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What is New

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Oliver's Insights - Rising US interest rates, trade wars, the US midterm election results, etc - should investors be worried?

Shane Oliver, Head of Investment Strategy and Chief Economist.

 

The attached note takes a look at share market valuations. The key points are as follows:

 

  • It's still too early to be sure that last month's pullback in shares is over but we remain of the view that it was not the start of a deep bear market and that the trend in shares remains up.
  • Worries around US interest rates, trade wars, European politics etc are unlikely to be terminal.
  • The US midterm election turned out pretty much as polls indicated. Since 1946 US shares have rallied in the 12 months after all midterm elections.

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Oliver's Insights - Five things you need to know about the Australian economy

Shane Oliver, Head of Investment Strategy and Chief Economist.

 

The attached note looks at the outlook for the Australian economy. The key points are as follows:

  • The Australian economy grew solidly over the last year.
  • While recession remains very unlikely, the combination of a slowing housing cycle, constraints on consumer spending and still subdued business investment will likely see growth slow going forward to around 2.5-3%.
  • As a result, spare capacity is likely to remain significant, keeping wages growth and inflation low.
  • We don't expect the RBA to start raising rates until late 2020 at the earliest and the risk remains significant that the next move could be a cut.

 

 

 

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Oliver's Insights - Trumponomics and investment markets

Shane Oliver, Head of Investment Strategy and Chief Economist.

The attached note looks at the risks for investors from President Trump's approach and policies. The key points are as follows:

  • So far President Trump has been positive for share markets but this year the focus is increasingly shifting to populist policies with greater risk for investors.
  • The key risks to keep an eye on in this regard relate to trade conflict and the expanding US budget deficit, although the latter is more a risk for when the US economy next turns down.
  • However, the best approach for investors in relation to Trump is to turn down the noise given the often contradictory and confusing news flow he generates.
 

 

 

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The Australian housing market starting to cool (in parts)


Shane Oliver, Head of Investment Strategy and Chief Economist.

Key points are as follows:
 

Australian housing remains overvalued and this has gone hand in hand with 

high household debt. Against this, supply has been constrained and there has 
not been a deterioration in lending standards.

The hot Sydney and Melbourne property markets are showing signs of cooling
  as APRA measures bite. Expect price falls of around 5-10% around 2017.

Property investors need to be careful at this point in the property cycle as 
medium term returns are likely to be constrained.



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