Category Archives: Oliver Updates


Australian house prices back from the abyss – seven things you need to know about the Australian property market

11

Sep 2019

Australian house prices back from the abyss – seven things you need to know about the Australian property market

Introduction After the biggest fall in at least 40 years – with a 10.2% top to bottom fall between September 2017 and June this year – average capital city home prices have turned up again. I thought prices would fall further with a 15% top to bottom fall led by around 25% falls in Sydney and Melbourne. But the facts changed from May – with…

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Nine reasons why recession remains unlikely in Australia

05

Sep 2019

Nine reasons why recession remains unlikely in Australia

Australian economic growth has slowed to the weakest since the GFC. Talk of recession remains all the rage. And economists don’t have a great track record in predicting recessions globally – with an IMF study finding that of 153 recessions seen in 63 countries around the world between 1992 and 2014, economic forecasters only predicted five in April of the year before they started –…

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Negative rates, QE & other measures the RBA may deploy- why? will it work? what would it mean for investors?

28

Aug 2019

Negative rates, QE & other measures the RBA may deploy- why? will it work? what would it mean for investors?

Introduction Since the RBA started cutting interest rates again back in June and in the process taking them closer to zero there has been increasing debate that it will deploy so-called “unconventional monetary policy measures” such as negative interest rates and quantitative easing. This debate has hotted up in recent weeks after the escalation in the US-China trade war posing a rising threat to global…

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Plunging bond yields & weak share markets amidst talk of recession – what does it mean for investors?

20

Aug 2019

Plunging bond yields & weak share markets amidst talk of recession – what does it mean for investors?

Introduction Only last month share markets in the US and Australia were at record highs. But ever since President Trump ramped up the US-China trade war again at the start of August, financial markets have seen a significant increase in volatility. Share markets have had 6% or so falls from their highs to recent lows and bond yields have plunged to new record lows in…

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Escalating US-China trade war – triggering (another) correction in share markets

07

Aug 2019

Escalating US-China trade war – triggering (another) correction in share markets

Introduction After a third round of talks made little progress last week, the US/China trade war has escalated badly with tit for tat moves on an almost daily basis by each side. This has seen share markets fall sharply with US, global and Australian shares down about 5-6% from recent highs and safe haven assets like bonds and gold benefiting on the back of worries…

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The Fed cuts rates

01

Aug 2019

The Fed cuts rates

As widely anticipated, the US Federal Reserve has cut its key Fed Funds cash rate by 0.25% to a range of 2-2.25%. This is the Fed’s first rate cut since December 2008 and follows nine 0.25% rate hikes between December 2015 and December last year. The Fed also announced that quantitative tightening (ie the process of reversing its quantitative easing program by letting bonds on…

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The longest US economic expansion ever – does this mean recession is around the corner?

24

Jul 2019

The longest US economic expansion ever – does this mean recession is around the corner?

A common concern ever since the Global Financial Crisis (GFC) ended a decade ago is that the next recession is imminent. This concern has become more pronounced recently as yield curves – ie the gap between long-term bond yields and short-term borrowing rates – have inverted (or gone negative) as in the US. This concern has taken on added currency now that the US economic…

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2018-19 saw a rough ride for investors but it turned out okay

02

Jul 2019

2018-19 saw a rough ride for investors but it turned out okay

The past financial year saw a roller coaster ride for investors. Share markets plunged into Christmas only to rebound over the last six months. This note reviews the last financial year and takes a look at the investment outlook for 2019-20.   A volatile but good year for diversified investors The past financial year saw pretty good returns for investors. But it didn’t feel so…

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Don’t fight the Fed… or the ECB or RBA

21

Jun 2019

Don’t fight the Fed… or the ECB or RBA

This decade has now seen three global growth scares – around 2011-12, 2015-16 and now since last year. Each have been associated with softening business conditions indicators (or PMIs) as indicated in the next chart – see the circled areas. Source: Bloomberg, AMP Capital And each have been associated with roughly 20% falls in share markets. Source: Bloomberg, AMP Capital All have seen central banks…

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Australian growth will be constrained but here’s nine reasons why recession is unlikely

18

Jun 2019

Australian growth will be constrained but here’s nine reasons why recession is unlikely

For some time our view has been a less upbeat on the Australian economy than the consensus and notably the RBA. The reasons were simple. The housing cycle has turned down and this is weighing on consumer spending. And this is at a time when the risks to the global economy have increased as the trade war threat has ramped up again. All at a…

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