Insights

The landscape of wealth management is undergoing a significant transformation, with an increasing focus on servicing High Net Worth (HNW) clients. As financial advisers and wealth management businesses look to grow and scale, understanding and addressing the unique needs of...

With the evolving role of financial platforms and their growing impact on wealth practices, Tim Yule, our CEO, shares insights on how platforms like Mason Stevens can transform the growth and efficiency of financial advice firms. Navigating the Financial Landscape:...

Early in the morning of 2 February Australian time the Fed raised the target Fed Funds rate by an expected 25 basis points to 4.50/4.75%. Chair Powell noted there was no reason for the Fed to differ from its guidance...

Australian CPI is released monthly, and the annualised rate released on Wednesday 25 January was a truly shocking 8.4%. This series is very new and the ABS has decided that it will not be as comprehensive as the quarterly release...

The US Bond market rode a rollercoaster last month, starting down the road that leads to strong action by the Fed and doing a sharp U turn to price for a swift end to inflation as the key factor in...

At its meeting on Tuesday 6 December, the RBA Board decided to increase the cash rate target by 25 basis points to 3.10 per cent. The continued mantra is that inflation in Australia is too high (6.9 per cent over...

On Melbourne Cup day APRA released a letter to authorised deposit-taking institutions (ADIs), general insurers and life insurers (together ‘insurers’) to reinforce the existing prudential requirements for additional Tier 1 capital or Tier 2 capital instruments. This letter was only...

In the last 30 years, Aussie interest rates have often been higher than US rates. Looking at the chart below, for the lion’s share of that time the Aussie 11am Cash Rate was significantly higher than the US Fed Funds...

At its meeting just before the Melbourne Cup, the RBA Board decided to increase the cash rate target by 25 basis points to 2.85 per cent. They noted that inflation in Australia is “too high” and yet retained their moderation...

The RBA may be rueing their decision to temper the pace of their rate hikes this month with a truly awful CPI release on 26 October. The tough news was CPI in the quarter hitting 1.8% and 7.3% annualised, both...

The Federal Reserve is made up of several regional Feds, and Kansas City plays a very key role in their calendar as it hosts the Jackson Hole Economic Policy Symposium (known simply as “Jackson Hole”). This annual event is the...

Google Trends is a highly unscientific tool to see what is important to people. Looking at the chart below it seems only a few of us were checking for latest inflationary developments before the Russian invasion of the Ukraine started...

For the second meeting in a row the Reserve Bank of Australia’s Board has raised the cash rate by 50 basis points, putting the cash rate now at 1.85%. We have had 1.75% of increases this year, the fastest pace...

Australian economists were pleasantly surprised when the June quarter CPI was released, and it was “only” 6.1%. The violent adjustment in bond yields, equity prices and sentiment that came along with that dragon jumping out of its cage earlier this...

On Tuesday, 19th of July the minutes of the July RBA Board meeting that decided to raise the Cash Rate by 50 basis points was released. The Board said that it was absolutely determined to “withdraw some of the substantial...

The biggest impact inflation has had is not the higher cost of gas for the American commuter or that steak is a once a fortnight not once a week family meal, but a quick unwinding of the “extraordinary” financial measures...

Investors who took the decision to de-risk their portfolio in 2021 by investing in fixed rate bonds have seen unwelcome revaluation losses in their portfolios. These transitionary “losses” are almost totally related to opportunity cost rather than any likelihood they...

The people of Hamelin realised they had a rat problem but didn’t like the cost of the solution. On Wednesday (early Thursday a.m. our time), Jay Powell the Chair of the Federal Reserve Open Market Committee (FOMC) did the only...

Tuesday’s shock announcement underscored what can be viewed as a pivotal turning point in the mentality and approach of the RBA, where the RBA has now transitioned into “inflation fighting mode” – seeking to “front load” rate hikes and chart...

The collapse of the Terra/Luna ecosystem has been a stain on the cryptocurrency industry for the past few weeks – supporting the arguments of many sceptics who talk of tulips, bubbles and the need for harsh and sweeping regulation. Whilst...

Over the past two years, the focus on inflationary rhetoric has been primarily centred around the disruption of supply chains, and injections of fiscal and monetary stimulus. What has received less attention is the role of wages in the inflationary...

Our next Federal election is to be held on 21/May, 10 days away, and pre-voting is already open. Domestic financial markets are looking at the election in two different ways; 1/ Both major parties are similar and the ultimate result...

Over the past few weeks, we’ve begun to revisit the real asset space – exploring exposures which offer uncorrelated, and real returns. Soft commodities, whilst vital to our existence, have historically played a bit-part role in investor portfolios – despite...

Yesterday the ABS published our domestic CPI data for Q1 and the result was an upside surprise, where inflation pressures surged above consensus expectations, and even further above previous RBA estimates. Today’s note details the underlying components seeing costs of...

In an environment where higher inflation is more sustained, protecting and then growing the purchasing power of capital becomes the focus of portfolio positioning. Equities are a claim on nominal growth and can therefore perform well in this environment, as...

A hot topic of debate over the past few years has been the outsized controls which social media networks have on the dissemination of information, where the concept of “free speech” has been debated time and time again against the...

In the month since we last detailed RBA cash rate expectations, a lot has happened where the market has raised rate hike expectations aggressively. Specifically, projecting a cash rate of 2.15% by year end, with over 2% of rate hikes...

As an NFL enthusiast and Philadelphia Eagles fan, I’m well aware of the concept of “Time in Possession”, which is a statistic measuring the percentage of a game that a team’s offence has the ball. Time in possession isn’t necessarily...

Whilst financial markets have remained largely fixated on energy markets throughout the Russia-Ukraine crisis, an impending hunger crisis has been festering in the background which could have grave implications for the global economy, as well as on the health and...

On Tuesday evening, our Federal Budget for FY2022/23 was handed down and was definitely an election year Budget less concerned with fiscal consolidation than yesteryear. Windfalls from higher than forecast commodity prices boosted revenues, as did a quicker rebound in...

Today marks the 34th day since Russia’s invasion of Ukraine, where both sides have entered into a protracted stage of conflict where neither side has shown signs of being able to definitively secure victory in the short term. Global markets...

The shape of the government bond yield curve is an incredibly powerful tool for determining the forward looking price of money. The shape – the relative flatness or steepness – can also be used as a gauge of inflation expectations,...

Last week, I had the opportunity to speak at a portfolio management conference held by IMAP – Institute of Managed Account Professionals – on the topic of embedding ESG into fixed income portfolios, specifically, AUD fixed income portfolios. In today’s...

The use cases of NFT’s will span far beyond the digital art and collectibles markets we see today, through their properties of being verifiably scarce, portable, and programmable digital assets. Their key values lie in being able to establish digital...

Yesterday morning (in our time zone), the Federal Reserve raised their cash rate by 25bp to 0.25-0.5% p.a. What caught our eye was the more hawkish dot plot, where the median dot was higher than the market’s forecast, a hawkish...

Agriculture exposure is something that is overlooked when constructing a portfolio, which is odd, when you consider that agriculture produces the food which everyone looks forward to at breakfast, lunch, and dinner.  In Australia, agriculture contributes 3% (about $50 billion...

Each year, International Women’s Day provides a strong reminder that we’re continually failing as a society to provide gender equality, considered by the United Nations to be a fundamental human right, but also a necessary condition for a peaceful and...

Credit spreads have endured a difficult start to the year, widening on the back of the same forces driving most risk assets - interest rates and the Russia/Ukraine conflict. Whilst investment grade issuers remain well capitalised, rising interest rates have...

The importance of cybersecurity has continued to grow as more and more of our lives are transferred to the digital realm. The threat of Russian cyber warfare, the Colonial Pipeline ransomware attack, and the SolarWinds hack have all demonstrated the...

Putting the topic of the Russia-Ukraine war aside for a day, higher and more sustained inflation is still front-and-centre for investment decision making this year, as well as the likely reaction function that central banks will have in dealing with...

Late last week and over the weekend, several nations joined forces to jointly sanction Russia for invading Ukraine. One of the latest sanctions was an economic restriction on specific Russian banking institutions from using the SWIFT electronic-payment-messaging system that forms...

Last Thursday morning (local time), Vladimir Putin launched a broad based Russian military offensive against Ukraine – starting what is by some measures the largest armed conflict in Europe since WW2. It has currently involved missile, air and artillery strikes...

The last 2-3 weeks have been overshadowed by geopolitical uncertainty regarding Russia-Ukraine unrest, whilst the spectre of higher bond yields and less financial market liquidity is continuing to influence markets. In the past 3 months we’ve seen what the prospect...

There are only two ways to size an investment. You make money and wish you bought more, or you lose money and wish you bought less. While being flippant, what we’re saying is that we invest and choose each position...

Copper has experienced a “death cross” price event, where short-term average price has declined below long-term average price levels. While this type of technical price indicator is lagging in nature, there’s only been 5 such events in the past 30...

One of the most important news stories over the past few months has been the escalating Ukraine-Russia tension, where the threat of invasion has continued to linger over the world as negotiations continue to fall afoot of Russian demands. Uncertainty...

The capacity to self-custody cryptocurrencies generates an immeasurable opportunity for current, and potential market participants. Through the removal of intermediaries, access to this section of capital markets is granted to anyone with a working internet connection, and some spare change....

SaaS (Software as a Service) businesses are one of the fastest growing segments within the IT industry, and have been one of the largest beneficiaries from the COVID-19 pandemic given the growing importance of flexible, affordable and cloud based technological...

Monetary policy is set to become less expansionary and accommodative this year, although not outright contractive, will provide less impetus for risk assets to continue their stellar performance of recent years. This year we must come to understand a new...

Over the past two years cryptocurrencies have emerged from the fringes of capital markets to become regular talking points within asset allocation discussions. However, whilst the seemingly exponential growth of valuations over the past few years has been attractive enough...

The recent decline in many global share indexes has been largely attributable to lower valuations and investment outflows. These outflows where from industry sector to industry sector, from one nation’s index to another, and between asset classes as well as...

January has seen equity markets selloff considerably, in response to the expected acceleration in rate hike timelines and earlier than expected announcement of Quantitative Tightening (QT) in the US. Whilst this has seen the majority of shares decline, some sectors...

Welcome back to the Mason Stevens morning note series. Since we left off in our last note on 10/Dec, quite a lot has happened and asset prices have moved somewhat, notably equity markets are off their 2021 highs. For our...

CY2021 like 2020 has yet again been dramatically influenced by COVID infection and hospitalisation rates, likely a year that flew by for most of us, and one with less memories that stand out, with less experiences to use as reference...

Today’s note culminates our aggregate market outlook for 2022, where we summarise our views for the global macro-economy. CY2022 is likely to be a starkly different year to 2020 or 2021, where there were generally one to three main drivers...

2021 has been a breakout year for cryptocurrencies, with its dramatic rise through the ranks of popular culture seeing the asset class move from the fringes of society, to a focal point within political and investment-based discussions. Despite this, the...

Fixed income assets are likely to be influenced by divergent forces in 2022, where COVID-19 variants and surging infection rates will elicit risk-off investing and the demand for safe haven assets such as bonds as well as specific currencies such...

For the everyday Australian, their superannuation account will be one of the most important investments of their lives, serving as a stable base to support their retirement. Given its importance to our lives, we should spend time dwelling on how...

It's that time of the year where we start to aggregate our views to provide tactical positioning for the 2022 calendar year. I've elected to start off our "Outlook" notes series by tackling what I find to be the hardest...

Both geopolitics and investment management are about philosophy and strategy, where both incorporate at least some degree of forecasting or signalling of future events. Our considerations of the future and the way it relates to our present self is couched...

The Metaverse has received significant press attention over the past few weeks on the back of Mark Zuckerberg’s announcement to change Facebook’s name to Meta. But what exactly is the Metaverse? The Metaverse can’t by defined by a location, or...

Good afternoon and welcome to the Weekend Reading, Jesse style. I gave Max the day off today so that he could enjoy his birthday to its fullest extent…whilst the poor guy is in lockdown. As I’m a different person with...

In March and April we made a fairly astute call that was out of consensus at the time, that mortgage rates were going to rise due to the evolving economic circumstance, putting margin pressure on mortgage lenders. At the time...

Last week we wrote about the decarbonisation of the global economy, and the subsequent opportunities available in the lithium industry. Central to the task at hand in reaching net zero emissions is developing scalable and efficient technology, which enables the...

We’re into month eleven of COVID-19 vaccinations globally and eight months into the Australian process. In the past month there’s been many newsworthy items as COVID-19 pills have been tested in clinical trials, with results sent to global health regulators...

Decarbonisation has been one of the most talked about phenomenon’s over the past few years, as governments and institutions grapple with how to meaningfully reduce emissions to a point where we can avoid irreparable damage to our planet. Over the...

The RBA met for their 10th and 2nd last policy meeting of the year, yesterday, deciding to play things safe by bowing to market forces and following recent actions and commentary from other global central banks. Whilst they’ve changed different...

For the second time this year, we’re experiencing a bond market sell-off. However, this time around, mostly focused on short term yields rising quicker than longer tenor bond yields . The market term for this is a “bear flattener”. In...

Over the past 18-20 months since the pandemic struck, a trend has been established where workplaces have experienced higher staff turnover, often with employees quitting without another job lined up. This has occurred with increasingly regularity in the past six...

Keeping Up with the Kardashians? The investing equivalent should be “keeping up with the property market”, where those born in the 1980s and 90s are finding our nation’s capital cities increasingly expensive and having to take more risk to just...

Bitcoin reclaimed its all-time-highs last week, and it seems like time to revisit the world of cryptocurrencies, and more specifically, its largest threat – regulation. Cryptocurrencies, and blockchain technology more broadly, offer the potential to revolutionise our digital world and...

Over the past two weeks, oil and gas have hit 7-year highs, while coal has hit all-time highs. For some in the market, this may have come as somewhat of a shock – aren’t we supposed to be transitioning away...

In the past month since we’ve spoken about the trajectory of our AUD and its valuation, quite a lot has changed where AUD/USD has found support and the fundamentals are improving. We nuance our views with the concept of “horizon...

Yesterday, we held our quarterly Mason Stevens Credit Fund webinar, where the main topics of conversation were regarding inflation expectations, rising bond yields and a steeper yield curve, and how to actively manage fixed income exposure to benefit from a...

COVID-19 can be viewed as one of the largest points of inflection in our modern society – where there has been a significant shift in thinking towards a greater prioritisation of one’s health. The Australian nation that is re-opening is...

In building investment portfolios, investors utilise expected return and expected risk to build “optimal” or “efficient” portfolios, which relies on our ability to accurately or reasonably forecast future events and asset prices. But what if our expectations are vastly different...

As governments around the world continue to loosen restrictions, the travel industry stands out as one of the most significant beneficiaries of the international re-opening trade. When looking into the main players within this space internationally, a trend is clear...

We’re into month eleven of COVID-19 vaccinations globally and eight months into the Australian process, where we’ve continued to see a ramp-up in local supply allowing for quicker vaccination progress. The good news is that the end is coming into...

Evergrande has received significant attention in mainstream press over the past few weeks, as its potential default has spelt concerns of “contagion” throughout the global economy. The next chapter of Evergrande’s story is yet to be determined, as the world...

The USA’s working age population has grown over the past decade, yet the amount of people participating in their labour market has fallen. Why is that? The answer is subtle: where there are over 24 million Americans that share this...

Our title says “non-standard” but it could just as easily have said scathing or blistering, as a US Federal Reserve economist has written and published an academic discussion paper that seeks to refute all the recent policy responses from the...

Most federal elections influence financial markets, owing to the sweeping changes often made to fiscal and sometimes monetary policy by newly elected political parties and their leaders. This fact is especially pertinent for elections over the next year, where governments...

This has been a fast moving week, between a live Fed policy meeting, the AUKUS agreement and nuclear submarines, the looming spectre of China Evergrande missing bond coupon payments, and RBA providing an explicit framework for how it can provide...

It’s hard to argue that countries with younger demographics, lower public indebtedness and without legacy technology have longer growth runways ahead of them; we’ve known about the opportunities in emerging and frontier markets for years and decades already. The hardest...

As interest rates have continued to move lower over recent years, a product of a two-decade long period of disinflation and the COVID-19 pandemic, the question has been continually asked – do government bonds still have a place in portfolios?...

Hyperloop is set to be the first new form of mass transportation humankind have developed in nearly 70 years, revolutionising the way we travel – and subsequently the way we live. Current forms of transport require us to live in...

In March, we wrote about China’s 14th Five Year Plan, and identified 8 key areas worthy of note and mostly likely to be impactful to investment portfolios. Three of these areas were tech, healthcare and education, where we warned of...

Historically, our AUD’s worth has been defined by three key criteria – commodity prices, interest rate differentials (“carry”) and China. In respect of the developments of 2020, we can now add COVID-19, creating the “four C’s” framework. In today’s note...

Specialisation and centralisation have played a key role in global capital markets, where only regulated exchanges and counterparties have been able to facilitate the purchase and sale of assets. However, as blockchain technology has developed and gained more mainstream acceptance,...

The RBA met for their monthly policy meeting yesterday and their statement surprised slightly dovish, having re-affirmed their decision to taper their asset purchase program, but doing so in a slowly manner than previously stated. Whilst this is dovish and...

We’re into month ten of COVID-19 vaccinations globally and seven months into the Australian process, where at present, a large number of Australian residents are in lockdown or working from home to avoid the spread of the delta variant. The...

I really like analysing utilities, as they tend to perform like bond proxies providing regular income (most of the time), where a substantial portion of their business comes from regulated activities with high degrees of certainty. However, we’d be remiss...

The earnings season is nearing completion, and there has been a clear outperformance of growth over value. Some of the greatest upside surprises have come from the Information Technology industry, which should come at no shock given the impact of...

In the weeks leading towards the annual Jackson Hole Symposium, we weren’t expecting anything profoundly shocking to eventuate, where the Fed – like other central banks – has been slowly providing forward guidance to avoid another calamitous “Taper Tantrum” that...

Gold has long played a role within utility maximising portfolios – given its ability to diversify and reduce volatility. During last years market crash, gold was able to outperform the S&P500 by 30.6%, however outside of its qualities as a...

The Delta variant and Chinese restrictions on iron ore imports has created an uneven earnings season, with some companies flourishing amidst lockdown restrictions, and others being impacted by increasing uncertainty. Within the telecommunications industry, results have been mixed, however significant...

We can learn a lot about investing from analysing piles of sand. As children, many of us are lucky to go to the beach as one of Australia’s favourite pastimes, where many of us have built small structures out of...

Even for the most digitally inept of us, the amount of time we have spent online has gone up. This has enforced lifestyle changes which will likely be irreversible, where in the past, onboarding into the more efficient digital world...

We published a morning note on 28-July outlining the likely outperformance to be received from the likes of CBA and NAB and the potential for large share buyback programmes to commence, creating a strong short-term positive impulse for their share...

Describing inflation as “transitory” has to be one of the most annoying terms a central banker can use for investors, as it offers no insight into the time-frame that inflationary pressures will be felt. A 6 month spike in price...

Web 3.0 will serve as one of the most important technological developments of our generation, and promises a more secure and efficient internet, operating through peer-to-peer (P2P) networks which don’t require third parties. No longer will Facebook and Google be...

Many reading this note may remember a time before the internet, when the term “information superhighway” was used unironically and the most complicated pages out there were static text documents with some coloured text. The evolution of what we now...

Unconventional central bank monetary policy has similarities to driving a car, we aren’t kidding. In recent client conversations, discussions regard central bank “tapering” of unconventional policy initiatives of 2020 have ranged from those thinking tapering will cause volatility and panic...

Fintech seeks to disrupt traditional financial systems through the creation and implementation of innovative technology solutions, intended to increase efficiency, generate synergies, and improve the customer experience. What Fintech offers is the provision of financial services made mostly in conjunction...

In the 6 weeks since our last COVID-19 vaccination update, there has been an additional 1.04 billion vaccines administered across the globe, where approximately 16% of the human population had received at least 1 dose of various vaccines. Our National...

The need to transition to more renewable energy sources is a challenge which is paramount to the survival of the human race. However, the transition requires the development and acceptance of technologies able to efficiently supplant both existing energy needs,...

The essence of investing is to preserve your capital base’s purchasing power, and grow it if possible, in line with investment objectives. In order to formulate a strategy that allows this, we need to have robust processes in place to...

Our domestic banking landscape has changed since COVID first impacted our economy last year, where banks were forced by regulators to retain more capital, while our yield curve flattened detracting from net interest margins, and lending volumes plummeted. As 2021...

As consumers continue to transition away from cash, the payments ecosystem is becoming increasingly more integral to our global economy. Apple Pay has rose to prominence, capturing 5% of the global digital payments market through its contactless payment method, with...

A key reason to draw parallels between our current markets and the situation immediately following the GFC is a term that has been floating around financial media over the last few months of a “taper tantrum”, in relation to if/when...

Jesse Imer, Fixed Income Strategist, breaks down the myth that yield cannot be found within Fixed Income within the current low interest rate environment, and why investors may be overlooking the benefit of pairing of investment-grade credit bonds, with active...

When we published our 2021 Outlook last year, we forecast an AUD/USD exchange rate to reach 80c, which happened in 35 days, in early February! Since then, AUD/USD had trended lower, as our AUD has been weak relative to the...

Credit spreads represent the difference in yield between the relevant benchmark (usually government bonds) and the yield of another non-government debt security of the same maturity. As interest rates have gone to record lows, investors have begun to allocate more...

Graphics Processing Units (GPUs) serve as one of the only constants within the technology of the now, and that of the future. Despite previously used only for generating computer graphics, they are now set to play a key role in...

Working from home (WFH) is by no means a recent phenomenon, where the movement has grown in popularity ever since the 1970s as female workforce participation rates increased. This trend gained speed as technology developed, making it more practical, and...

We’re a little over half way through the calendar year and it’s time to review our strategic asset allocation framework to confirm or amend our forecasts for this year. In December, we wrote about how POLICY was trumping FUNDAMENTALS in...

Capital markets exist to improve transactional efficiency, providing a venue to allow the transfer of capital between those who possess it, and those who demand it. Whilst capital markets have enabled economic advancements which have significantly enhanced our standard of...

Yesterday the RBA met in a meeting foreshadowed in previous months to be “live”, where they would potentially recalibrate the monetary policy setting of the domestic economy. The RBA didn’t disappoint – amending their asset purchase program, adopting data-based forward...

It’s never a bad time to have a conversation about lowering the debt servicing costs of an entity, whether it’s a household, a business or our Federal government. At the Federal level, gross government debt has grown over 200 billion...

Our lives are becoming increasingly lived through technology – whether it’s social media, mobile phones, email, video conferencing or video games – and as this trend continues, increased demand for better products and services has provided ample investment opportunities to...

To date, our risk-off series has focused largely on investments which are inversely related to market sentiment, and as a result may only be suitable within short-medium term time frames. These solutions may also not be suitable for those investors...

The most recent US White House Budget has no budget surpluses forecast for the next decade, likewise in Australia, there’s no budget surplus forecast until 2031/32 fiscal year. This begs the question how governments are proposing to finance these deficits...

What may be evident at this point in our Risk-Off series is that for each opportunity we have to make a risk management decision, there is often a corresponding opportunity to make gains within our portfolios. Touching on risk management...

3D printing offers a glimpse into the future, where manufacturing and transport networks could be completely overhauled through on-demand, mobile and flexible production channels. Whilst the industry has been in existence for decades, recent developments have made mainstream adoption increasingly...

In the past, the ability to buy and hold foreign currencies such as US dollars or Japanese yen was unavailable to non-institutional investors, where the minimum requirement was generally millions of AUD of investment, and a private banking arrangement. However,...

As Jesse mentioned in the introductory note to this risk-off series, investors are constantly faced with the possibility of the extreme, be it to the upside or downside. During 2020 we were faced with both circumstances, with the global pandemic...

Last week several central bankers spoke about their bank’s pathway to normalising monetary policy, which would see a tapering of asset purchase programs and eventual increases to cash rates. Rising bond yields and funding costs has implications to equity valuations,...

The past year has seen markets rapidly evolve through a greater level of retail involvement and an enhanced focus on new asset classes and industries purported to offer a glimpse into our future. However, as momentum behind these trends has...

We are now into month seven of COVID-19 vaccinations globally, and month four in Australia. Our pace of domestic vaccinations has improved, though still below the original, revised and current target rates for inoculation. However, we are speeding up with...

In the multitude of notes we’ve written about equities, most will make a basic assumption that we are ‘long’, i.e. we are buying the security or fund with the view that the market is going up. But what if we...

In 2002, US Secretary of Defense Donald Rumsfeld answered a question by talking about known unknowns and unknown unknowns, events we know but happen but can’t accurately forecast them, and events that happen out of the blue that can’t be...

With the new year came a new US administration in the White House, where President Joe Biden has since divulged foreign policy priorities, amid the backdrop of rising tensions between the US and China centred around flashpoint issues such as...

For close to seventy years, government issued fixed-rate bonds have provided satisfactory levels of income at relatively low levels of risk. As interest rates have declined over this period, the income became less and less, an the diversification benefits less...

The RBA is trying its utmost to provide clear and concise publications that state their policy objectives, and how they’re attempting to reach them. What they’re doing is making it easy for households, businesses, investors etc to get ahead of...

As the COVID-19 vaccine has been rolled out around the world, investors have flocked towards the re-opening trade - where improved economic growth outlooks would see certain industries outperform. More broadly speaking, this has also involved a move from growth...

The father of value investing, Benjamin Graham, proposed in his 1949 book “The Intelligent Investor” that “chief losses to investors come from the purchase of low quality stocks..” Seventy years later this statement remains relevant, where even during the largest...

Elon Musk’s recent tweets over the environmental sustainability of Bitcoin have sparked a debate regarding the ESG credentials of Bitcoin, and whether or not it is an appropriate allocation of resources or capital. Whilst some market participants will happily declare...

Growth investors have enjoyed a stellar decade, supported by an equity bull market and record low interest rates. However, with increasing inflationary expectations and lofty growth stock valuations, investors have begun to rotate into other areas of the market. In...

Quantitative factors were once the realm of statisticians and hedge funds, where they’re grown in popularity and accessibility in recent years, and speaking about “growth”, “quality” or “momentum” factors has become commonplace. In short, “factor” based investments seek to isolate...

Usually when Australian exporters have big years – like they’re having this year – we see the AUD/USD exchange rate rally where AUD outperforms most other currencies. However, this year AUD/USD is trading in a confined range, while our terms...

In 1991, the total value of Japanese real estate was estimated to be USD $20 trillion, 5 times that of the entire US and making up 20% of the world’s wealth. Since the collapse of their real estate and equity...

Last week’s Federal Budget projected that Australia would run budget deficits for the next ten years, until 2031/32 fiscal year. With this, the government has changed their rhetoric of balanced budgets and fiscal conservatism, to higher portion of spending and...

We are now into month six of COVID-19 vaccinations globally, and month three in Australia. Our pace of domestic vaccinations has improved, though is well below the original, revised and current target rates of inoculation. This presents the shifting economic...

As with all Federal Budgets, there are winners and losers, where during election years, the incumbent government usually seeks a higher spending agenda to create the optic there’s more winners than usual, and they’re looking out for everyone. In that...

Industrial metals have historically held strong correlations with inflation, and with good reason. Due to this correlation, they serve as one of the best performing inflation hedge assets, as well as an important bellwether for economic trends. In today’s note,...

In Australia and across the world, we’re seeing higher prices in pet food, corn, wheat, timber, iron, copper, bitumen, housing, accommodation, yet we’ve only seen muted inflation data thus far, as measured by Consumer Price Indexes (CPI). This made us...

Soft commodities generally refer to agricultural goods that are grown, rather than extracted from the ground. “Soft” referring to the tensile strength in comparison to harder commodities such as gold, platinum (precious metals) or iron, nickel and cobalt (industrial metals)....

The relationship between precious metals and inflation has been shown empirically in the past, including gold and the ‘white metals’, being silver, platinum and palladium. These are also “real assets”, physical pieces of ‘something’ which we believe to have some...

Many phrases are thrown around markets, with varying origins and use cases. In today’s slightly lighter note, we will go over some of the more commonly used terms and expressions in the industry, ranging from a “dead cat bounce” to...

Inflation is on everyone’s minds right now – specifically regarding if it will eventuate, and whether it will merely be transitory, or more permanent. Lumber prices have surged over 340% in the past year, providing a dramatic example of inflation...

Inflation-linked bonds are a specific way to hedge against both expected and unexpected inflation increases in the future, as their capital value and coupon payments are explicitly linked to the Consumer Price Index. As inflation expectations have surged in the...

US President Biden is the man with the plan, having already legislated the American Rescue Plan, he is now seeking approval for the American Jobs Plan, before proposing the next chapter, the American Families Plan. Build Back Better was a...

When people talk about the technologies which will define our future, one name always pops up – Artificial Intelligence (AI). Whilst it may be difficult to distinguish, AI already plays a role in many facets of society, with its influence...

The vast majority of Australians pay variable (floating) rates on their residential home loans, which has been beneficial for the majority of the last three decades, as mortgage rates and other borrowing costs have trended lower. However, if interest rates...

We are now into month five of COVID-19 vaccinations globally, and two months into the inoculation process in Australia, a month since our last update. On 22-Feb: there were 186mln doses administered worldwide across 82 different countries, at a run-rate...

Gambling predates almost everything known in human existence, with the first instances of gambling recorded in the Stone Age – almost 3.3 million years ago. Since then, it has evolved dramatically to become a USD $465 billion-dollar industry. In today’s...

Recently we were analysing the trading patterns in Bitcoin relative to more mainstream assets, such as the Australian dollar and Japanese Yen currency cross-rate (AUD/JPY). What we found was that Bitcoin DOES have an effect on AUD/JPY – who would’ve...

Government bond auctions are a relatively unknown part of international finance, yet they have wide ranging impacts for government funding costs, taxation, bond valuations, equity valuations, opportunity cost and asset allocation. They’re largely unknown because as long as they work...

Deliveroo’s recent IPO was the worst in the history of the London Stock Exchange, falling 26% on its first day of trading. With structural tailwinds driving competitor share prices higher and higher throughout 2020, what exactly went wrong? In today’s...

If there is anything that central banks have learned – especially our RBA – is that monetary policy is more effective when it is transparent and easily understood. Furthering this agenda, the RBA has published a discussion paper that details...

Over the past 100 years, financial markets have developed into the beast we now know – offering exposure to anything and everything, ranging from a simple share of Apple to complex derivatives on the Laotian Kip (currency). As our product...

Diversification is an investment process that seeks to lower portfolio risk in order to achieve a lower variability in returns. The importance of diversification only started to be a mainstream economics concept in the 1950s, when Harry Markowitz wrote his...

One of the tell-tale signs of the US housing bubble and the subsequent subprime mortgage crisis and credit crisis – later labelled the Global Financial Crisis or Great Recession – was a surge in house prices that peaked in 2006,...

The world is now into month four of COVID-19 vaccinations, and we’re one month since starting the inoculation process in Australia.  It’s also been one month since our last update. On 22-Feb: there was 186mln doses administered worldwide across 82...

Title: The USA’s New Plans for Asia Pacific While financial markets have been focusing on; bond markets sell offs,equity market earnings season,COVID-19 vaccine rollouts,cryptocurrency developments, the United States has been rolling out a comprehensive strategy against China and has been...

By now, we are all used to hearing the same old stories – growing COVID-19 infections, the U.S. government’s newest stimulus bill, and the price of Bitcoin going up. Whilst cryptocurrencies have been around for 10 years, several structural tailwinds...

International Women’s Day (IWD) is not new. Its origin dates back to February 28th 1909, thanks to the Socialist Party of America in New York City. Attendees cited the need for a reoccurring and more formalised event with credit to...

There has been a lot of hype over the last few weeks regarding the sell-off in sovereign bond yields, most of it fixated on longer-duration government issued fixed-rate bonds of maturities 7+ years from now (2028 or later). Due to...

Bond markets are not meant to be interesting. Bond markets are where governments and corporates can raise money via borrowing, to finance their operations, projects and objectives. Bond markets are meant to be orderly and stable, a place of mathematics...

Investor interest in cryptocurrencies, both from institutions and investors, has exploded over the past six months. Although cryptocurrency has been an existing asset class for over a decade, its renewed public profile makes it important for investors to gain a...

The human brain is a funny thing. There is a psychological phenomenon called the mere-exposure effect, a type of familiarity bias, where people tend to develop a preference for things merely because they are familiar to them. In investing, this...

Cryptocurrencies are the talk of the town, with their total market capitalisation increasing from $344 billion USD on the first day of October 2020, to $1.46 trillion USD as of the 24 February 2021, representing a 324% increase over just...

Yesterday I had the opportunity to speak at the Institute of Managed Accounts Professionals (IMAP) conference, held in Sydney. First and foremost, I would like to thank IMAP for the opportunity to attend and speak to the large cohort of...

The world is now into month three of COVID-19 vaccinations, with over 186 million doses administered worldwide, across 82 different countries, at a rate of 6.34 million doses per day at the current run-rate. Unfortunately for Australians, we are not...

Over time, there are three things which have held true – death, taxes and a change in the global reserve currency.  By nature, all predecessors to the USD’s rule as the global reserve currency have fallen – brought down by...

There was once a period of time where government bonds provided the desired income that investors required to meet their objectives. I’m talking about when “govies” used to yield 4% p.a. or higher, basically any time before the last 10...

It has become an ever-increasing topic of discussion in how to avoid potential market drawdowns this year or next, yet still be invested. In fact, for many balanced and growth mandates, they are required to maintain allocations to equities in...

The AUD/USD has appreciated by 33% since March 2020 and has brought foreign exchange (FX) risk into the forefront of the minds of investors looking at US equity and fixed income markets. We have discussed the factors which have driven,...

Prelude In order to provide you daily content in our morning notes, we are usually organised ~2 weeks in advance with lists of topics and thematics that we hope will resonate with you. Originally, I had planned to write this...

We tend to overconsume things that have no monetary cost. In economics, we call this the “free rider problem” where consumers do not value the inherent costs and benefits of things that are free. Think about it yourself, what is...

Swipe, swipe, partner for life…? Dating apps have revolutionised the dating industry, with the advent of Tinder in 2013 flipping the script on existing matchmaking services by placing the onus on users to pick and choose from singles in their...

Australia’s economy has fared relatively better than most other Western economies throughout the ongoing COVID-19 pandemic. This is due to many factors: our isolation being an island nation that is far from many other global trading hubs; fiscal and monetary...

Happy New Year and welcome to our first daily morning note of calendar year 2021! We hope that you all had a lovely holiday period and are rejuvenated for the year ahead. Our last morning note was published on 18...

Today is the last note of the year.We’ll return to publishing our daily content on 1 February 2021. First and foremost, thank you for your support this year – reading our publications, utilising our platform and investment service, participating in...

Today’s daily missive marks our second last publication for the year and the last of our 2021 outlooks, finishing with our multi-asset view. While it’s useful to derive and forecast performance objectives for specific asset classes, it’s increasingly important to...

As primarily a fixed income investor, I spend an inordinate amount of time managing foreign currency fluctuations, as currency exchange rates tend to gyrate more than the underlying bond prices. As an example, it doesn’t make sense to buy a...

The imposition of COVID-19 on societies across the globe may have lead investors to doubt the future prospects of commercial property, while the opposite has occurred in many nation’s residential property markets, as the rise of working-from-home arrangements has re-emphasised...

The American pharmaceutical firm Pfizer, in collaboration with German firm BioNTech, surprised the world when it announced their coronavirus vaccine showed 90% efficacy in preventing COVID-19. Days later, another American firm, Moderna, announced their vaccine has nearly 95% efficacy. Shortly...

If you missed last week’s missive, I’d encourage you to take a look, as today I continue from where we left off last week. The original topic was to deconstruct modern portfolio theory, in order to build portfolios that meet...

Yesterday, I had the opportunity to speak on a panel discussion hosted by the Institute of Managed Account Professionals (IMAP) regarding what zero% interest rates mean for managed account investing, and how we should invest in defensive and income bearing...

Mark Twain once observed: “History does not repeat, but it rhymes.” We are seeing parallels between current markets and 1999, the start of a ten-year period where US equities indices returned negatively. There have been 6 different “Lost Decade” periods...

RBA Governor Philip Lowe attended the Committee for Economic Development of Australia (CEDA)’s annual dinner on Tuesday evening. The topics he spoke about are not only important to us for their investment implications, but also to understand what policies one...

The world changed last week, and not just because of the US election. Pfizer announced a COVID-19 vaccine that is looking to be over 90% effective in stage 3 clinical trials. The market also knows that many other COVID-19 vaccines...

It is well known that certain companies, such as the mega-tech FAANG stocks, are trading at valuations that are high relative to historical averages. If you’re wondering why – there are two main answers. Investors and traders believe the valuation...

For investors, risk and return go hand in hand where for a potentially higher return on capital, there is a corresponding increase in risk. This is known as the risk-return trade-off. It is important to be aware that investing is...

The Reserve Bank (RBA) met yesterday and while the market predicted most of the resulting change in monetary policy setting, the Bank did provide some unexpected surprises. The point of policy In our missive on 26 October, we sought to...

In advance, thank you to Brent Donnelly at HSBC for the two charts and providing the link to the BBC news article. "Past performance does not indicate future performance." You may have seen this statement or a similar one on...

Governments’ budget proposals are just that – proposals – meaning they are subject to amendments. In implementation, they can differ greatly from their original plan. They are based upon assumptions such as tax rates, unemployment figures, government revenue (tax receipts),...

Monetary policy has become less clear, despite central banks stated desire to promote stability and transparency. It used to be that looking at the RBA’s cash rate target and charting the yields of ASX-listed bank bill futures would provide a...

Over the last decade, our Australian dollar (AUD) exchange rate has been closely correlated to the relative change in iron ore prices. As iron ore was more highly demanded and bought, our AUD would rally against foreign currencies – all...

I’ve used a provocative title today, but the question has been asked of me more and more in recent weeks - where government expenditure as a ratio of our overall national output (spending/GDP) is growing to higher and higher levels....

The price of goods, services and financial assets determine our ability to consume or invest in them. If prices increase and our income does not, then we need to reduce our ability to consume or invest. In terms of goods...

On Tuesday evening, Commonwealth government Treasurer Josh Frydenberg delivered the 2020-2021 budget (delayed since May) which was brimming with a mix of measures designed to boost near-term demand as well as lift longer-term growth and economic output. The latter, the...

I’ve wrote the majority of this note on 2-October and since original time of writing, it has been reported that US President Trump and his wife have tested positive for COVID-19 and have begun their 14-day quarantine period. It would...

In Monday’s missive regarding the RBA’s (potential) impending rate cut and alteration of current monetary policy settings, the key sentence for me and a lot of other market participants was “Given the outlook for inflation and employment is not consistent...

The market is now pricing in a cut to the Overnight Cash Rate (OCR) from 0.25% for the RBA’s October 6th meeting, with potential to change other policy measures as well. Let’s take a look why. The Australian Economy and...

That’s where I first saw Mary, On that roadside picking blackberries, That summer I turned a corner in my soul, Down that red dirt road               Brooks and Dunn (2003)   Some days my song references and links to my...

Ngilondoloze (Guard me) Uhambe nami (walk with me) Jersulame ikhaya lami (Jerusalem is my home)               Master KG [2020] Today marks the vernal equinox so a happy first day of spring for all of us reading in the southern hemisphere....

And it pains me so much to tell you, That you don’t know me that well…               Nelly Furtado (2000) [Today is part 1 in a two-part series regarding bank funding and capital – today’s topic being about funding and...

There’s a lady who’s sure, All that glitters is gold And she’s buying a stairway to Heaven               Led Zepplin (1971) Last Wednesday, I wrote this note about how central banks are providing so much liquidity in an attempt to...

“People say I got a drinkin’ problem But I got no problem drinkin’ at all They keep on talkin’ Drawing conclusions They call it a problem, I call it a solution”               Midland (2017)   My song and band reference...

Today, I want to talk about the Autumn of ’68 in the USA.  While not as catchy as Bryan Adam’s “Summer of  '69”, the US Autumn of 1968 was quite a notable period, but for all the wrong reasons. Calendar...

Times are rough, but we can make it, We can work it out How can we be lovers if we can’t be friends? How can we start over if the fighting never ends?                 Michael Bolton (1989)   This week...

Each year there is a large gathering of economists, financial market participants, academics, US government officials in Jackson Hole, Wyoming (USA), to discuss long-term economic policy issues of mutual concern. All the papers are available online. This year’s meetings occurred...

Worried Australians have stockpiled fresh Australian banknotes during the current pandemic, with Note Printing Australia issuing over $10billion worth of new notes year to date, increasing the total supply of bank notes 13% from 84 to 95bln AUD. This is...

An August summer night, Soldiers passing by Listening to the wind of change                 Scorpions (1990)   With the publication of ANZ’s Q3 results last week, we closed the reporting season for our Big Four Major banks – ANZ, Westpac,...

Understanding the difference between risk and uncertainty is crucial in every aspect of investing. A decision involving risk lends itself to statistical analysis and econometrics, particularly if the opportunity or idea is common, and the event re-occurring. On the other...

“Just a small-town girl, Livin’ in a lonely world, She took the midnight train goin’ anywhere”                 Journey (1981) A question we increasingly receive at Mason Stevens is if bonds are still a benefit to portfolios. The latest academic research...

On 1 July 2020, Indonesia’s central bank closed an agreement with the government to fund $40bln USD at zero% interest rate, to fight the coronavirus pandemic. This is the largest debt monetisation program among emerging market nations so far. While...

Just to see you smile, I’d do anything, that you wanted me to, And all is said and done, I’d never count the cost It’s worth all that’s lost                 Tim McGraw (1997)   Today’s note is several weeks in...

“Who’s to blame for the lives that tragedies claim, No matter what you say, It don’t take away the pain”                 P.O.D. [2001]   In Australia, we’ve been relatively lucky that our Commonwealth government has given Australians clarity of government...

“So shiny, my polyester girl”                 Regurgitator [1997]   Real yields on 10-year US Treasuries hit -1% on Friday – a first for American history – indicating that an investor lending money to the US government (buying their bonds) would...

Want to hear a bond market joke? Q: What do you call Canada after having its credit rating cut from AAA to AA? A: Canad Thank you, I’ll be here all week. On to the note – last week Tuesday...

I don’t have a song for you today – nothing really fits the brief. I want to use today’s missive to talk about the economic term “creative destruction” and the inference that the US Federal Reserve has investors backs and...

“And we’re falling all over again, Like a flashback to way back when, Back when we were us.” Luke Combs (2019) It is becoming a consensus view that an Australian economic recovery, as well as a global recovery, hinges upon...

“And if you said this life ain’t good enough, I would give, my world, to lift you up I would change my life, to better suit your mood” Santana ft. Rob Thomas – Smooth (1999) 32.9 million Americans received some...

“Don’t call it a comeback, I’ve been here for years” LL Cool J (1990) I set aside time each week in my “reading time” to peruse theories that I disagree with. I believe this is key in mitigating confirmation bias...

“I’m an easy read but I ain't no open book, Got a knack for making things harder than they look” Luke Combs (2019) Something the RBA is particularly good at is making their balance sheet transparent so that market watchers...

“Funny the things you thought you’d never miss, in a world gone crazy as this” Tim McGraw & Faith Hill (2014) This may be new news – but financial markets around the world are in varying stages of transitionary periods...

“Come on, come on, listen to the moneytalk” ACDC (1990) It has been a point of interest that Australian bond markets stick out in attractiveness compared to global peers, starting with our AAA-rated sovereign issued bonds, yielding higher than comparable...

“Hey now, hey now, don’t dream it’s over” Crowded House, 1986 Last week the ABS released Q1 2020’s GDP figure, telling us what we already knew, that economic output declined in Q1 this year. Australia has gone 114 quarters without...

It’s been widely publicised that this crisis is different from the GFC, as its origin is medical in nature as opposed to financial. This has prompted us to assess financial markets differently, as the government and institutional responses have been...

Understanding inflation is crucial to investing because inflation can reduce the value of investment returns. Inflation impacts all aspects of the economy – be it household spending, business spending, employment rates or interest rates. Inflation is a sustained rise in...

On Thursday evening, the heads of the Reserve Bank, APRA and ASIC gathered together to host a webinar regarding the Australian financial services sector. The most interesting topic is APRA chairperson Wayne Byres noting it would not be a concern...

Over the weekend I found myself reading an excerpt from Thomas Macaulay, a British historian in the early 1800's. In 1830, T.B. Macaulay wrote in reply to the pessimists of his day: “We cannot absolutely prove that those are in...

Today I would like to take the opportunity to talk about Modern Monetary Theory (MMT), which is a recent socio-economic view stemming from the 1990s. It may be surprising to know that MMT as a standalone concept was developed originally...

The phrase “throwing everything but the kitchen sink” gained popularity during World War II when it was delivered to describe using every possible weapon or methodology against the enemy in order to beat them. We use this phrase liberally in...

Today I wish to channel Chubby Checker’s 1960s hit Limbo Rock. As government bond yields head towards recent lows and some countries (ergo: Australia) are at all-time lows, it’s time to explore the possibility of long-term bond issuance as a...