The FinSec View

Issue: Friday 18 September 2020 'The Show Must Go On' ... As residents of #10 Greenhill Road, the middle of September represents show week and our cue to escape as a team for our annual business planning. This year (the first time in 100 years of The Royal Adelaide) the Ferris wheel did not turn, the show bags were regulated to supermarket shelves, and the silence (as a business, it is a noise we often begrudge) was deafening in [...]

Issue: Friday 04 September 2020 Australia Enters Recession Australia is officially in recession for the first time since 1991 after posting a 7% fall in GDP for the June quarter. The 'official' definition of a recession is two consecutive quarters of negative growth, and the June contraction follows a 0.3% decline in the March quarter, bringing a remarkable run to an end. However, the data release revealed some bright spots. The national savings rate rose to 20% from 6% [...]

US Equities Defy Gravity The S&P500 and the Nasdaq both hit all time highs this week. A capitulation can occur at extremes in markets, where the rally becomes so strong that even the doubters get FOMO and want in on the action. Right now, we can see these pockets of euphoric sentiment emerging and caution that if such optimism continues, equity markets will become overbought. The danger here is that when risk-on assets reach this level, they can exhibit [...]

Issue: Friday 07 August 2020 What a Year This Week Has Been! Our thoughts are with our Victorian clients, friends and families as the realities of COVID-19 escalate and they learn to deal with stage four restrictions. Yesterday, The Australian published alleged Victorian pandemic modelling which suggested new COVID-19 cases would be in the thousands for a protracted period next week, a frightening thought that made headlines around the country! Subsequently The state's deputy chief health officer, Professor Allen [...]

Issue: Friday 24 July 2020 Gone are the days when economic policy was adjusted once each year by the government in the budget and fine-tuned once each month at meetings of the Reserve Bank board. The COVID-19 means we haven't had a budget in more than a year. What the Reserve Bank has been forced to do to interest rates, mean its monthly board meetings have little to no impact for the foreseeable future (Governor Philip Lowe reaffirmed this [...]

Issue: Friday 10 July 2020 In recent weeks the stock market and its many participants have once again hung on to recent gains in the face of complete uncertainty. The S&P/ASX200 is only around 10% below its level at the start of 2020, but economic indicators paint a less positive picture. Adding to the short-term volatility is the rise of a new phenomenon amongst the "corona- generation". 'Small trader calls' (where people pay for the right to buy the [...]

Issue: Friday 26 June 2020 Over the last couple of weeks, the stock market has once again defied pundits and pushed through fears of the ongoing recession, job losses, business closures and a second virus wave. How can this be? The rally has certainly gone on far longer than we expected but our view remains the same - The current rally's longevity is one built on optimism. It has been largely driven by the injections of liquidity and stimulus [...]

Issue: Friday 12 June 2020 Drought, bushfires and coronavirus ... the Treasurer has admitted Australia is now in a recession after the fall in the March quarter GDP. The June quarter is certain to be worse. And such are the times we live in, despite mass unrest on the streets of dozens of US cities where 40 million people are unemployed and ongoing tensions with China, markets surged over the last couple of weeks (albeit, like we saw in [...]