April 2024 Update
Inflation, Interest Rates, Investment Markets and Geopolitical Events
Financial markets have risen the last two days after the recent sell off due to high inflation, meaning interest rates may stay higher for longer, and the Middle East tensions which saw a flight to bonds and gold. Financial markets move with speed and the preceding thought is that an open conflict between Israel and Iran has been averted, for now.
The Doomsday Clock is sitting at 90 seconds to midnight amid nuclear and AI threats.
It sounds a little drastic to me but wars in the Middle East, Ukraine and ongoing tensions between China / the US & Taiwan are certainly keeping strategists on their toes. And the rise of Artificial Intelligence is sounding like the story line from the Terminator franchise.
Yet, markets are close to highs, companies keep making money and there are jobs for pretty much anyone who wants to work. Data is, however, starting to suggest applicants per job advertisement are increasing.
For the last few months, we’ve seen a host of interest rate and inflation articles in the financial media, with seemingly daily changes to predictions as to when rates will come down. I’ve come to the position that journos have to write articles every day so they tend to rehash the hot topics until the next one comes along.
Just recently, AMP suggested rates would fall in August. Not likely. ANZ has suggested November which does appear closer to the mark. Still, if I were paid to make a call, I’d say 2025 seems more likely due to ongoing inflation, low unemployment, high immigration, pending tax cuts and significant wage rises for public servants. But of course we will lag the US on this decision and higher inflation / low unemployment is also seen on their shores.
ASX v Nasdaq v S&P 500
Over the last 5 years, the ASX has significantly lagged the S&P 500 and The Nasdaq.
The ASX has returned almost 22% in this period, whilst the US Indexes have returned 71% and 91% respectively. The Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla) have had a major impact on the growth on US markets. But even they are not immune to volatility with weekly movements of 10% either way not uncommon.
Crypto / Bitcoin
We wouldn’t normally discuss Crypto but a relatively new Exchange Traded Fund has caught the attention of Crypto punters.
Popularity has soared since eleven ETFs were approved across the New York Stock Exchange earlier this year. $7bn flowed into these exchanges on the first day of trading. This increased to $18bn in March and saw the price for Bitcoin soar before moving sidewards.
No spot bitcoin ETF is currently available on the ASX but Australian investors are also accessing the cryptocurrency via Global X’s 21Shares Bitcoin ETF, a physical-hold bitcoin fund.
The unit price has doubled since October 2023. Whilst this is not an investment we would be recommending, it may well be a consideration for the grandkids, who at least appear to have some understanding of crypto.
Ageing Population
Australia now boasts some 6192 centenarians, with WA home to 642.
Expectations are for 50% of all seven year olds to reach the ripe age of 100.
Estimations are never completely accurate but the messages from the latest intergenerational report are that we have an ageing population that are living considerably longer, and we do not have the expected growth whereby those of a working age can contribute taxes for those no longer working.
None of this is news, but governments cannot only rely on technological advancements and must do something about productivity, or better put, lack of productivity from our shores.
We already have a housing crisis with no solution in sight. Aged care is insufficient now which leads me to say I am glad I won’t even be close to being around in 50 years!
And of course this impacts the way we invest because we have to plan for being here for longer.
Angela Dignam has completed an aged care professional accreditation update so we have the necessary skills at Your Wealth to assist with all of life’s planning phases.
Cyber Security
Our resident IT guy, John Motteram, reinforces the need to be aware of scams and makes the following points about being aware.
If you are online, you are at risk of being targeted by scammers, it is an unfortunate fact of life today.
Scammers work on the law of averages, we may be expecting a parcel, or we may have driven on a toll road, our children or grandchildren may need money and have lost their phone and so we probably assume it is legitimate and follow the link or the instructions.
The first thing to do is treat everything with suspicion and stop. It is better to wait and find out it is legitimate than to rush on in and find out later that it was a scam.
Start by looking at the time it was sent, we won’t send you emails at 1:20 am. Does the senders email address match their name? If they say they are from the tax department does the email address look like it is from the tax department or is it some random address? Is there an urgent request for money or for you to click on a link? Is the spelling and grammar what you would expect from the sender? Does the logo look blurry as if someone has copied from a document?
When you are online, make sure your devices are updated regularly to ensure you have the latest security patches. Try using the incognito setting in your web browser, ask you children or grandchildren where to find it. Don’t do your banking by using public WI-FI. Use a password protection program to keep all your passwords safe and don’t use the same password for everything.
The Australian Signals Directorate has a website with a lot of useful information on how to protect yourself online and it can be found here: https://www.cyber.gov.au/protect-yourself
The https in the above link means it is secure which is something you can look out for as well but given we have just said don’t click on links, type “Cyber Security” into google and look for:
