Triple Threat: Drought, Fires & Corona

Can the Aussie economy take it anymore? We’ve had the triple threat of drought, bushfires and now COVID 19.

The RBA has just put in place another 25bps cut as we speak and further measures to help keep the lending market oiled and running. Particularly hard hit are the SMEs who are still feeling the pinch from drought and bushfire related slow-down in foot traffic and ordering. The RBA and the government have come to the party and loosened the economic purse strings to help. Whilst they’ve thrown the proverbial kitchen sink at the problem, it could all rest on timing and impact. Whilst I recognise that these fiscal and monetary measures will take a while to work through the Australian economy, it needs to hit when we can do something about it (particularly from a consumer point of view), no point in getting the consumer to spend if we are in a self-isolation period.

It’s been certainly interesting to see how three analogue threats such as drought, bushfires and COVID 19 can have on our digital economy. I think that we as people and investors are doing the best we can, but can we together ward off recession? I’m not so sure. Can we stop a depression? Maybe. S&P has warned of the huge stimulus affecting our ‘AAA’ credit rating. UBS is estimating economic recession and a rise in unemployment to over 8%. My personal belief is that this is a good outcome. We’ve only just seen today Qantas let go of two thirds of their workforce yesterday. Even the Treasurer, Josh Frydenburg, today has conceded that a recession is likely.

The question going around at the moment is it is going to be a V, U or L shaped outcome. An L shaped revival is no revival at all, rather a long period of unsustained economic muddling. I’m a believer of a U shaped outcome as the global economies will show green shoots over differing periods of time. China is already showing small signs of their wheels turning economically as we speak.

We currently don’t have all the answers today and continue to monitor the markets and at-hand-information to nimbly take advantage of opportunities where they present. However first and foremost, it is important that all the eInvest team and our clients stay safe and healthy. We are here to answer any of your questions. hello@einvest.com.au

Until then,

Stay safe and healthy.

C

Disclaimer: Please note that these are the views of Camilla Love, Managing Director, eInvest and is not financial advice.

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ETF Investments Australia Pty Ltd trading as eInvest Australia, (‘eInvest’). ABN: 88 618 802 912 eInvest acts as the distributor for Perennial Investment Management Limited ABN 13 108 747 637, AFSL: 275101, the Responsible Entity of the eInvest funds. eInvest a corporate authorised representative of PIML. CAR number issued by ASIC is 001261747. Whilst every effort has been made to ensure that the information in this presentation is accurate; its accuracy, reliability or completeness is not guaranteed. Perennial expressly advises that it shall not be liable in any way whatsoever for any loss or damage which may be suffered by any person relying upon such information or any opinion, analysis, recommendation or conclusion contained in this presentation or otherwise arising in connection with the content of, or any omission from, this presentation. The fact that particular securities may have been mentioned should not be interpreted as a recommendation to either buy, sell or hold those securities. This information does not take into account your investment objectives, particular needs or financial situation. Past performance is not a reliable indicator of future performance. The PDS can be found on eInvest’s website www.einvest.com.au.

Camilla Love
Managing Director
eInvest

Senior funds management professional | Passionate about education and investing | MD, eInvest - Active ETFs | Board Director | Founder, F3 - Future Females in Finance | Skier, theatre-goer, dog lover |

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