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Image Reuters



January 28, 2021

Good morning, 

and the above image from Reuters today, 
tells the whole story of what is going on in markets. 

This is the nature of the market now, as the power of the smartphone apps in the pockets of the fear of missing out generation with greatest consumer power goes completely insane.

Like me, many an experienced and usually successful market caller and fund manager was caught out by last year's rally and some of these individual stock tear aways to the upside. It is this gigantic herd of follow the news headline on any 'trendy' stock. The assumption being they know better than the old people. That's anyone over 40 laugh out loud. And I do. because they have no comprehension at all, that as they all buy and keep buying, they are only intensifying the moment at which they will be competing to the downside.

That they themselves are becoming nothing, but

a sea of potential sellers. 

They will do very poorly at that, because this technology is new, social media trading, and they have never experienced a real bear market, one where the selling does not come back to turn into buying again. This is what this next great crash, for that is what it will be, will be about. Most of these traders will keep buying the decline until they cannot anymore, and then end up in debt. For instance the UK financial journalist who on doing extremely well in Bitcoin, 80,000 account to 9 million, then borrowed to buy more, then ended up 3 million in debt, financial life destroyed. In the next couple of years these stories will become more common. 

Why I am telling you all this, is this is the market we are now dealing in.

They are not new.

Nonsensical biggest rallies in history have happened for hundreds of years,
but they are rare.

For instance, the roaring 1920s when radio was the change everything technology, advertising, huge company profits boom. Exactly like now. Followed by the 1929 crash. That was down 90%, stocks and property. It is how the Kennedy's became wealthy. They sold stocks near the top and bought property near the bottom. 

We will not see 90%, but we will see something very significant.

Has it started just now? Maybe.

We do not know, you can never be sure,
but we will hunt this as if it is.

Clifford Bennett


January 18, 2021

Full article, all charts, available via email request

Is today's data, really

as good as they say? 

Hello, and while the media, especially in Australia, see AFR headline below, are all celebratory about the fourth quarter number of 6.5%, 6.1% was the consensus expectation, the overall data today is less than ideal.

The quarterly number is good, but achieves a mere 2.3% GDP outcome for 2020. While it is fair to point to recent acceleration as a very positive sign for the future outlook, there are still strong reasons for concern. 

The AFR headlining. It seems the perfect outcome for our region doesn't it, but wait, there is more.

This is the quarterly number of 6.5%. The economy is that much stronger than a year ago. This is what was the norm before covid. The hole generated by covid is still a loss of wealth and income circulating through the economy however.

China has not rebounded to above trend performance to make up for covid. It has merely managed to get back to a quarterly number akin to pre covid. This is good, but the following data starts to create further holes in the rosy outlook of the media and many economists today.

For instance, China's retail sales growth has only bounced back to being half what it was before the crisis. And has even weakened over the past month, suggesting there may be some rolling over risk in this economy as well.

China fixed asset investment is also telling a similar story. Well down on previous levels and already starting to plateau. 

It is in the area of industrial production, that the Chinese economy is really performing quite well, but really only here. What concerns me greatly, is this is the area of the economy over which the government has greatest influence.

In other words, rather than a broad based economic recovery, we are most certainly seeing, to some degree, a government inspired pumping up of production to drive up GDP. Nothing wrong with that, but it distorts our view of how the economy is truly travelling. The great risk with this though, is that production could exceed demand if this continues. As other data is telling us that the private sector is less active, and consumers are not as keen as they once were. 

The Great Depression in the US,
was caused by over-production.

So, while the media like the AFR are willing to run with a vanilla and potentially badly mis-leading headline number like the simple quarterly number, may I suggest, we be a little more thoughtful than those people. 


While mining companies will garner some of this recovery, and already have in their orders, it will not be as great a proportion as was previously the case. Also, in every other area of the economy that does business with China, sudden total stagnations will continue to occur.

The Australian media and commentary is all about how great we are, and how wrong China is. Some, even suggesting that it will be China that suffers more than Australia? Just how seriously delusional are these people. 

We were the first to attack, but we sit back, and complain about retaliation as if this is a new problem created by China.

Australia, our leadership, and many others, you did this.
We all did this.

Until we accept that, and sit down to talk on that basis, the relationship will continue to steadily decline. I believe permanent damage has already been done. Again, something people do not seem to be grasping. If you are a farmer who has lost your China market, I wouldn't be sitting around waiting for that to come back. In many cases, it never will.

All, really a function of this totally incorrect view of Australia, which developed out of the GFC, that we are somehow clever people running a smart economy. Our relative performance in the real data continues to decline against the rest of the world.

By this, I mean levels of productivity and education. We sat on our laurels and watched as the rest of the world caught up and has begun to move beyond us. Many still think we are somehow superior, and this will be our great undoing. For it most certainly is not the case. 

The great Australian story of the past two decades is driven almost single handedly by the rise of China. Once a close friend. Now, not a friend at all. 

All the errors of our economy are about to be revealed, as the masking provided via China, exports, students, travel, investments, all continue to decline.

I have been writing and speaking since 2002 about how Australia has to WAKE UP. We still haven't.

In conclusion, today's data out of China contains serious fault lines the mainstream are ignoring. In any case, we, in Australia, delusional about our recovery bounce back phase being on-going, have yet to fully recognise the impact souring relations will have on all of us.

My forecast since last year, of the May to June period being one of real risk to the Australian economy, as the post covid party comes to an end, remains very much in place.

Clifford Bennett



January 4, 2021

This is a big deal. Who will control the Senate. Either way, the margin will be tight and problematic. Political paralysis likely to continue, in an environment of a highly degraded US society and economy.

Photo Reuters


January 4, 2021

US Jobless claims remain at extraordinarily high levels as the overall job market continues to deteriorate.

Photo Trading Economics


January 4, 2021

Asia continues to leave the rest of the world behind. South Korea exports a mixture of covid inspired health product buying and strong demand for chips as everyone stays at home buying the latest gadgets. Still, it does represent my thesis at the start of the century of intra-regional growth on Asia being the primary driver of globe growth for decades to come. Asia is not out of the woods either, but China being first in, first out, has certainly helped.



December 23, 2020

Covid intensifies,

but the human spirit stays strong.

From resurgence in Japan and South Korea to catastrophe in the USA and Europe, the healthcare emergency is raging like a wild fire with governments and medical teams racing to contain it. The point that the covid situation is intensifying rather than improving, cannot be ignored.

Photo NYT


December 23, 2020

According to the real experts, herd immunity on the basis of a vaccine, needs the vaccine to be 90% effective, tick, and 90% of the population to have the vaccination... more problematic. This is why US leaders are going live on TV with their injections. There is only about 50% at this time who are saying in polls that they will have the jab. Also, this is not a vaccine for the economy as many seem to believe. It is good news and should be celbrated, but still no silver bullet.

Photo NYT


December 23, 2020

Emergency US stimulus package that took months to happen. In the midst of one of the worst crises in US history it took them several months to put together this emergency extension package. Some may say, too little too late, but anything that puts food on the table and helps pay the rent is a welcome event. It does represent and say a lot about how the US will continue to function long term on a whole range of issues.

Photo NYT


December 23, 2020

Existing home sales have begun to fall back after the euphoric rise on back of stimulus. near zero interest rates, and of course, for many the sudden desire to live outside metropolitan areas, or at least have a better weekender to retreat to.

There has also been a significant investment frenzy aspect to all of this. Fueled by the idea that the virus would not have a lasting impact on the economy. That is a highly optimistic view of things that is not being born out on the streets of America.

Photo TradingEconomics


December 23, 2020

German Consumer Confidence continues to take a battering, as the first thought that they had handled it better than others, begins to fall into disarray. There will be a sustained impact on the economy, even with best efforts at this point. There is a vaccine, but it does not miraculously resolve global and national dislocation and supply line issues.

Photo TradingEconomics


December 23, 2020

US GDP remains seriously depressed, and may fall back to an even lower level of activity in the first 3-6 months of 2021.

Photo TradingEconomics



21 December, 2020.

A summary of my closing end of year points in brief.

The US Senate majority will be decided this week, with the two seats up for grabs in Georgia. In either case, for either party, the Senate will in any case almost tied, and this means only middle of the road reasonable policy should pass into law. It will nonetheless, be worrying to markets should the Democrats win both seats. 

US Stimulus package will be passed apparently, but it took them this long to keep funding going for the federal government, and only for another two days at this point, and that the stimulus package is of the smallest degree of help to struggling families in the midst of winter, just goes to show how far the United States has fallen as a nation overall. 

Southern California has now officially run out of ICU beds. There are none left, even all emergency set ups are full to capacity and the cases continue to grow alarmingly. This will be the worst Christmas the US has ever experienced. 

Tesla joins the SP500, and I believe both Tesla and the SP500, have at best, another 1-3 days of strength, before it is all over.

That there is stimulus approval will see a knee jerk rally today, but this involves such simplistic non-real world thinking it beggars belief, and is in step with my stupidity index, Bitcoin, which is way up.

An Alternative Christmas Plan. Unfortunately, many of us, myself included, will not be able to spend time with family this Christmas, due to the covid outbreak in Sydney. Thank goodness for technology, but I also thought of just delaying Christmas. The Greek Orthodox Christmas falls on January 7th. Perhaps we will all be able to get together then, and enjoy the full celebrations. That said, perhaps even such a date is overly optimistic.

There is an immediate and very negative impact on the Australian economy. Markets have only begun to price this in. There may be a false rally on the day with the brighter prospects of a US stimulus package, but it is very likely to fade as quickly as a New York snowflake in Sydney today.

The special offer, $6,000 value for just $300 is only available this week. I have already promoted this several times, so will leave it be, but if you wish to take up the offer, please do. This week.

Wishing everyone the very best of the Holidays, and indeed Christmas.

Make it what you can,
Clifford Bennett


A lot of people have been talking about business confidence improving this past month, which misses the point that the index remains at recession, even depression levels. The impact of the latest more severe shut down is yet to be felt as well.

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Photo: Reuters

24 November 2020

Trump makes way for Biden who will usher in a new era to be sure. He will focus on a calmer presidency to create contrast and win a second term perhaps against a resurgent Trump. A narrow congress majority and a Republican senate mean little of the Biden campaigns drastic measures, such as the tax hikes, should come to fruition. This is a major positive for the market. On foreign policy he will be firm with China, but with far more diplomacy. There will be differing points of view on this, but it is likely. For Australia, there is a very large risk here. A softer Biden line on China, even slightly, will leave Australia exposed as the most combatant nation against China in the world. Our trade is in for further reductions in exports to China to be sure. Morrison has been vote winning on China, while harming the nation's long term economic welfare. We should be making the points we are, but not in the grandstanding public statements approach of the government. There are more effective ways to operate. The USA will not immediately recover and the current post election plus vaccine euphoria is vulnerable to decay in coming months. All the best for your day, Clifford.



23 November 2020



18 November 2020

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Photo: Bloomberg

11 November 2020

The world's centre of gravity continues to shift toward Asia, in all kinds of ways. Australia needs to note it has an excellent seat at the table of the Asian economic and cultural phenomenon.

Understanding the separate cultures of Asia and not going out of our way to publicly insult our trading partners, would seem the best way to achieve desired goals and continue to prosper. Much more can be achieved by being strong in person behind closed doors in confidence, than will ever be achieved by public grandstranding insults as has been our governments approach in recent times. With consequences that were all too obvious from the very beginning.

All some in Asia can think, is where is the appreciation for having chosen to buy from us for the past two decades. If the shoe was on the other foot, we would be having the same thoughts.



16 November 2020

All the news. Applying an original perspective.

The market is holding up here. Perhaps we are entering a period of relative calm. Overall this is a stock market acting like there are no risks ahead. Even if a vaccine was a silver bullet, the US, Australian and global economies are knee capped, and the patient is only walking because of short to medium term fiscal stimulus impact. This has brought forward an over-exuberance of economic behaviour in the short term. Creating a cliff on the other side in normal circumstances, but this is an economic environment still experiencing shutdowns from the state of Washington to the UK Prime Minister. Lasting supply chain disruptions are in place. To extrapolate the recent economic bounce into a new trend is an error of significant magnitude. That is the economy. The market will believe what it wants to believe for the moment. We will pay attention to the short term price action. While remaining aware that further upside is increasingly un-sustainable and vulnerable over the medium to long term.


11 November 2020

The lately hidden from the headlines catastrophe of covid, is quickly over-taking Europe again and in both North and South America the situation really is one of total human devastation. Strong words, but perfectly apt.

The economic impact and damage to corporate earnings from all of this is by no means over. It gets worse before it gets better is again where the US economy is, and it had not even recovered from the first wave. That stock prices are where they are is a historical form of denial. After the weakness of the past 24 hours as we favoured, expect volatility, but the dominant risk is very much to the downside for stocks. Signals have been sent to members and all the best for your day. To prosper long term we must have open eyes to the risks to the US and global economy being on-going, as well as Australia's outlook having dimmed rather significantly for several years out.


10 November 2020

In the market, my inclination is to sell as the vaccine and Biden rallies combined have already begun to unwind. Yes, Trump is already talking about running again in four years time, while still fighting the current election result. I think this is a high probability, because his ego will allow to be fed for at least the next four years by saying the election was stolen and he will win in 2024. The show rolls on. The government department that officially calls the election result and is meant to be neutral has still not signed off on a Biden victory, This denies Biden any government support or jurisdiction. While Trump will remain for another two months, Biden needs what would usually be done within hours of the result being known. This may remain the case until any recounts and legal proceedings are concluded. A major frustration for the incoming administration. President Trump just replaced his Secretary of Defense by tweet. As I said, the show rolls on. Trump is fast destroying his legacy of good economic management. Five different defence secretaries in less than four years says everything about why he lost the election. Which in a nutshell, was covid and his own self. That McConnell is supporting Trump contesting the election is in some ways quite reasonable, but again it combines to delay the likely inevitable transition of real functioning power while the pandemic accelerates and the economy continues to falter. Speaking of a faltering economy, the outlook for stocks from these dizzying heights is not so great.


Headline from New York Times 10 November 2020

This is a joint effort with a German firm and both had very strong days. Across the board companies, previously heavily sold, such as travel had enormous rallies. Interestingly, cracks in the technology sector continued to grow with several being sold on the day. This was one of the most dramatic price days you will ever see. It also had a lot of fuel with any potential sellers on the day, largely having already withdrawn. To see how far the post US election relief rally would travel itself. This created a further vacuum effect to the upside.

Basically, spectacular upside on dramatic very positive news, and an already existing situation of no sellers, created a one way street for most of the day.

The vaccine news was indeed surprising in its quality. Which few experts have expected would be achievable in terms of its effectiveness. That said, the company itself has stated that safety trials are continuing and more needs to be done. Nevertheless, this is great news for everyone.

In summary though, it is clear that even on the day the move was overdone. The market has given up nearly half those gains by the closing bell in New York, and closed looking quite heavy. this does not mean that was the absolute top. However, this scenario is a serious possibility. Despite all the market bullish financial news headlines today.

The point of distinction I would like to make, is that the broad market is at record highs, having already priced in more than perfect outcomes for corporate America for several years to come. This sentiment will not be the reality seen, even with a vaccine. A vaccine is great, but right now the pandemic is getting worse, even accelerating across Europe and the USA. The economic damage and lasting dislocation, particularly to the US economy will be on-going for many months and possibly for up to two years out. That corporate earnings will remain well down with their stock prices at all time record highs with extreme valuations, remains a fundamental bedrock of the US stock market that is indeed fractured.

Once everyone has bought on this news, and normal seller interest returns, the market is at risk in the medium term over the months ahead.


US PRESIDENT ELECT BIDEN is keen to hit the ground running, well all in preparation really, as it is a while before he moves in, gets sworn in. That will be a big event no doubt. Regardless of your feeling on the outcome, and it is always easier for the winners to talk about 'coming together', than it is for the losing side. We are about 'getting it right' here, and there will be a lot more of that. It is worth noting though, that as excited as one side may be about a new start, the other is still very much in a different mood. Which should not be ignored. The USA will have opposing forces in the Presidency and in the Senate. While, still having the most serious of issues to confront. A health and economic emergency and a still divided nation. This will not be easy. Unfortunately, it has to be pointed out the US will not be turning the corner simply with the conclusion of this election. The next stimulus package and perhaps some effort of conformity across the various states in addressing Covid, will be high on the agenda. How Biden approaches China will also be closely watched by markets. Expect a large stimulus package as perhaps the most significant guiding force to markets at this point. This will be seen as a positive, but a failure to resurrect the economy, as I expect will be seen over the following few months post such a stimulus, and any continued talk of tax hikes will combine to create profound downside for stocks. Albeit, perhaps, from a higher high than where we are now. Perhaps not. The next few days will be instructive in this regard. On the morning today, we are seeing US stock indices basically stall after the strong gains of last week. This is interesting. I think what it means is that traders are now unsure as to whether this is a positive for markets, or not after all. New York trading will be the greater bellwether. I suspect this time tomorrow we will be higher. A 1-3 days further relief rally being possible, before a potential major top. I make no apology for warning of the downside risks. They are greatly under-estimated by market sentiment in general. Should markets begin to fall away immediately, over the next 24-72 hours, then we will have indeed seen a lasting high. As it would suggest that all the buying to be done on the back of a calmer Presidency via Biden, has already been done. Creating for the moment, nothing but a sea of potential sellers. As always, we will be looking to continue to evolve the service as some long term trends may be developing themselves in particular sectors and we will talk more about this in coming days and weeks. There will be recounts in the US election and some senate run-offs, so the complexity is not resolved, but other Republican leaders will increasingly accept and recognise the Biden victory. Trump will be an increasingly isolated, yet thrashing around figure. While the rest of the Democratic and most of the Republican machines begin to move forward with the reality of President Biden.


8 November, 2020

US PRESIDENT ELECT BIDEN will be giving his acceptance speech.

We correctly forecast the Trump victory, then the Coalition win in Australia, and now Biden winning by a narrow margin. Though that margin is growing.

KEY POINT: The problems of the USA do not go away overnight. Nevertheless, except a further relief rally in US stocks, followed by a slow setting in of the reality that the US economy is not coming back to its previous speed and is in fact likely to deteriorate from current levels over the next six months. None of this economic weakness is priced. As well as covid, there are the social and political disconnects that will continue to play their part in moderating economic performance.

Biden's victory is likely to be a positive in many regards, but the economic risk just went up. Of particular concern are the proposed immediate tax hikes, an over-spend on the next stimulus package and a potentially wasteful new green deal effort. As long as all of this is tempered by a Republican senate, we may see a generally moderate America moving forward.

Congratulations to Joe Biden, he certainly deserves it.


At the moment the momentum is toward Biden in the counting of votes.

Biden is already in the lead in enough states to deliver the magic winning 270 electoral votes.

If Trump wins every state he is currently leading in, he does not win the election.

CONCLUSION: People are cautious in calling it, due to the un-precedented wild swings in the moment direction of vote counting. First Biden, then all of a sudden Trump, and now steadily moving toward Biden. And as stated above he currently has enough. It would now take a tremendous surge toward Trump in postal votes for him to regain the lead. This seems unlikely.

It does appear the US will have a new President Biden.

RAMIFICATIONS: There is no doubt he will be a more inclusive President. People will have different opinions on this, but whether positive or negative for the US, it will certainly be a steadier calmer path.

Combined with a likely large stimulus package there are economic positives. However, if he does raise taxes as he has previously indicated, this has the potential to be catastrophic for the economy and significantly set back the US in terms of global competitiveness.

A likely 'healing' and progressive US President, may in fact be quite negative for the economy, employment, and certainly corporate earnings and profits. This is a major stock price negative. Particularly as prices are already sky high and well above any sense of reasonable valuations on the outlook for the next several years. Even before tax hikes.

Biden may well prove to be a good President, but there is a real risk in terms of his economics.

Should Trump make a comeback from the current situation, there would again be relief upside in stock prices. At the moment, it may be a case of many being relieved on many issues with Biden again ahead, but deeply concerned on the economics.

Even with reasonable legal challenges, the outcome is likely to be what it is looking like right now. There may be recounts which means the outcome will not be known for as much as a week. To watch, for Biden to lose, he would have to lose his lead in Nevada and Michigan. Biden does not need to win any more states.


The reason Trump beat the polls last time, was not that the polls were wrong. They constantly showed an undecided vote of 22% to 28%. Which was part of why, from six months out, I constantly forecast a Trump win.

It is exactly the same this time. We falsely believe we are logical. The ultimate error in all economic mainstream thinking, When, in fact, we are an emotional creature that utilises logic, true and false, to justify the emotional position pre-chosen. In this Presidential election, there are two dominant emotions, fear of a weaker economy and fewer jobs under Biden, albeit with a medium term boost from a bigger stimulus package, and fear of covid, a leader seemingly out of control in many situations and often contentious. People judge the incumbent before addressing the alternative. Trump has done very well on the economy and equally badly on Covid. Covid is the stronger emotional issue. Also issues of race will see greater young support for Biden. Last time the surprise for everyone else, we always said Trump would win, was that he did. This time, perhaps, the biggest surprise will be that we could know the result today or tomorrow. We all know Pennsylvania, Michigan, Florida and Ohio are likely to decide the outcome. Even with the again high undecided category in polls, perhaps the emotion of covid will dominate over the economy. Which would give the election to Biden, only because he was not in power at the time and so avoided responsibility by default.

All around the world we are seeing the governments of countries that have handled covid well returned, but handling it badly could be a very different story. The high undecided means Trump can still win. Those so called battleground states however, may well have slipped on covid. It looks like Biden. It's just how we humans are.


At last : The moment we have all been waiting for.Made ever more dramatic by the combination impact of one of the most contentious President's in history and the Pandemic. It will be close in the Senate, but I continue to favour a marginal Republican win. Who will be the next US President? I think it will be Biden narrowly. This will mean that over the next four years we see a President generally well liked, a shift toward a greater emphasis on fighting global warming, but of course avoiding the primary cause which is animal husbandry, some strengthening of covid restrictions perhaps, a big spending stimulus plan and budget in general, hopefully with a lot of focus on infrastructure, and a private sector economy that remains pretty much below par, in fact well below par as massively higher tax rates not only make it difficult for corporate profits, but also take the US off the board of global competitiveness. As a result, poverty levels will be unmoved despite strong investment, the American worker will survive this year and get by, but returning to pre covid levels of employment will remain a distant thought, the US deficit will go sky high again, and the loss of global competitiveness in most industries except technology. Basically, everything except the long term well being of the US economy will be marginally better. But, that quick combination of massive deficits and general indebtedness, with sustained high unemployment, higher taxes and loss of competitiveness... will confirm the end of the USA as the world's dominant economic power. It will be strong, but will be more in the mix with China and the EU. Maybe, even falling to third place over the next decade. Sounds dramatic, but it has been a process long in place as the rest of the pack, the world, has been constantly gaining on the leader. With the victory of either candidate, there is likely to be some form of post-election unhappiness with the result by 40% to 50% of the population. The USA has all sorts of problems, created by itself, that will not be going away tomorrow.


3 November 2020

The RBA may well cut rates and institute quantitative easing, but to be frank this smacks of ego to be seen operating like other central banks and will do little, perhaps zero, to spur any further economic activity beyond the financial markets. And the financial sector is booming, so this is a lot of window dressing to a real world economy that will not change on these developments. It would be far more effective to remain on hold and not further panic businesses and consumers alike. So there may well be much financial news fanfare about this event. It will help sell papers, screen time, but really, does anyone think anyone's decisions are going to be different at 0.10% to what they are at 0.25%? This is all Ivory Tower delusionalism (new word).


What is interesting about the US Elections is just how increasingly confident both sides are becoming?

The problems in the US, again brought into focus by the shooting of Walter Wallace, are across all aspects of the American society. The immediate assumption by the community that the shooting was unjustified and the mix of true demonstrations, violence and looting on a large scale, immediately came into effect. Such flare ups do have an economic impact. The ramifications include an an ever heightened and intensified polarisation nationally. This polarisation will be reaching a crescendo in the Presidential election. Both sides are increasingly certain their candidate will be triumphant. Polling has shown that 40% of voters on both sides are increasingly declaring they will not accept the victory of the opposing candidate. This means that democracy may already be dead at the community level. This is an extraordinarily dangerous situation. We all expect the US will somehow navigate a way through this period to some form of normal, post the US election. The pressures that are building at the moment however, are pointing to on-going fragmentation of the US society and economy for several years to come. 50% of US families have suffered a loss in income from covid and shutdowns. The on-going economic strain, even with another stimulus package, is far worse than in the GFC. And this is proving to be a chronic situation as cases surge. Consumers remain extremely cautious. In short, the US economy will continue to suffer post the election, regardless of who wins. To be euphoric about the victory of either side will be to badly miss the point. The USA is in serious trouble, socially, politically and economically. All at the same time.


30th October 2020

+The Election will be close, but still looks like Biden. +Some US hospitals are now using local fair grounds as the wave of covid cases passes full capacity. +Tech stocks record strong earnings. +US GDP growth has huge bounce in Q3. Yes, still sticking to it will get worse for the market. The stock market rebound on what we already knew would be good Tech earnings and GDP growth data, looks to have already been completed. All US Indices have fallen again from the heights of the day. The immediate situation is not about the day to day change in closing prices. It is all about these large swings and where they are eventually pointing. I believe that remains very much to the downside. Volatility will continue, but the dominant risk remains very much to the downside. All the good news for Tech and economic growth in Q3 is now out, while the economy has weakened again substantially in Q4. The rush to Tech products has likely peaked for the time being as well. We are already seeing that in the Twitter data, and this should begin to show up in other Tech stocks in Q4 earnings results. Hence the muted price bounce relative to recent days, and the close of day weakness again across the board.


US GDP rebounded strongly, but not to previous levels. It is important to note the tremendous loss of income impacting 50% of American families and the broad economic damage has not been erased The economy is down about 5% from the start of the year on this data, and does not take into account the fall back in economic activity all of the more recent data has confirmed is now taking place.


29th October 2020

It is difficult to find any economic data of note on a day when the financial markets world finally woke up, looked out the window, and saw what is happening in the real world. These are the key fundamentals, major economies were already rolling back over before the current fresh virus surge to frightening levels equally in both Europe and the USA, the US society is fractured/broken, neither President will be good for the US or solve anything, global trade remains greatly dislocated, more businesses are going out of business having tried to hold on for the other side that never came, unemployment is rising, and even in Australia we are likely about to fall off yet another economic cliff. Stocks have a long way to fall to reflect the realities of the real world. Instead of the casino computer game markets of recent times.

Photo: Reuters



A novel solution worthy of NY. Outdoor eating remains well down on previous levels.


The Australian Industry Group Australian Performance of Services Index fell further to 36.2 in September.Our scenario of post lockdown euphoria rolling over, seems to be on track.

7th October 2020


The AIG Australian Performance of Manufacturing Index declined 2.6 points from the previous month to 46.7 in September. Australian manufacturing remains tenuous over the coming year.


Unfortunately this is proving not to be something that just magically goes away, and while we will not have the total lockdowns as previously, significant economic suppression will be required at times. We are not going back to the economic activity levels that were seen pre-covid. 


High frequency data in the US continues to show an economy running at about 80% of the previous level. This is a massive impact that continues to unfold.


US New Home Sales, like existing homes data, is pointing to a massive bubble market. As buyers rush in to take advantage of stimulus measures and Federal Reserve generosity on interest rates. New Sales are now stretching higher than pre GFC bust levels.


The Commonwealth Bank Services PMI in Australia was 50 in September. Little change from the month before. While conditions were seen as stabilising, spare capacity rose further creating downward pressure on employment still.


The Commonwealth Bank Manufacturing PMI in Australia increased to 55.5 in September. A good number as export orders rose for the first time in 8 months and factory floor life returned to less restrictive guidelines. problems remain with supply chain dislocation. Caution, could still be part of the initial euphoria thesis.


Exceeding Expectations


RBA rates; "why" change, rather than 'no change' is this month's mantra. If stimulus and record low rates are not working now, doing more will make no difference. There is no way any of this can replace the Covid general loss of activity as well as far less Chinese investment,ent, spending and trade. Australia is in trouble, and there is nothing much the RBA can do about it from here.


Slightly below market expectations, but certainly reasonable as we thought. As with the GFC, state owned enterprises and a still robust domestic sector have again seen China take the latest global crisis in its stride. Of course, the irony of this, given the origin of covid is lost on no one, That said, the loss has yet to be recovered, but China will continue to perform well. This is by no means an exa\mple of what could happen in Europe or the USA however. The rest fo the world cannot copy the strict nature of covid fighting that was in operation in China. Nor, does the rest of the world have the massive state owned enterprises to lift the aggregate data the way China can. 

19th October 2020 


New orders for US manufactured durable goods rose 1.9% month-over-month in September. This is really just an economy on idle at the moment. The renewal of homes and home offices surge has passed. The US economy is running at about 85% to 90% of what it was a year ago.
28 October 2020


US S&P CoreLogic Case-Shiller 20-city Home Price Indexin the US rose 5.2 percent from a year earlier in August. The Covid surge in buying is extending, but nevertheless the market is only up 5% from a year ago with near zero interest rates. The feeling here remains that a form of housing bubble is in the making as future buying interest has been brought forward to this year, leaving a gap over the next 1-3 years.
28th October 2020


South Korea Consumer Sentiment increased to 91.6 points in October. This is a good recovery, but again we are seeing this pattern of recovery that is not back to previous economic levels. As this pattern evolves around the world supply chains will remain disrupted and overall global growth will remain subdued.
28th October 2020


The Chicago Fed National Activity Index in the US dropped to +0.27 in September. Remember back in those strong number months, I said that it would roll over. The US is an economy in dire straights. I cannot say it any more plainly.
27th October 2020


Sales of new US single-family homes dropped 3.5 percent to a seasonally adjusted annual rate of 959 thousand in September. Rolling over and the outlook is one of a sustained broad economic downturn of greater duration than the initial covid depression.
27th October 2020


The Ifo Business Climate indicator for Germany dropped to 92.7 in October. Not back to previous levels and rolling back over as well.
27th October 2020


New Zealand Trade Deficit in September. Imports fell 11%. Exports fell 8%. A New Zealand and global economy in serious trouble. 
27th October 2020


Slightly below market expectations, but certainly reasonable as we thought. As with the GFC, state owned enterprises and a still robust domestic sector have again seen China take the latest global crisis in its stride. Of course, the irony of this, given the origin of covid is lost on no one, That said, the loss has yet to be recovered, but China will continue to perform well. This is by no means an exa\mple of what could happen in Europe or the USA however. The rest fo the world cannot copy the strict nature of covid fighting that was in operation in China. Nor, does the rest of the world have the massive state owned enterprises to lift the aggregate data the way China can. 

19th October 2020 


Industrial Production has taken a long time to make back the collapse of earlier in the year, at just about where it was now, but with significant loss having occurred. The numbers do look better than Main Street reality, as in the US, but nonetheless this is a true rebound.
19th October 2020


Up 3.3%, this is really the first sign of life in retail sales this year. Not a number to get too excited about, but the way back is established. The consumer has taken many more months to begin spending again, than did government authorities and state owned enterprises. The path of retail sales recovery has been a long one, and only after virtual irradiation of covid. Europe and the US are 1-2 years behind the China economy in terms of full recovery.

19th October 2020


This is still extremely low and of real concern. Again suggesting that not all sectors are enjoying a uniform recovery, particularly for small and medium sized enterprises. The private sector being far more damaged and still cautious than state operations.

19th October 2020


The headlines are along the lines that Trump had a far more brisk debate, but he experienced a far more aggressive and robust interviewer than did Biden. In a way, this gave both the opportunity to shine to their own constituents. The overall impact was in a way to present a choice between a strong, somewhat belligerent President, against a slower, more thoughtful candidate. Which both voter groups already know and endorse. In terms of swing voters, my take would be that they were both seen to be more reasonable, but with neither gaining advantage. The swing voter remains confused as to how to vote. Making the final actual debate all the more important.
16th October 2020


US Jobless Claims fell, but still in this multiple of 5 times what they use to be area. They will decline as everyone who needs help has finished applying, but the true un-employment rate is still around 10%.
22 October 2020


Consumer Confidence, the main driver of the economy, deteriorates again from already horrific levels. 
22 October 2020


Consumer Confidence,even in Germany the economy is rolling over back to decline rather significantly.
22 October 2020


The polarisation of US society continues with the farce of simultaneous speak to your own constituents televised shows.There are two powerful forces ripping at US society, the political division, unlikely to subside post election no matter who wins, and the great economic divide which is intensifying significantly as a result of covid response. The "left behind" by the economic boom is becoming ever larger. Both forces lead to lower economic performance overall for several years.
16th October 2020


US Jobless Claims Increasing Slightly
The number of Americans filling for unemployment benefits rose by 898 thousand in the week ended October 10th. The more significant aspect is that jobless claims remain at a multiple of five above pre-covid levels. This is of extreme concern.

16th October 2020


The market continues to look the other way, from the reality of Main Street fundamentals at this point and the continued rise of Covid as a problem in both the US and Europe. People are focussed on the stimulus package, but there are more significant issues looming. Note the increasing medical recognition of this virus being un-flu like in that there are long term rolling health issues related to the brain, heart and lungs for 10% to 20% of all cases. This will lead to renewed caution by people about contact environments in the months ahead. As well as the loss of income, consumers will additionally be cautious in behaviour for many months to come.
16th October 2020


Are we seeing a stealth redevelopment of downward momentum here. The reality of the lasting impact in Asia and elsewhere, as well as the ability of this virus to come back again, is all becoming far too apparent. Meanwhile, the next US stimulus package remains elusive, while the US health system is quietly coping with a worrying acceleration in cases. The market has so far simply decided to look the other way, but the reality of the working and middle class pain through all of this will begin to dominate at some point.
15th October 2020


The RBA has indicated it may cut rates to 0.10%. This could be harmful. The idea that anyone's economic behaviour would change on such a small shift at already extreme historically low levels, beggars belief. If anything, it would only stimulate greater consumer caution. Just when everyone is feeling a little hopeful.
15th October 2020


This is another suggestion that periods of higher inflation than currently anticipated, may occur sooner rather than later. This would be largely a function of supply chain disruption, but also with lower absolute sales, businesses may need to raise prices to stay operational.


Falling way back to just a 0.7% gain for the month of September. On a yearly basis industrial production is still down 7.2%. In the current environment we should expect the situation to remain weak. 
15th October 2020


Australian consumer confidence managed to get out of negative, and into the positive zone. This is related to fiscal stimulus measures announced, and a kind of double whammy of Euphoria. Firstly for the rest of Australia the previous month, and now due to the low cases in Victoria suggesting lockdown will not last much longer. The risk to sentiment, is that all the excitement about coming out of lockdown will fail to manifest in the form of real business, and lead to a rolling over of this indicator akin to what we have seen elsewhere. 

14th October, 2020


This is a great phone, but Apple fans seem insatiable for massive quantum leaps for each new model. This was possible during the sharp run up in chip capability and the creation of ever more diverse features. It is no longer reasonable to expect huge leaps each year. This phone is nothing to rush out and purchase, if you already have a X or 11. Overall, I continue to see the Tech sector as vulnerable at these heightened levels.
14th October, 2020


Clearly some problems that needed to be cleared up. Any bounce is unlikely to be sustained however, as this remains a company that cannot justify its already astronomical stock price. 

14th October, 2020


Admittedly this is off a historically low base and still below the Federal Reserve target. That said, it is a very strong indicator of supply chain disruption. The globalisation that brought inflation under control, has been significantly impacted. Again, my feeling is globalisation flows will return, but not to the previous levels. The Fed will not raise rates simply because of even above target inflation, unless employment is strong as well. So there is zero risk of such a rates scenario any time soon. Still, we should be aware, that the next move in rates may well be to the upside. This, fortunately, is 2-3 years in the distance. Rates will stay as they are while the economy experiences a second slow down, currently just beginning, and for the next couple of years. 

14th October, 2020


Many businesses, particularly small and medium sized businesses held on through the lockdown, banking on a return to business as usual post the virus. Finding this is not the case, it becomes increasingly difficult to maintain staff.

14th October, 2020


Liquidity requirements of banks backing the selling of the Yuan have been reduced. This should only be seen as another small step toward an eventually relatively free floating currency. This is what I addressed, in my talk at APEC, Russia 2012, that the world would definitely move toward three equal reserve currencies over a 15 year time frame. President Putin referred to my comments in his closing speech. That I was mistaken, because there would be four reserve currencies including the Rouble. He was being jovial, and so I was able to exit the country. The point though is that this latest move by China must be seen in that long term game plan context. 

12th October 2020


Earnings may not be as bad as Q2, but still disastrous. Even in the Technology sector, the expectation is flat to down slightly. Which makes one wonder what the huge rally in that sector has really been about. Has it been justified. On current earnings... No. On earnings achievable over coming years, again 'no'. Our view remains, 'sell the rally'. Overall, earnings down 20% is what we have been expecting all year, and anything below 10% is a disaster. Particularly, when you consider that corporate earnings had already been flat for the year before the covid pandemic hit.


It is so important to note that this pattern is now occurring across the world. A surge in confidence and activity coming out of the first wave of the virus, followed by a more realistic falling back in economic expectations and activity. 


Germany's trade surplus declined to EUR 12.8 billion in August. Again, clear signs of a renewed bout of economic weakness. 
9th August 2020


ECB officials signaled readiness to adjust all of its instruments to ensure that inflation moved towards its aim in a sustained manner, including by slashing interest rates deeper into negative territory. This is the last thing Europe needs. Further stimulus is an academic exercise with zero positive impact in the real world.
9th October 2020


Around the world economies are suddenly slowing again, and stock markets are paying no attention at all. 
8th October 2020


Industrial production in Germany dropped by 0.2 percent month-over-month in August. This decline was unexpected by the market, as we continue to see economies roll over. 
8th October 2020


By this, I mean that the earlier higher numbers were all about what was expected by many to be short term temporary unemployment. The current and latest number reflects long term unemployment. This is what does real economy damage, and represents true human suffering. 7.9% at this stage is a very challenging number.

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