The InvestSense Podcast

Australian underlying inflation came in well above the RBA’s forecast at 4.3% over the year. AI is real, but so is the borrowing behind it is the risk, the warning lights are amber rather than red, and this is not an environment in which to reach for yield in credit. Lastly, diversification is earning its keep: October's best outcomes came from infrastructure, bonds and the parts of the equity mar...

The local story this week was inflation, but the interesting part is how local and global influences are being blamed depending on one’s perspective. Deputy RBA Governor Andrew Hauser intimated that inflation is getting worse and that this week's print would likely land on the higher side of expectations — a domestic problem, framed principally domestically with a focus on the structure of the eco...

Australia outperformed this week. The ASX 300 rose 0.9% while the Nasdaq shed 4.5% — and around 6% over the past fortnight — with emerging markets dragged lower by Korea and its large chipmakers. The S&P 500 finished roughly flat, and markets with more defensive exposures, the UK as well as Australia, edged higher. Most of the damage came in a single week of accelerating pessimism about the AI...

Australia had a thin data week and a noisy global one. Westpac's consumer confidence index fell from 84.4 to 80.4, with mortgages costing more after the Reserve Bank's recent tightening, a reminder of where the shift in interest rate environment is biting the most. The dollar tried and failed to clear 70 US cents, finishing near 69.8. The local ten-year moved the opposite way to most of the world,...

The RBA hiked to 4.60%, August CPI came in softer than expected, and US payrolls missed badly. Meanwhile high-yield spreads wobbled for the first time this cycle and Google issued a record-breaking bond into the Australian market. We talk through a quarter that moved a great deal and arrived nowhere. Get access to the graphs: www.investsense.com.au/industry-articles/a-quarter-of-movement-not-much-...

The S&P rose while the thirty-year hit 5.49%. The RBA is set to hike Tuesday, unemployment is now in the range the Governor wanted, and oil is back above US$104 after Trump rejected Iran's ceasefire offer. This week we discuss why this is a grind rather than a spike Get access to the graphs: www.investsense.com.au/industry-articles/ai-oil-and-a-flat-local-market-fy25-26-in-review    Join the I...

We asked Andrew Hunt last week whether, after years of "yes, but liquidity", we were finally coming to the end of something. His answer was an unambiguous "Yes, I think we are." The mechanism is the US current account. Hunt's long-standing rule is that once the American deficit approaches 1% of global GDP — roughly a tenth of world savings — funding becomes a problem. For 18 months it has been com...

Every defensive allocation starts from a price, and for most of the past decade that starting point was generous: bond yields had room to fall and credit spreads had room to compress. Today the position is reversed. Government yields are grinding higher rather than mean-reverting, and credit spreads sit near their tights. The defensive leg of a diversified portfolio is being asked to do its job fr...

Three major central banks raised rates last week: the Fed to 4%, the ECB earlier in the week, and the Bank of Japan to 1.25% on Friday. In almost every case, markets are priced for at least one more increase this year. The Bank of Japan matters more than most assume: one explanation for the synchronised rise in yields across the US, Europe, Japan and Australia is hedge funds unwinding the "yen car...

Three central banks are hiking at the same time, oil touched $110, and a trillion dollars of AI capital expenditure is landing in bond markets alongside already large government deficits. All that said equity moves were comparatively contained, and the damage was in rates, not shares which is unusual Get access to the graphs: www.investsense.com.au/industry-articles/hawks-at-home-oil-abroad-and-a-...

There is a respectable case that this is noise, if painful noise. Much of the move in long yields has tracked oil almost tick for tick, and one analysis circulating this week put the rolling correlation between the two at its highest in four decades. On that reading, the bond market is a hostage of the Gulf: a durable ceasefire takes oil down and yields with it, and central banks return to somethi...

When we spoke with Andrew Hunt in late July, his advice was to stay at the party. Getting defensive, he said, would be like standing on a railway track in front of an oncoming locomotive: you might know the track is broken behind you, but the train won't notice you. The impetus  was extraordinary, a US credit boom that refused to stop, and trillions of dollars of Asian trade surpluses being recycl...

The domestic focus last week was Wednesday's July CPI, and it was not the one the Reserve Bank wanted. Headline inflation eased to 3.5% over the year on base effects, despite a roughly 6% monthly rise in fuel prices, but the trimmed mean held at about 3.6%, and rose 0.5% in the month, well above expectation, with the pressure broad-based across goods and services rather than concentrated in one or...

Australia's August reporting season is drawing to a close, and the more interesting story is not the earnings themselves but what they triggered. CSL guided to flat revenue and rose 20%. Private equity bids arrived for Cleanaway, Equity Trustees, Perpetual, Steadfast and Reliance Worldwide. Meanwhile, the banks drifted the other way as mortgage applications rolled over post-Budget. This week, we l...

The ASX 300 fell 0.6% last week, but the index number disguised a sharp change in leadership Get access to the graphs: www.investsense.com.au/industry-articles/australian-reporting-season-rotation-beneath-a-flat-tape   Join the InvestSense Community to receive weekly insights from our investment team: https://www.investsense.com.au/investsense-insights?utm_source=Podcast+&utm_medium=MarketSens...

The RBA dominated the local week, holding the cash rate as universally expected but with a deliberate hawkish tilt.  Get access to the graphs: www.investsense.com.au/industry-articles/us-earnings-growth-hits-50-4-or-32-once-the-paper-gains-come-out   Join the InvestSense Community to receive weekly insights from our investment team: https://www.investsense.com.au/investsense-insights?utm_source=Po...

Australian small caps are usually treated as a satellite, added when markets feel buoyant and trimmed at the first sign of trouble. The S&P/ASX Small Ordinaries is not a miniature ASX 100 though, and it is not the banks and iron ore that drive it. We speak with Ben Griffiths of Eley Griffiths Group about what small caps genuinely add to a diversified portfolio, and why valuations make this a b...

With 88% of the S&P 500 now reported, second-quarter blended earnings growth stands at 50.4% — the strongest since Q2 2021 — on revenue growth of 15.0%, itself the best since late 2021. The headline flatters, though. Alphabet's result included a US$98 billion unrealised gain on equity securities and Amazon's a US$53.4 billion gain on its Anthropic investment; strip those paper gains out and ea...

The last week of July was another round trip for markets with the NASDAQ and chip heavy emerging markets indices off 4–5% earlier in the week before making most of it back in the final sessions. Over the month the pain was concentrated exactly where the year's gains had been: Korean stocks, mainly the chipmakers that now make up some 28–32% of the emerging-markets index, fell around 10%, moving in...

The job of multi-asset investors is to build portfolios where a concentrated, catalyst-driven strategy has the space and the time horizon, five to seven years, to do what it does, without being rolled out at the worst possible moment.   This week, JR spoke to James Hawkins of L1 Capital about what it takes to run ten stocks through stretches where high-conviction, value-driven investing was decide...

Rising GDP does not reliably translate into returns in emerging markets. The index is dominated by state-owned enterprises, political conglomerates and whichever theme is in vogue. Today that’s semiconductors, at more than 40% of the index.  We speak to Rahul Desai of Aikya, who focuses on cash-generative domestic franchises across India, Brazil and South Africa that have compounded at 10–15% in U...

Australian employment and US earnings led the news last week. The story is a familiar one wearing new clothes: an energy shock testing disinflation progress just as markets question the AI capex boom's cash generation.  Get access to the graphs: www.investsense.com.au/industry-articles/who-funds-the-ai-boom-when-borrowing-costs-are-rising   Join the InvestSense Community to receive weekly insights...

Andrew Hunt often says Markets = Faith x Liquidity. While faith may have peaked, liquidity clearly hasn't yet. His message is to stay invested for now, while avoiding the frothiest and most volatile areas of the market which will move quickest and most if the dynamics of that equation deteriorate further. Is Korea over the last 6 weeks or so the canary in the coal mine? He will also be watching fo...

As the US reporting season gets underway, volatility has been creeping back into markets, and in a distinctly uneven way. In summary, the Australian economy is looking a little resilient, and a flat year behind us means a more stable valuation starting point, not such a bad thing. The volatility in hotter corners of markets is worth discussing alongside how portfolios are positioned around it. Whi...

Most markets finished the week lower, though the Australian market held its ground. The pattern is telling: a dip through the middle of the week and a partial recovery into Friday.  The oil price traced almost the exact mirror image, spiking to around US$80 a barrel before easing back to US$76.  Get access to the graphs: www.investsense.com.au/industry-articles/looking-through-the-noise-with-marke...