The Albanese Government has flagged increased regulation of both the ‘buy now, pay later’ (BNPL) sector and cryptocurrency exchanges. Financial services minister Stephen Jones says BNPL products are a “good innovation” in the credit market, but stresses that they should be subject to the same laws as credit cards. Jones added that the government also
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Putin vows “denazification” of Ukraine, smashing markets
Russian President Vladimir Putin has given a speech ordering “a special operation in Donbas”: Russian state media is also confirming. “I have declared a special military operation,” Putin said. Fox News is reporting that Russian forces have entered Ukraine from Crimea. Putin announced the Russian military action to ‘demilitarize’ Ukraine.” And further he provocatively asserted:
Could crypto crash become the 21st century’s tulip bubble?
Coolabah Capital’s Chris Joye with the note: Bitcoin is almost 6x more volatile than US equities and 18x more volatile than the US dollar. Also compare this to the change in the value of risk-free bank deposits, or cash investments, which have zero volatility since they are held at par (ie, not marked-to-market)…Bitcoin, and other
2022 could be the year Tesla goes Teracap
Morgan Stanley with the note: Tesla reported 4Q unit deliveries roughly 15pct ahead of consensus, annualizing to over 1.2mm units BEFORE contribution from Austin and Berlin which we ultimately expect to be far larger plants than Fremont and Shanghai. 3key thoughts: It’s not just the unit beat, but the favorable economics from reducing the proportion
FT: Bitcoin is the greatest Ponzi scheme ever
FT has a great article from Robert McCauley, a non-resident senior fellow at Boston University’s Global Development Policy Center and associate member of the Faculty of History at the University of Oxford about how Bitcoin may end up being not just the greatest Ponzi scheme ever, but worse on a social level – an actual
Where are we in the monetary easing cycle?
Societe Generale with the note: The ongoing post-pandemic monetary easing cycle started with the first rate cut of July 2019 after tightening reached a peak in December 2018. After two cuts, the Fed policy rate had declined to 1.75% by February 2020 from a tightening peak of 2.5%. With the global pandemic bringing economies to
Central banks on defensive over inflation
Mizuho with the note: Central banks are often viewed as the guardians of inflation, but the Fed and ECB now face a predicament: with rapidly rising prices a political issue in the US and elsewhere, central banks that remain dovish have come under increased criticism and been forced to reframe some of their commentary. Rate
Goldman: US yields continue to rise on faster taper
Goldman with the note: The November FOMC minutes provided little new insight into the FOMC’s tapering plans. All participants judged it appropriate to announce the start of tapering at the November meeting and “some” participants favored a faster taper, but the September minutes had already revealed that “several” participants advocated for a more rapid reduction
For companies, not all inflation is created equal
TS Lombard with the note: Not all inflation periods are created equal: when inflation is “demand-pull”(pro-cyclical), corporates are able to pass on PPI increases to customers. Historically, margins improve when inflation is pro-cyclical and contract when it is counter-cyclical. The current regime is pro-cyclical; we remain positive on margins and equities. Rising input costs do
Send your portfolio to the Moon
I had a fascinating space investment conversation (podcast) yesterday with Dr Andrew Barton, an engineer specialising in space technologies with a long career in both Australia and internationally. For me, what is incredible is the pace of cost reductions being seen in the sector. Elon Musk’s SpaceX has brought the cost of launching equipment into
Beware the inflation snap-back: today’s inflation isn’t 1970s (part 1 of 4)
Runaway inflation is the theme du jour. “Protect your portfolio from hyperinflation” scream headlines from investment newsletters. I have an alternative scenario for you. Current inflation is supply-chain and commodity bubble-based, temporary, and the recent price signals will actually create the opposite effect. It is a detailed argument. So, I’m going to present the alternative
Quick Q1 2021 reporting season update
The Q1 2021 reporting season is in full swing in the US, Europe and Japan and profits are booming. Markets are expensive, but if the upgrades keep coming the current prices won’t look so bad… In the US, even the company at the worst 25th percentile has seen upgrades to forecasts: Disclaimer: Q1 2020 to
Trump takes a dump on relief as markets flump
Quelle surprise. His Royale with Cheetos has decided at the last minute to squash the long awaited yet extremely underwhelming stimulus bill from the US Congress, wanting more money in the stimulus cheques ($2000 vs the paltry “let them eat cake” $600) and removing a lot of riders and other “unnecessary” spending. From MSN: The
One last hurrah for the 60/40 stocks and bonds portfolio?
Markets move in cycles. The last 40 years have seen interest rates down from 20% to less than 1%, quietly fuelling a rise in bond returns over the same time. This has driven the return of the benchmark 60/40 portfolio (60% stocks and 40% government bonds). Over the 40 years, the benefit of the 60/40
Your diversification free lunch is not “all you can eat”
Nobel prize winner Harry Markowitz gets the credit for coining the phrase that “diversification is the only free lunch in finance”. Add the insight that stock markets are at least semi-efficient, and a multi-trillion dollar exchange-traded fund (ETF) industry was born. And indeed, many exchange-traded funds are worthwhile investments, providing low-cost diversification. But some take
RBA Deputy Governor Debelle lists ‘other’ policy options.
From CBA’s head of Australian economics, Gareth Aird: RBA Deputy Governor Guy Debelle listed four ‘other’ options to ease monetary policy further: (i) purchase bonds further out on the curve (supplementing the three year yield target); (ii) foreign exchange intervention; (iii) cut the current structure of interest rates in the economy without going negative; and (iv) negative rates. Purchasing
eSports are sexy, but expensive
The digital games and interactive media sector is probably much larger than you think and still growing. To put it into perspective, one of the highest rating movies ever, Avengers: Endgame, grossed US$858m during its opening weekend. Grand Theft Auto V’s release, earned US$1b in just over three days. Originally just a PC/console experience, ubiquitous
Will the earnings season snap US stocks back to reality?
by Chris Becker Save for the record high bubblicious NASDAQ, Wall Street is stalling out in the new financial year as the dual impact of the upcoming presidential election and the disastrous effect of the coronavirus takes hold. But good news everybody – earning season is around the corner! Wall Street goes through this every
Chinese stocks to the moon as Australian dollar lifts
by Chris Becker The start of the trading week has seen mainland Chinese stocks soar, with the Shanghai Composite up nearly 3% in midday trade, now putting on nearly 20% from its lows and building above the 3000 point barrier: Meanwhile, other Asian bourses are up solidly, except the ASX200 which is treading water after
Ray Dalio: markets are no longer free
by Chris Becker Ray Dalio, the masterful manager at Bridgewater Associates had a long and wide ranging interview on Bloomberg over the weekend, nailing how the markets are no longer free allocaters of capital, but completely propped up and fed by the Fed and other central banks. Take aside a half hour of your time
You are being given a rare second chance to sell stocks
Stock markets have dislocated from fundamentals. The economic fundamentals are almost as bad as they have ever been. Stock market valuations are almost as expensive as they have ever been. But that hasn’t concerned markets for the past six weeks and, to be frank, it doesn’t look like concerning markets any time soon. This is