Signal or Noise

Signal or Noise: 10 things every investor should know right now

When Livewire's Hans Lee set out to create a macro-focused series 18 months ago, he had one mission. From the beginning, the aim has been to make economics and data more relevant to the everyday investor. 
In every episode, we endeavour to take the most interesting headlines and narratives from the financial press before breaking them down in a way that you can use in your investment journey. 
But as the series has developed its audience over the last 18 months, we've also learned there has been an appetite for education. Not just explaining why the data points matter, but what those data points are and why the professionals look at them so closely.
In that spirit, this month's edition of the show is an all-educational episode, aimed at getting you right across the key data points that every investor should know. 
Plus, we'll also distil some jargon and central bank speak. If you've ever wondered why there's so much debate about the definition of a recession, why there are multiple measures of inflation, or how long it takes for interest rate hikes to hit your hip pocket, this show is for you.
To help us do this, we've recruited three of Australia's foremost economic and investment minds to help us achieve this goal:
Diana Mousina, Deputy Chief Economist at AMP and our series regular
Isaac Poole, Global CIO at Oreana Financial Services. Former economist at the RBA, Lloyds, and NSW Treasury
Anthony Doyle, Head of Investment Strategy at Firetrail Investments. Former investment specialist at Fidelity International and economist at Macquarie Group
Note: This episode was taped on Wednesday 6 September 2023. 
Wire: https://www.livewiremarkets.com/wires/signal-or-noise-10-things-every-investor-should-know-right-now

Why these fund managers think the hiking cycle is done (and what it means for your investments)

Cast your mind back to December 2022 when the consensus among analysts was that 2023 would see an extension of the large falls in markets. The 40-year rally in government bonds which preceded last year's crash was ancient history and central bank rate hikes would keep equities down and yields higher for longer. 
Well, that hasn't panned out. Far from it. 
It's equities that are off to the races and bonds are comparatively lagging. In fact, the BlackRock investment returns map is showing that developed market government debt (ie US, Australian etc bonds) have returned just 1.2% for the year so far.
So where did it all go so flat for bond markets and what place do fixed income investments have in the modern, everyday investor's portfolio?
We're answering all those questions (and more) in the Signal or Noise fixed income show. And for the first time, the show comes to you from downtown Melbourne. Moderator Hans Lee has made the trip south and is joined by three market veterans. Between them, they possess over 70 years of experience in financial markets across a range of firms. 
Charlie Jamieson, Co-Founder of Jamieson Coote Bonds and former co-head of rates trading at Bank of America Merrill Lynch
Andrew Canobi, Director of Fixed Income at Franklin Templeton Australia and former PM at Deutsche Bank
Tim Toohey, Head of Macro and Strategy at Yarra Capital Management and former Chief Economist at Goldman Sachs Australia/NZ
Note: This episode was taped on Wednesday 2 August 2023 at Franklin Templeton headquarters in Melbourne. 

7 key themes (and 4 stocks) to watch this ASX reporting season

Investors have arrived at one of the most important and fascinating earnings periods in a long time. Weaker profit growth and cautious guidance statements look likely to dominate the upcoming annual results season. 
After all, the list of headwinds is plentiful and many of them remain unresolved. Is the Reserve Bank's July pause actually going to stick this time? Australian inflation sits at around 6% but which businesses will bear the brunt (and benefit) of those increased costs? Can the leading economic indicators break out of their long and sluggish downtrend? 
And most importantly, which corporates will handle this uncertain environment best?
Most of these questions will be answered over the next four weeks. To get you ahead of the curve and make sure you're prepared for the torrent of results and themes to come, Livewire presents the August reporting season edition of Signal or Noise.
Moderator Hans Lee is joined by three of Australia's top macro minds. Between them, they manage billions in funds under management and advise both institutional and retail clients. 
Shane Oliver, Chief Economist and Head of Investment Strategy at AMP
Randal Jenneke, Head of Australian Equities and Portfolio Manager at T. Rowe Price
Jason Kim, Portfolio Manager and Senior Analyst at Tyndall Asset Management
Note: This episode was taped on Wednesday 26 July 2023. You can watch the show, listen to the podcast, or read the edited summary at https://www.livewiremarkets.com/wires/7-key-themes-and-4-stocks-to-watch-this-asx-reporting-season

Why the ASX is trading like a recession is coming (and the NASDAQ isn’t)

On May 3rd, 2022, the Reserve Bank of Australia hiked the cash rate target by 25 basis points to 0.35%. In the last paragraph of that day's decision statement, the Board wrote the following:
"The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time. This will require a further lift in interest rates over the period ahead."
Since then, the RBA has hiked that rate by 400 basis points (4%) and still isn't ruling more out, even if it creates a much larger risk of recession. 
Equity market investors have worked this out and it shows in the price action. The ASX 200 has effectively completed a round-trip, with the index roughly back at May 2022 levels (7200). Even the P/E ratio and ASX earnings yield have barely shifted an iota in the past 13 months! Until very recently, this was also the case in the bond market with the 10-year yield hovering in the mid-3% range. 
It's a far, far different story in the US, with the NASDAQ up 37% in the last year and the Barclays AI basket up nearly 50% in that same time period.
So how did we get here, why are we here, and more importantly what happens now?
Those three questions are just some of the pressing issues we are tackling in this month's edition of Livewire's Signal or Noise. Moderator Hans Lee returns alongside regular panelist Diana Mousina, deputy chief economist of AMP. They are also joined by two market veterans who have more than 50 years of experience between them.
Simon Doyle, CEO and CIO at Schroders
Mark Gardner, CEO and Head of Equities at MPC Markets
Wire: https://www.livewiremarkets.com/wires/why-the-asx-is-trading-like-a-recession-is-coming-and-the-nasdaq-isn-t

The ultimate guide to Australian income investing

No matter your age, market experience, or life goals, one thing every investor loves is a dividend. And with good reason! Australia has a friendly tax structure for those who rely on those dividends for passive income. But after 11 rate rises in an unprecedented year for markets, other investment avenues have come back into vogue. 
Bonds are back, thanks to a massive spike in yields across the government and corporate curves. Rental yields continue to go up, thanks primarily to the massive shortage in urban Australia. Even a term deposit can fetch you 5% interest at some financial institutions for just one year's patience. 
With so many options available, how can investors harness the powers of an income-oriented strategy? And which assets will pay out the most?
To answer those questions and to mark the start of Livewire's 5th annual Income Series, Signal or Noise is back with its first ever show dedicated to all things income investing.
Moderator Hans Lee returns to the chair, as does AMP's Diana Mousina. This month, they are also joined by two long-time Livewire contributors:
Aaron Binsted, co-portfolio manager of the Australian equity strategy at Lazard Asset Management
Pete Robinson, head of investment strategy at Challenger Investment Management
Note: This episode was taped on Wednesday 31 May 2023. 

Signal or Noise: Why the RBA’s May rate hike was the right decision

Before the COVID-19 pandemic, the Reserve Bank of Australia was considered one of the leading lights in the global central banking circuit. For a large part of the last 30 years, inflation has been within the Bank's 2-3% target and the broader economy has not been in a technical recession once thanks in large part to strong monetary policy settings. 
When the pandemic arrived, the cash rate was just 0.75%. It was quickly cut to 0.1% and Governor Philip Lowe strenuously argued that the nominal interest rate would not be taken below zero (unlike in Japan or Europe). 
What happened afterwards is a series of undoubted mistakes - forward guidance, yield curve control, a lack of consistent communication chief among them. The combined frustration from investors, economists, and the general public has thrust the RBA's credibility into a spotlight it never wanted to have. 
Now, 30 years on since its last major operational review, Australia's central bank will likely have to contend with some humongous changes. Among them - fewer meetings, a crystallised inflation target, and a separate monetary policy board. 
And all this before we find out if the Governor gets to keep his job for a supplementary three-year term. 
To discuss the Reserve Bank Review and what it means for investors, Livewire's Signal or Noise is back with an all-new episode. Joining moderator Hans Lee and permanent panellist Diana Mousina of AMP are:
Kerry Craig, global markets strategist at J.P.Morgan Asset Management
Warren Hogan, chief economics advisor to Judo Bank
Note: This episode was taped on Wednesday 3 May 2023. 

Is this the start of a second Global Financial Crisis?

Banking is a game of confidence. When the public loses faith in its financial institutions, the whole system crumbles. This month's episode of Signal or Noise probes those exact questions and how the fallout from the global banking crisis is impacting the decisions of investors.Joining moderator Hans Lee are:
Diana Mousina, AMP Deputy Chief Economist and series regular
David Cassidy, Head of Investment Strategy at WILSONS
Daniel Siluk, Portfolio Manager at Kapstream Capital
Note: This episode was taped on Wednesday April 5 2023.

Five commodities stocks successfully navigating geopolitical change

The global commodities market is at a vital point in its current cycle. Years of underinvestment have caused massive supply problems in the energy market. Climate change has drastically changed the food production supply chain. And central bank rate hikes are adding to real yields - creating a headwind for gold investors at a time when gold should be thriving.
It's also been just over a year since Russian forces invaded Ukraine, causing already high prices to soar even more. At the outbreak of the war, some energy prices increased by more than 100% in a matter of days. According to McKinsey, more than 1,000 companies have withdrawn their operations in Russia, the world's 11th biggest economy, since the first days of the invasion. 
While we recognise the tragedy and injustice of war, we also cannot avoid its impact on financial markets. 
As the conflict enters its second year, Livewire's economics series Signal or Noise is taking a closer look at how the war has changed investing and the wider economic landscape. We'll also take a close look at the commodities market - the asset class which saw the biggest single movements as a consequence of the war.