Oliver's Insights
Oliver's Insights
US political protests, inflation and rising bond yields
January 21, 2021
Dr Shane Oliver, Head of Investment Strategy and Chief Economist looks at the investment market implications of recent political protests/rioting in the US and the recent back up in bond yields. The key points are as follows: US protests are only an issue for investment markets if they significantly impact economic activity and/or the sound...Read More
For some years now Modern Monetary Theory (MMT) has been gaining prominence as a solution to the perceived failure of traditional economic policies to achieve full employment & meet inflation targets, despite at or near zero interest rates. MMT has been given added impetus by the hit to economic activity from coronavirus. And with even...Read More
In May, in a note called The Lucky Country, I argued that due to Australia’s far better control of coronavirus relative to many comparable countries, a stronger economic policy support response to shutdowns, and exposure to China which was well into economic recovery Australia was likely to come through this period of global misery relatively...Read More
Contrary to what would normally be suggested by the worst recession since the 1930’s, high unemployment, the worst riots since 1968 and the poor handling of the coronavirus pandemic Donald Trump performed very well in the US presidential election resulting in a close outcome. However, while counting is still continuing in some key states, major...Read More
Broad based additional easing from the RBA As had been well flagged, the RBA announced significant further monetary easing at its November meeting. This entails: A cut in the cash rate, the Term Funding Facility rate (ie, the rate at which the RBA provides cheap funding to the banks for three years) and the three-year...Read More
From the get-go back in March, as coronavirus lockdowns hit, there has been much debate about what this recession would be like: how deep and long would it be? Was it going to be a recession like those in decades past or more like the Great Depression of the 1930s? Would it look like a...Read More
Expect slower medium-term returns
October 22, 2020
Despite a 35% or so plunge in share markets earlier this year; on the back of the pandemic and rough patches in 2018, 2015 and 2011, well diversified Australian investors have seen pretty good returns over the last 10 years. The median balanced growth superannuation fund returned 5.8% pa over the five years to August...Read More
As an investor its very easy to get thrown off by the ever present worry list surrounding investment markets that relates to economic activity, profits, interest rates, politics, etc. Or by the perennial predictions of an imminent crash. Or by talk of the next best thing that’s going to make you rich. The investment world...Read More
The US election is only a month away. Markets are now paying close attention to it for several reasons. First, Joe Biden is proposing higher taxes and more regulation. Second, the proximity of the election made worse by the move to replace Justice Ginsberg may have reduced prospects for needed fiscal stimulus. Third, increased use...Read More
From “eye watering” to “eye popping” Much concern has been expressed about the longer-term consequences of the blowout in budget deficits and public debt in response to the economic hit from coronavirus. This is understandable given their scale. In Australia, the Treasurer described the projected budget deficit for this financial year of $185bn as “eye...Read More