The attached note takes a look at the continuing surge in global inflation pressures, notably in the US. The key points are as follows:
Inflation is placing increasing pressure on major central banks to remove monetary stimulus.
Inflation & rising interest rates will likely contribute to more volatile & constrained investment returns this year..
The long-term downtrend in inflation and interest rates since the early 1980s is likely to be over removing a tailwind for investment returns.
The attached note provides a simple point form summary of key insights and views on the economic and investment outlook. The key points are as follows:
2021 saw strong investment returns with low volatility.
2022 is likely to see more constrained returns with increased volatility.
Watch: coronavirus and vaccines; inflation; the US mid-term elections; China issues; Russian tensions with Ukraine and the west; & the Australian election.
As business fundamentals improve, the earnings recovery takes over as the primary driver of shareholder returns. The equity market is supported by its real earnings even with the inevitable share price falls.
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Most people entering retirement do not see a financial adviser, mainly due to cost. It's a major problem because there are small mistakes a retiree can make which are expensive and avoidable if a few tips were known.
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For 40 years, recording the market's X-Factor has become an obsession. In weighing up four big candidates for the most likely X-Factor emerging from 2021 and likely to hit in 2022, there is a clear winner.
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Global companies offer investment opportunities not available on the ASX. Coming out of COVID, strong trends are accelerating or reversing, creating potential on both the buy and sell sides of a long short fund.
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In history there are decades where not much happens, and there are months where decades happen. Covid has had far reaching effects on how economies function, where we work and how firms do business, and that process is on-going.
While the dust has not fully settled, the early picture emerging in the post-pandemic economy is that household behaviour, labour markets, correlations between asset classes, and the sensitivity of all those factors to policy changes, have notably changed. These factors have, in turn, altered the growth and price trends in most economies, and this will have significant implications for risk and return dynamics within portfolios going into 2022 and beyond.
Key Points:
After a 22% rise in Australian home prices this year, they are expected to slow to 5% growth in 2022 with prices likely to fall 5-10% in 2023.
The main drivers behind the slowdown are: worsening affordability; rising supply; rising rates; macro prudential tightening; & a rotation in spending away from housing.
The main risks on the downside are another big covid set back or faster rate hikes & the main risk on the upside would be a fast return to pre-covid immigration.
In this second part on the reader responses with advice to younger people, we have selected a dozen highlights, but there are so many quality contributions that a full list of comments is also attached.
Online shopping can be a convenient way to buy the things you want. Know how to protect yourself online, and what to do if you don't get what you pay for.
From the hundreds of survey responses, we will select them in blocks of 100 over several weeks to help manage your time. There are consistent themes in here from decades of mistakes and successes.
For more than 2.1 million Aussies, the federal government’s COVID-19 support payments offered a lifeline through the latest pandemic lockdowns. Now they’re being wound back as vaccination rates increase. If your income has been affected, here are some tips and resources to help you manage the transition.
The key points are as follows:
The march of central banks towards removing monetary stimulus is continuing with the RBA bringing forward its guidance regarding the first rate hike and the Fed set to commence tapering. We expect both to start raising rates later next year.
The shift towards monetary tightening signals slower more constrained share market returns – but the trend should remain up as the impact of monetary tightening is offset by economic recovery & higher profits, monetary policy is still easy and will be for a while & bull markets usually only end when monetary policy is tight.
The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:
Compound interest is an investor's best friend.
The higher the return, the greater the investment contribution and the longer the period the more it works.
To make the most of it, ensure an adequate exposure to growth assets, contribute early and often to your investment portfolio and find a way to avoid being thrown off by the investment cycle.
The attached note looks at the recent pull back in investment markets and renewed uncertainty regarding the outlook. The key points are as follows:
The march of central banks towards removing monetary stimulus is continuing with the RBA bringing forward its guidance regarding the first rate hike and the Fed set to commence tapering. We expect both to start raising rates later next year.
The shift towards monetary tightening signals slower more constrained share market returns - but the trend should remain up as the impact of monetary tightening is offset by economic recovery & higher profits, monetary policy is still easy and will be for a while & bull markets usually only end when monetary policy is tight.
Investment returns have defied initial expectations set in the early stages of the Covid pandemic, but where to from here? Which asset classes offer the best opportunities?
The Melbourne Cup day RBA meeting confirms the cessation of the 'yield control' strategy that's been in place since July. What might this signal for interest rates in the near term?
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Stagflation occurs when economic growth slows (stagnation) and prices rise (inflation), and while this scenario has been evident for a while now, is it really the same as the last time, over 40 years ago?
Be suspicious of anyone that offers you easy money. Scammers are skilled at convincing you that the investment is real, the returns are high and the risks are low. But there's always a catch.
There are increasing signs that science and medicine are getting the upper hand against coronavirus: new global cases are in decline; vaccines are working; half the global population and 73% of Australians have had at least one vaccine dose; and there are more treatments for coronavirus.
Key to watch will be whether hospitalisations in response to any resurgence in cases remains subdued.
Coronavirus coming under better control means a continuation of the economic recovery and supply constraints starting to come under control both of which are positive for shares, although the latter will take time.