Welcome back to our weekend reading,
The view out any office window in Sydney is quite grim at the moment, desolate streets where only the trams trundle along like particularly elongated wildebeests. With this thought in mind on Thursday, I thought to make a parody of Shelly’s “Ozymandias”, till I remembered one of the newsletters Jesse, Mike and I subscribe to already did that.
But did you know that there is a second “Ozymandias”, written at the same time, by Horace Smith as a friendly competition with Shelly? So, now there’s no risk of being a hack, here goes:
In Sydney’s concrete silence, all alone
Plays a television, whose picture shows,
A southern premier, mask to his nose –
“I am great ANDREWS”, saith the Dan,
“The King of Kings, my mighty City shows,
The wonders of lockdown” – The City’s gone –
Naught but artisan coffee left to disclose,
The site of this forgotten Babylon.
Sorry, Melbourne, but “Berejiklian” has too many syllables.
Let’s look back on the week.
Keep The Citizen Satisfied
Say you walked into the bank where you had a mortgage, and in a conversation with your lender could either assure them that they should keep interest rates low in the future, or that they should panic and hike, which would you chose?
If you chose the former, congratulations you think like President Joe Biden, who dismissed fears of persistent inflation in the U.S. economy this week, citing that there would be “near-term inflation as the economy is picking back up” – adding that it is “highly unlikely” that long term inflation would get out of hand.
Regardless of if you agree or disagree with his economics, this fell in line with market expectations for his views, considering he sits in the unenviable position of atop a pile of around $28.5 trillion USD of national debt at present.
This is after the U.S core CPI print surprised to the upside last month, marking a 0.9% increase for June against a market estimate of 0.4%.
Lost in Space
Jeff Bezos and three other passengers have safely touched back down in Texas this week, after a 10 minute Blue Origin capsule flight took them to an altitude of 105km above sea level (the mesosphere, for the physics enthusiasts out there).
Bezos flew with his brother Mark, 82-year old former astronaut trainee Wally Funk, and Oliver Daemen the 18-year old son of a Dutch financier. Sounds like the setup to a bad joke.
Coupled with Richard Branson’s flight on Virgin Galactic’s “space plane”, June is proving to be a compelling time for the testing and viability of space tourism as a budding industry.
Both companies are looking to commercialise the opportunity, with ticket prices likely starting around the price of a second hand Aston Martin, or 250,000 $1 cheeseburgers. Opportunity cost in action here.
An Apple A Day
Apple has pushed back its office re-opening timetable at least back to October, in response to what is appearing to become a global surge in COVID-19 delta cases. Currently retail store workers are encouraged to wear masks in the U.S, here on George Street they’re almost in full hazmat suits.
The company have said they will give employees at least a month’s notice before announcing the shift back to the office, likely starting back around 2-3 days per week and potentially building back up to full time over the proceeding months.
Apple was up 3% on the day of the announcement, albeit it’s unsure if the market likes the idea of Apple being a good corporate citizen or if the index was just up that day.
See You in 2032
Brisbane won the tender to host the 2032 Olympics, so they now have approximately 10 years to address some of the logistical issues such as road congestion and tourism, where the IOC feasibility study estimated a shortfall of 61,000 rooms, where the region will need to build ~600 medium sized hotels between now and then, sounds like a good reason to get long QLD property!
See you in 11 years once we’re allowed to travel interstate!
*All numbers in USD from BofA Securities
Equities: $3.3 billion into equities
Bonds: $8.4 billion into bonds
Precious Metals: $1.0 billion out of gold
Cash: $4.8 billion into cash
Flows to Know
Strong inflows into equities continue ($0.6 trillion YTD)
5th week of outflow from “reflation trades” but limited in size
1st outflow from bank loans since December 2020
Upturn in tech inflows past 4 weeks
US debt per capita hit $82,000
US CPI forecasts still rising
Evergrande, Not So Grand
China Evergrande continues its on-going financial and sentiment crisis, as the world’s most indebted property developer fields rising fears of it defaulting.
This week at least four of Hong Kong’s largest lenders announced they would cease providing mortgages to any buyers, owner occupied or investor, of Evergrande’s unfinished apartments in the city.
This was on the back of a wide series of reports about overdue payments to suppliers by the company, existing lenders becoming wary of repayment timing and likelihood, and a $20 million USD dispute with a Chinese bank (which has since been resolved).
Evergrande’s 2025 USD bonds fell to almost 45c on the dollar on the back of this news.
The Battle for Venezuelan Gold
Although it sounds like the title of an adventure novel, this was the headline this week as the issue of who controls over $1 billion USD worth of Venezuelan gold recently release from a Bank of England vault made the news.
The U.K Supreme Court is hearing matters that the British government continue to recognise the leadership of Venezuelan opposition leader Juan Guaido, rather than the current incumbent president Nicolas Maduro.
The court on Monday had ruled that the BOE must release the gold to the Venezuelan central bank, before being overturned by the U.K foreign secretary.
Our morning calls continue, please do tune in for a daily dose of market insights and access to some leading experts in the funds management field.
Tune in from 9:30-10:00 am AEST, Tuesdays, and Thursdays.
Have a safe and enjoyable weekend.
Max and the Mason Stevens team.
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The views expressed in this article are the views of the stated author as at the date published and are subject to change based on markets and other conditions. Past performance is not a reliable indicator of future performance. Mason Stevens is only providing general advice in providing this information. You should consider this information, along with all your other investments and strategies when assessing the appropriateness of the information to your individual circumstances. Mason Stevens and its associates and their respective directors and other staff each declare that they may hold interests in securities and/or earn fees or other benefits from transactions arising as a result of information contained in this article.