores the risk of even more savage future discount rate increases given the remarkably low 4.6% US jobless rate and robust wages growth that is now on par with its pre-GFC marks; that the IMF has again reminded us---like APRA did last month---that the major banks will have to raise substantial amounts of additional equity capital in the years ahead contrary to the assumptions of sanguine sharemarket investors (albeit that out-of-cycle rate hikes are helping expand net interest margins and defray the unavoidable return on equity shrinkage); and that ASIC thinks the bond market needs much greater price transparency, which could help attract more liquidity and larger super fund allocations that would ultimately reduce the banks' reliance on foreign debt capital markets. Free (VIEW LINK)


Portfolio Manager & Chief Investment Officer
Coolabah Capital

Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 26 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...

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