Exciting new episode of Coolabah’s Complexity Premia Podcast out now!
It is time to unveil a new expectation: if the RBA continues cutting through conventional and unconventional means, which is our central case, I expect that this economic cycle house prices will likely increase by about 30% with no immediate financial stability hazards. This follows on from our April 2019 projection that the 10% draw-down in Australian …
Today I explain why most global high yield bonds are really just equity risk, with similar volatility and maximum 40% losses, while also lifting the lid on one of our most complex and bold predictions: the shock Standard & Poor’s upgrade yesterday of the major banks’ hybrids from their previous BB+ “high yield” rating to …
How we predicted S&P’s shock upgrade of major bank hybrids to investment-grade Read More »
Today I write that the ACCC inquiry into the big banks, and the front book/back book fracas that reportedly precipitated it, are completely bogus. Let’s get a few facts straight. First, all businesses, including banks, are free to discount new product sales. Trying to prevent banks from doing so would be akin to telling Coles they …
Today I write that it is amusing how we have shifted from nobody believing our early May forecast that Aussie quantitative easing (QE) was coming, to it suddenly becoming the consensus view as the Reserve Bank of Australia grapples with an effective lower bound on its target cash rate. In fact, there are interest rate …
Here are some basic thoughts from my team on CBA’s new hybrid issue, which is not investment advice and should not be relied on for any decision-making. Note that this is also very high-level… Analysis of new CBA Hybrid: CBAPI CBA has launched a new hybrid security offering: PERLS XII, expected to trade on the …
On Thursday I debated and demolished my old foe Dr Steve Keen (of doomsday fame) on the contentious subject of Aussie housing. You might recall that Steve was the guy who garnered enormous media coverage for predicting a sensational 40 per cent drop in house prices during the 2008 global financial crisis. Aussie house prices are now 131 per …
In predictably cutting its cash rate to a new record low of 0.75 per cent in October, the RBA moved itself one meeting away from initiating quantitative easing (QE), or outright purchases of bonds—as we controversially forecast in early May—to satisfy its full-employment target. Click here to read the full column or AFR subs can click here. Excerpt …
While studying at Cambridge University in 2003 I got a letter from former US secretary of state Henry Kissinger, inviting me to meet him in New York. I naturally embraced the opportunity. I recall walking into his stuffy office overlooking Park Avenue, adorned with literally hundreds of photos of Kissinger standing alongside heads of state and …
Kissinger: Why Traders Are Smarter Than Investors Read More »
Today I argue that in response to the 2008 crisis central banks and treasuries have thrown the baby out with the bathwater. Unable to tolerate the pain associated with capitalism’s most important attribute, “creative destruction” – or the cathartic process by which markets punish bad businesses and reward good ones – government agencies decided that …
This weekend I write that the ECB’s decision to start buying bonds again to reduce the long-term cost of capital (aka QE)—coupled with the Fed cutting in a few days—will only amplify pressure on the RBA to follow-suit (click on that link or AFR subs can click here). I also argue that it is high time APRA …
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