He also talked about an axis of autocracy with Russia and China at its core. A friendship with no limits. The group of Russia, China, Iran and North Korea represents a techtonic shift in the geopolitical landscape.
We have a highly complex global economic system and geopolitical environment.
If you want a silver lining we're on the way to normal from abnormal and it will take time. Be patient.
Meet the Managers Seminar 2/3/2023
2022 witnessed one of the largest rate hikes in the US and an inflection in market concentration (less dominance by tech names). Note that stock markets recover 6 months before recessions end. We are seeing evolving globalisation, health care, innovation, energy transition and continued digital disruption.
Comments from another speaker were as follows. A short shallow recession. Once inflation gets above 8% if usually takes about 9 years to get under 3%. The US Federal Reserve is usually on hold for 6 months before it starts cutting. We now have the highest 10 year government bonds. Bonds do not diversify equities when inflation is high.
Financial Advice Roadshow 10/03/2022
Bevan Graham - Economist Salt Funds. Transitory inflation heading down largely due to lower energy prices.
US inflation still strong. Wages are causing inflation from a tight employment market. Unemployment stuck at 4.5% and will come down a bit although not enough for Federal Reserve.
Expect US interest rates will go a little higher. We might see interest rate cuts next year.
Growth is slowing in most developed economies. We will have a recession and the UK already in recession.
A China recovery is underway. NZ already in mild recession. Residential building by square meters is 20% down over the last year. Flood rebuild will take years to sort. Growth -1.5% for this year. Immigration is back to around 35,000/year however can't solve all our issues. The official cash rate is 4.75% expect to peak in April at 5% overtime likely to settle at 3.5% to 4% with cuts starting mid 2024.
Globalization in retreat with a increase in equality between countries and a increase in inequality within countries meaning higher inflation and lower growth. India is the new China. By 2040 1.48 billion Indians will be of working age.
Going forward one can expect shorter economic cycles, more volatility which is good for active investors, and sovereign bonds challenged. Real assets such as infrastructure will do well.
Harbour Asset Management Seminar 15/03/2023
In the next 12 months NZ firms intending to hire fewer people and pay them less. Unemployment to increase to 4% later in the year. Monetary policy (ie higher interest rates) will bite harder than anticipated.
Growth stocks have partly recovered. Medium NZ company grows 3.3% over time however Harbour looking for 11% compound returns. Opportunity in US software rather than hardware. On a recent road trip to the US they visited 23 fund managers and asked them where they would invest their funds in the next 12 months. 16 said cash, 6 bonds and 1 equities.
Reason why is expected contraction and sell off followed by rally. Equities not expensive but more expensive than 5 months ago. Bonds and cash are now giving decent returns.
Nikko Investments update 29/03/2023
Yarra Capital Economist
There are issues for some US Banks and global banks creating some risk. The problem is central banks stripping out liquidity due to raising rates in a declining market. China is not going to make up for weakness in the west. The real issue is China's declining birth rate. True pace of US economy is pretty slow. Australia will slow however avoid recession. Quite a contractionary situation in the US credit spreads (the difference in the yield on high yield bonds and a benchmark bond measure such as investment grade) blowing out in the US. The Federal Reserve is at the top of the hiking cycle. US inflation will surprise on the downside now.
Wage pressure has started to come off with the labour supply lifting. Rents are expected to level out and fall.
The Australian Reserve bank is done with raising rates. Population growth in Australia strong due to lots of migration.