On the Money

Does monetary policy work any more?

In its latest quarterly statement on monetary policy, the Reserve Bank of Australia declared its preparedness to “ease monetary policy further if needed”. This suggests the bank still thinks monetary policy – in this case lowering interest rates to stimulate…

Six positive catalysts that could surprise investors

Over the last year, 10-year German Bund yields have gradually declined. Investor sentiment deteriorated over the course of this period as the US-China trade dispute dragged on, taking global growth down with it. Policymakers failed to adequately address the consequences…

The rise and fall and rise again of businesses serving more than just their shareholders

What’s the purpose of a business? For a long time, the textbook answer to that question has been purely “to make as much money as possible for its shareholders”. But business leaders – who often themselves get huge payouts from…

Markets may be expecting too much of central banks

The third quarter capped the best year-to-date return for the Bloomberg Barclays US Aggregate Bond Index since the first nine months of 2002. Although bond prices may continue to advance, we anticipate lower returns may accompany a rise in volatility…

Failing to pass on the full rate cut needn’t mean banks are profiteering

The unwillingness of the major (and other) banks to immediately cut their headline mortgage rates by as much as the Reserve Bank cuts its cash rate always attracts bad press, as well as condemnation from treasurers and prime ministers. After…

Late cycle strategy: income from infrastructure

The US Federal Reserve’s latest 25 basis points rate reduction in mid-September is seen by many market observers as another signal that world markets are in, or are fast approaching, a late cycle. US-China trade tensions, Brexit, Hong Kong protests…

Super guarantee debate goes another round

The debate about whether compulsory employer superannuation contributions should be increased from the current level of 9.5 per cent is constantly simmering, waiting for the next opportunity to boil over. Treasurer Josh Frydenberg turned up the flame last week, when…

In Australia, inequality is almost all about housing

Compared with the rest of the world, income inequality is not particularly high in Australia, nor is it getting much worse. The real problem is housing inequality. Rising house prices have increased wealth inequality. Rising housing costs have dramatically widened…

Talk about an index fund bubble is very passive-aggressive

If you’ve seen the movie The Big Short you will remember Christian Bale’s quirky character Michael Burry – the manager of the Scion Capital hedge fund who realises the US mortgage-backed security market is a massive bubble. He goes on…

Why now is the right time for value

The past two years have seen poor performance for value style indices and typical value managers globally, and stronger performance for momentum, growth and quality factors. There have been recent comments in the market that value is broken or that…