Over the past few weeks we have tried to elaborate upon what is turning out to be one of the most interesting and dynamic secular growth stories of the coming decades and perhaps century. And so, we would like to use this article as a conclusion of sorts, namely addressing the why? And more importantly, why now?
In light of the US Election results (or lack thereof) we have pulled some excerpts from a US Election webinar featuring Robert Swift run by Australian Fund Monitors.
This week we visit our second category within the mobility thematic, that is autonomy. A topic that is arguably more important than the general electrification of transport, we arrive at three key considerations for those wishing to take advantage of the thematic.
This week we visit the first of the categories within mobility, that is the most obvious, the electrification of transport and automobiles. There are several key catalysts for this process including the continued adoption of regulatory frameworks by governments across the planet towards sustainable development and tackling climate change.
This week we begin an exploration of one of the most prescient topics in the world of investing and economics, that is the future of mobility. We’re all familiar with the recent success of Tesla which has baffled many of the more conservative investors and has come to be a painful trade for the shorters over the last few years. Closer to home, we’ve seen some interesting aspects of this in less familiar names like Novanix (NVX.ASX) and adjacent categories such as Connexion Telematics (CXZ.ASX). We begin what is going to be a series of articles with an overview of sorts.
This week I continue my journey down the avenue of controversial topics and take another stance that goes against the mainstream narrative. Today we discuss the future of bricks-and-mortar retail. We have all heard the success stories of Kogan and, on the global stage, Amazon. The rise of e-commerce and the slow death of bricks and mortar is epitomised locally by Myer. However, there is one thing that does not fit neatly with this existing narrative.
This week we make a perhaps controversial call that goes against the grain of what every leading economist, including the RBA governor, has consistently said. That is, the cash rate will go to 0% before the end of the calendar year (which I previously alluded to in my article last week, though I did say 0.1%) and negative in the first half of next year assuming the current economic trajectory holds. How is this going to affect us in Australia? Bear with us, we’ll get there.
Following on from the exploration of the ASX20, I would like to visit the topic of large caps vs. small caps. What has been apparent in a world of low interest rates and QE has been the stellar outperformance of larger companies over smaller. On an intuitive basis this makes sense, since a negative economic environment should benefit larger companies who should, unlike their smaller counterparts, have the balance sheets and immediate access to a lower cost of capital to ride it out. Large caps often benefit from a flight to perceived safety during uncertain times too, though this may not be the case at the moment. So why hasn't this been the case in Australia?
We won't beat around the bush, this is a simple suggestion to look at listed Infrastructure equities as a source of dividend yield, reliability and yes, even capital growth.
This week Sid Ruttala gives his cursory thoughts following the introduction of Appropriation Bill (No. 1), alternatively referred to as the budget. And what a budget it was, a lot was at stake given that it is arguably the most important budget since WWII.
Sid Ruttala fleshes out a number of the points that Robert Swift has been talking about in his weekly Ausbiz appearances. Heading into the pointy end of the US presidential election, there is always heightened uncertainty in investment markets and (as much as we might want to given 2020 so far) this is not the time to bury one’s head in the sand and hope for the best.
We have been suggesting for a little while that the RELATIVE performance of the USA equity market is peaking. We have favoured Japan and now increasingly China and Hong Kong too. We still avoid Thailand, Indonesia, India and Malaysia for a number of different reasons. Vietnam is interesting and a favoured destination for FDI but hard to buy. The best way to play that may be through HK listings such as LUKS Group (HK:366).
This week we revisit a topic we first spoke of when the great Trump Trade War was very much in its infancy. That is the future of global trade and industry and, more importantly, what this means for Australia. The recent moves made by regulators in the US (including blocking off of Tencent and forced sale of TikTok) have brought many of our broader predictions, perhaps unfortunately, to a reality.
This morning the potential for the imposition of import duties on Australian wine by China has made it incumbent upon our government to formulate nuanced policy in an increasingly hostile and uncertain world. What does this mean for Australian investments? What is our world likely to look like over the next decade? These are the fundamental questions we seek to answer this week.
By no means do I follow the Eugene Fama line of thought and insist that markets are fully efficient nor consistently rational. However, just maybe, the current situation isn’t as irrational as one might imagine judging by the headlines, some of which include the S&P hitting all-time highs, the ASX not factoring in the full impact of the economic lockdown, recovering close to 35% from its lows, and all this despite quite possibly the worst growth numbers since The Great Depression.
This week we continue to explore the global financial system as it currently stands and how we have come to this position. In particular, I shall focus on the USD as the reserve currency, the Eurodollar market and how money is actually created. The goal being that by the end of this part of the series, the readership will be able to understand how the rise or fall in the USD can end up impacting credit growth in seemingly far flung or unrelated economies like China and Australia. Why, when the latest round of monetary stimulus was put in place, the Fed included dollar swap lines to central banks around the world, including Australia, to keep the system on stable footing.
This week (and over the coming few weeks) I would like to visit upon a passion of mine, that is the understanding of investment and capital markets within the broader context of history and the political economy. Firstly, I must admit the inspiration for this particular piece came from perhaps one of my all-time favourite intellectuals and money managers, though I consider the latter aspect of his life to be quite secondary to the former. Ray Dalio’s most recent study into the big cycles of the past 500 years was not only stimulating but puts a great amount of context to the world we live in, or at the very least makes the investment framework rather more nuanced.
This week we visit perhaps one of the more contentious topics within the context of modern day investing. That is the role of price discovery and fundamentals in today's investing world. Talking to both existing and potential clients on a daily basis, I constantly hear people coming up with doomsday scenarios and/or rules of thumb that don’t seem to work. It is rather frustrating.
Risk assets continue the long march upward with equities higher and yield spreads lower. Is it really a dead cat bounce as some fund managers (in cash) are saying?
The recent election in Singapore provided a gentle reminder to the ruling People’s Action Party that their hold on power should not be taken for granted. Singapore has generated significant financial wealth to deal with the impact of the Covid-19 pandemic and plans are underway that will underpin the short-term economic recovery as well as Singapore’s long-term reputation for competitiveness and innovation. The local equity market remains small and has not reflected the broad economic success of the country, nevertheless, we are able to find excellent small to mid-sized companies in Singapore to include in our Asian portfolio.
This week we revisit the most over-researched and perhaps over-discussed sector in this nation, namely the financial sector. More specifically I would like to touch upon the short-to-medium term outcomes of recent policy decisions.
Sid Ruttala delves deeper (pardon the mining wordplay) into Australia's largest export, iron ore. Looking at the future of both the supply and demand side and what this means for mining stocks in Australian's portfolios going forward. Is there a substitute for the banks in there?
Karl Hunt, of the Global High Conviction portfolio and Delft Partners, delves into what is shaping up to be one of the stronger global investing thematics. Infrastructure spending was needed prior to the ongoing pandemic and it is now likely to accelerate as governments around the world look to drive economic activity.
In the wake of governments around the world taking on a considerable amount of debt to deal with the ramifications of the ongoing pandemic, Robert Swift breaks down the current situation and looks at a couple of the likely outcomes.
We begin this week with the latest update in the throwing of the kitchen sink story which we first elaborated upon, what seems like years ago, in March. Back then we posited that the Federal Reserve would become the lender of last resort for the corporate sector and dispense with all sense of normality. And so here we are, the Federal Reserve has, as of last night (15 June), made a commitment to buy corporate bonds on an individual basis (as opposed to the high-yield ETF that was bought through a special purpose vehicle). This latest action should make for some interesting watching when Powell goes up in front of Congress on June 16th and 17th where he will surely be asked the question of whether the Fed is in the process of nationalising corporate debt. At this point, we ask the question: is it such a stretch to imagine that once you can put credit risk on the balance sheet of a central bank it's not too far to equities risk, is it?
Markets & Commentary
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TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.