Farewell Fiscal 2022, Hello Fiscal 2023

The Australian market has held up better than the US market due to lesser exposure to technology and our strong performance in the mining and resources sector. However, the Australian all Ords has fallen 13%, the S&P 500 21% and the Nasdaq 30%.

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WORLD ECONOMY and INFLATION

This article from David Bassanese, Chief Economist of Betashares, suggests that the Fed will be more aggressive in their approach as the US economy continues its growth trajectory.

Reprinted with permission of Betashares

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WORLD ECONOMY and INFLATION

As you know, I am keeping a wary eye on inflation. The issue that has emerged is the rapid increase in inflation across global markets led by the US which is now reporting an annual inflation rate of more that 6%.It is noteworthy that Jerome Powell, the Chairman of the US Fed removed the word ‘transitory’ from his latest inflation comments.

This is compounded by the global logistics and supply chain problems which have caused significant increases in global shipping costs with a flow on effect on the price of manufactured goods and raw materials across global markets. The result will be to put further pressure on inflation. In Australia, it has resulted in a chronic supply shortage of goods in the run up to Christmas for both retailers and consumers. I enclose a commentary by David Bassanese, Chief Economist of Betashares, which is well worth reading with a preview of 2022 markets.

Reprinted with permission of Betashares

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WORLD ECONOMY and INFLATION

This commentary from The Wall Street Journal summarises the factors that are combining to drive inflation higher in the US well into 2022. Any rise in US interest rates are likely to have an early impact upon Australia.

Reprinted with permission of The Australian (The Wall Street Journal)

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World Economy and Uncertainties

It is essential to understand the bigger picture and to step back for a moment from the daily financial news. This report from the Franklin Templeton Investment Institute gives a good overview.
It looks at economic growth and what the drivers are for financial markets for the remainder of 2021.

Reprinted with permission of Franklin Templeton

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Economic Growth

The global economic growth is forecast to remain strong well in to 2022.The Central bank perspective is reflected by the IMF World Economic Outlook which predicts global GDP growth of 6% in 2021 and 4.9% in 2022 after a decline of -3.9% this year. A Global Asset Manager’s view is shown in this report from Vanguard, one of the three largest global asset managers with assets of $7.2 trillion.

Source: Vanguard

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Vanguard economic and market outlook for 2021: Approaching the dawn

The COVID-19 pandemic has produced the most pronounced economic shock in nearly a century. In 2020, recessions around the world were sharp and deep, with significant supply-chain
disruptions at times. That said, perhaps more than in previous recessions, policymakers were aggressive in supporting financial markets and their economies. While the global economy
continues to recover as we head into 2021, the battle between the virus and humanity’s efforts to stanch it continues.

Source: Vanguard

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US election - what investors are anticipating

Every four years, markets are vexed by anxiety and volatility from the race for the US presidency. But a historical lesson for long-term investors is clear....

Article Financial Times 17/10/2020 by Michal Mackenzie

Ignore the short-term market noise and stick with equities and other assets that will benefit from the secular forces driving the economy and the business cycle into the next presidential term and beyond.

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Big Oil faces up to a future beyond petroleum

Where to for oil? The price of oil recently dropped briefly below zero and Chesapeake Energy, one of the largest producers of oil and gas in the United States, has just filed for bankruptcy...

Article The FT View June 16 2020

Big Oil faces a future where it may not be so big, and may have less to do with oil. The industry has faced an increasingly uncertain future as climate change has moved to the forefront of the public’s consciousness. Investors, too, have stepped up their calls for action. Now the coronavirus pandemic, by radically cutting demand for oil and gas and giving governments the whip hand in directing the revival of their economies, looks likely to accelerate the long-term shift away from fossil fuels in many nations. Continue reading here.