It's been a rough start to August for financial markets, with US shares suffering the biggest decline in almost two years on Monday. A sharp bout of risk aversion has hit, with bond yields lower, growth assets selling off aggressively and volatility measures surging. The Japanese sharemarket has fallen 20 per cent in just three days, something we haven't seen in data going back to 1949. The S&P 500 in the US is down 8.5 per cent from its peak three weeks ago, while the tech-heavy Nasdaq has ...
Aug 06, 2024•11 min
The US Federal Reserve left interest rates unchanged last week. However, it left financial markets in no doubt that a cut is imminent, with Chair Jerome Powell noting one might be on the table at the next meeting in September. Inflation is headed toward its target, and cracks are appearing across the economy. A recession isn’t upon us, but the risks of one might be increasing. So will September prove too late, and did the Fed just make a mistake by not cutting last week?...
Aug 05, 2024•5 min
What a week! The S&P 500 fell another 2.1% last week after a surprise jump in the US unemployment rate raised the prospect of a sharper economic slowdown, or even recession. The index is down 5.7% from its mid-July peak, with high-flying sectors feeling the brunt of the selling. Technology is down 12.8%, while consumer discretionary (of which Amazon is the biggest constituent) has slipped 10.1% and communication services (where Meta and Alphabet reside) is 8.7% lower. US interest rates fell ...
Aug 03, 2024•17 min
August is "Money Month", an annual public awareness campaign run by Te Ara Ahunga Ora. Also known as the Retirement Commission, Te Ara Ahunga Ora is the government-funded organisation behind the Sorted website, a great resource dedicated to helping New Zealanders get ahead financially. Money Month is about encouraging people to talk more openly about money, to help us all improve our financial wellbeing. There are plenty of examples of great money advice, but we'll try and boil it down to three ...
Aug 02, 2024•7 min
It’s been a pivotal month in US politics, with plenty of action since that infamous June debate between Joe Biden and Donald Trump. Biden has stepped aside and current Vice President Kamala Harris is all but assured as the Democratic nominee. How might this impact the likely outcome, and what should investors be thinking about as we head toward November?
Jul 30, 2024•12 min
Another eventful week looms, with all eyes on monetary policy decisions from the Federal Reserve, Bank of Japan and Bank of England. Key economic releases will include the ISM index and jobs report in the US, as well as PMIs in China. On the earnings front, big tech will be in the spotlight with Microsoft, Meta, Apple and Amazon all scheduled to report. On the local front, the ANZ Business Outlook survey will be a highlight as markets look ahead to the August RBNZ meeting.
Jul 27, 2024•20 min
The Official Cash Rate (OCR) will soon be headed lower, and this will have important implications for savers, borrowers and investors. Financial markets have taken a bolder view than most economists, and they now see at least two (but possibly three) 0.25 per cent cuts before the end of the year. A move in October or November seems assured, while there’s half a chance the Reserve Bank might take a more proactive approach and cut the OCR next month. Whether it happens in three weeks or three mont...
Jul 23, 2024•9 min
It's been a busy couple of weeks! The S&P 500 fell 2.0% last week as investors rotated out of the high-flying sectors and into some of the laggards which look better value. The S&P 500 Equal Weight index has performed much better, while the Russell 2000 (comprised of smaller companies) is up 7.8% over the past two weeks. Here at home, the local NZX 50 increased another 1.6% last week, which sees it at the highest level in more than two years and headed for the strongest monthly gain sinc...
Jul 20, 2024•17 min
The latest quarterly inflation figures are out this week. These will be closely watched, in particular the domestic inflation that has worried the Reserve Bank so much in recent years. With that in mind, this popular episode from May will give you a refresher on exactly how our inflation basket is composed, why domestic inflation has been so troublesome, and the challenges of reducing it without an unwanted spike in unemployment.
Jul 14, 2024•10 min
This was a popular episode from earlier in the year, and the messages are timeless to take a listen if you missed it the first time around! If you buy a share listed outside New Zealand, it’s not just changes in the share price that will determine your return. You also need to keep an eye on the exchange rate between the New Zealand dollar and the currency in question. Holding a portion of your wealth outside our shores is crucial, and we shouldn’t let the prospect of currency movements dissuade...
Jul 10, 2024•14 min
This week’s global economic highlight will be the US inflation report, while Federal Reserve Chair Jerome Powell will testify to Congress on Tuesday and on Wednesday. Markets see a 77% chance of the Fed cutting rates in September, with a cut fully priced by November. Politics will also remain in focus after last week's UK election, with investors monitoring the outcome second round of legislative elections in France early in the week. In New Zealand, the Reserve Bank will be in the spotlight on ...
Jul 06, 2024•25 min
The first six months of the year is behind us, so let's take a look at the best and worst performers, before turning to the rest of the year. The second half of 2024 is set to be action packed, and there's plenty for investors to monitor. Politics, inflation and interest rates will be in focus, so how should investors be positioned and what do we need to keep an eye on?
Jul 02, 2024•12 min
Politics will be in the spotlight with the first round of French legislative elections on Sunday, then the UK general election on Thursday. In the US, investors will be watching the latest ISM manufacturing and services indices on Monday and Wednesday, before the all-important jobs report on Friday. It'll be a holiday-shortened week with the Independence Day holiday on Friday, and markets will be also monitoring fallout from the first election debate last week. It was a poor showing from Preside...
Jun 29, 2024•20 min
US tech investor Nat Friedman famously said "pessimists sound smart, optimists make money." He wasn’t referring to financial markets, but there’s something we can learn from that as investors. There’s nothing wrong with being mindful of risks and let’s be honest, at any given time the list of concerning issues is a lengthy one. However, when it comes to investing being an optimist pays off.
Jun 25, 2024•7 min
Inflation will be in the spotlight this week, with the PCE report for May due in the US as well as flash CPIs in several European economies and the Tokyo CPI in Japan. The Bank of Japan's summary of opinions from the June meeting is out, while the European Central Bank will release its latest consumer expectations survey and there is also a monetary policy decision from Sweden's Riksbank. There's plenty to watch on the political front, including the first presidential debate of 2024 between Joe ...
Jun 22, 2024•20 min
We're five months out from the US presidential election and the campaign is set to heat up next week. Joe Biden and Donald Trump will face off in the first presidential debate of 2024 on the evening of June 27. While it breaks with tradition for the first debate to be so early in the piece, there's hardly anything normal about this election. Biden should be in pole position, at least according to history, but he’s not and the clock is ticking. There’s still a long way to go, but for now sit back...
Jun 18, 2024•8 min
The S&P 500 in the US rose 1.6% and hit new highs last week, as investors were encouraged by a softer than expected May inflation report. In contrast, European shares fell 2.8% in the wake of fresh political uncertainty. Elsewhere, the Australian ASX 200 fell 1.7% and the FTSE 100 in the UK was 1.2% lower. Japanese and emerging markets were little moved, as was the local NZX 50. Looking ahead, retail sales are out in the US this week, while China will release monthly activity indicators on M...
Jun 15, 2024•23 min
There’s been a raft of bad news from locally listed companies over the past several weeks, with more than a dozen either downgrading earnings guidance or providing negative trading updates. This hasn’t been limited to the smaller end of town either, with at least ten NZX 50 constituents in the headlines for the wrong reasons too. When it comes to inflation and interest rates, bad news can be good news, to an extent. Slumping activity and a worsening labour market might could see inflation slow m...
Jun 11, 2024•10 min
This week will be an eventful one in the US, with the June Federal Reserve meeting on Tuesday and Wednesday as well as the May consumer price index report. In the UK we'll get monthly GDP and some fresh labour market indicators ahead of the Bank of England meeting next week, while the Bank of Japan will release its latest monetary policy decision on Friday. It'll be a holiday-shortened week across the Tasman, and the highlights will be the NAB business survey (Tuesday) and the labour force repor...
Jun 08, 2024•20 min
We have a lot of clients from farming backgrounds, either past or present. They’re great people, and many have spent decades overcoming a plethora of challenges to build very successful businesses. When the time comes to think beyond the farm, investing in a portfolio dominated by shares, listed property, private equity and fixed income doesn’t always come naturally. Having less control and influence is a mental hurdle for some, while diversifying far and wide can also be a new concept. However,...
Jun 04, 2024•10 min
Global politics are in the spotlight this week, with a presidential election in Mexico, elections for the European parliament to be held on June 6-9, and India's six-week long national election in its final phase. In the US, all eyes will be on Friday's jobs report in the lead up to next week’s Federal Reserve meeting, while the latest ISM indices will also be in focus. In Europe, the key event will be the European Central Bank's monetary policy decision on Thursday, where we might see the first...
Jun 01, 2024•16 min
The Reserve Bank left the Official Cash Rate unchanged last week, and it's forecast track suggests there will be no respite for borrowers until next year, even though the economy is slowing more than expected, unemployment is rising more quickly and inflation has fallen to the lowest level in three years. The headline consumer price index increased at an annual rate of four per cent in the 12 months to the end of March, and the Reserve Bank expects it to end the year at 2.9 per cent. However, th...
May 28, 2024•10 min
Inflation indicators across some of the major regions will be in focus this week, with PCE inflation due in the US, as well as preliminary measures in Europe and the Tokyo CPI in Japan. Locally, Budget 2024 will take centre stage on Thursday afternoon, and we'll also get some fresh business confidence figures for May. There's plenty happening on the corporate front too, as the reporting season heats up on the NZX. This week we'll see the latest earnings releases from the likes of Ryman Healthcar...
May 25, 2024•27 min
There are many sayings in the investment world, and one that always comes up at this time of year is “sell in May and go away”. The adage emerged in the Northern Hemisphere and it suggests investors should sell their shares in May, relax and enjoy the summer months before returning to the market in the autumn (or spring, here in New Zealand). It's based on a suggestion the six months from November to April typically offers higher returns than the May to October period. There’s some truth in this...
May 21, 2024•10 min
There's plenty for investors to keep an eye on in the week ahead, with some of the key releases likely to be the flash PMIs for some of the major economies. Markets will also be monitoring the minutes from the most recent Fed and Reserve Bank of Australia meetings, as well as inflation prints in the UK and Japan. Share investors will also be highly attuned to the latest earnings release from NVIDIA (its share prices is up 87% this year, following a gain of 239% in 2023!). Locally, the Reserve Ba...
May 18, 2024•21 min
We’re starting to see an increasing divergence in the outlook for growth, inflation and the likely next move from many of the world’s central banks. Some are on track to cut policy interest rates as expected, such as the European Central Bank (ECB) and the Bank of England (BOE). Others, like the US Federal Reserve and our own Reserve Bank of New Zealand (RBNZ), are grappling with stubbornly high inflation that has delayed any plans for policy easing. What does this mean for the New Zealand econo...
May 15, 2024•15 min
The S&P 500 in the US was up 1.9% last week, while the UK and Europe were stronger still, rising 2.7% and 3.2% respectively. In contrast, it was a tough week for the local market. The NZX 50 fell 1.5% in the wake of a string of recent profit warnings and poor trading updates from the likes of Air New Zealand, Spark, Tourism Holdings and The Warehouse. In the US, the latest CPI and retail sales reports will be in focus on Wednesday, while monthly activity indicators are due in China and Feder...
May 11, 2024•16 min
Some women are apprehensive about investing, but there’s plenty of evidence they’re better at it than their male counterparts. There have been several studies conducted over the years, and many of these have shown that on average, women often achieve better investment returns than men. Women are more likely to follow tried and tested investing principles, while men often think they know better. Studies also show women trade a lot less, are more willing to stick to a long-term plan and are much m...
May 07, 2024•11 min
It was the second good week in a row for global sharemarkets, with many continuing to rebound from the weakness we saw in April. Markets still see interest rate cuts on the horizon, with some comforting Federal Reserve comments and a softer jobs report adding to hopes last week. This week, the US consumer will be in focus as the University of Michigan consumer survey is due for release. We'll also get the latest Fed Senior Loan Officer Opinion Survey (SLOOS) on credit conditions, while monetary ...
May 04, 2024•18 min
If you buy a share or exchange traded fund (ETF) listed outside New Zealand, it’s not just changes in the share price that will determine your return. You also need to keep an eye on the exchange rate between the New Zealand dollar and the currency in question. While currency moves don’t have a significant bearing on long-term returns and at times they can help reduce volatility, over shorter periods they can have quite a big impact. Many local investors are happy to take on some currency risk, ...
Apr 30, 2024•14 min
