The “S” word: Stagflation. It’s a term being increasingly used in financial media. Don’t worry, it’s not a rude “S” word 😅 It suggests that inflation globally could persist for some time, certainly longer than the US Federal Reserve would care to admit… But it is also describing a period of low global economic growth.
06-09-2021
George Lucas, Raiz Group CEO
While it wasn’t the most eventful week overall, there were some interesting developments in the US when the US Labor Department reported August payroll data.
The data showed that nonfarm payrolls lifted by 235,000 jobs last month, the smallest rise since January, as hiring in the hospitality and leisure sector stagnated amid another surge in COVID-19 infections, which dampened demand at restaurants and hotels across the country.
For the US Federal Reserve, the weak payrolls data complicates the outlook and raises questions about whether the central bank will start tapering asset purchase before the end of the year.
US Fed Chair Jerome Powell implied at a speech at the Jackson Hole conference last week that the central bank wants to commence tapering before the end of 2021, but the plan is thought to be conditional on continued gains in the jobs market.
The subdued August payroll data therefore complicates the picture for the US Fed and may mean that any announcement of tapering will now be pushed back, potentially into early 2022.
What was unexpectedly strong in the jobs report was wage growth — a sign of growing price pressure in the US. As a result, we saw a muted reaction from equity markets as the data did nothing to ease the fears around rising inflation in the US. As we said this job report complicates things for the US Fed.
In China, the Caixin/Markit services Purchasing Managers’ Index (PMI) fell from 54.9 to 46.7 last month, which apart from last year’s lockdown was the weakest reading on record. The 50-point line separates growth from contraction on a month-by-month basis in China’s services sector.
The slump in the August reading adds to signs from the official non-manufacturing PMI that COVID-19 disruptions have weighed on recent services activity in the world’s second largest economy.
Looking ahead, the weakness in services should reverse in September now that most recent COVID restrictions in China have been eased. Still, coronavirus disruption aside, China’s economy looks to be coming back to earth following a period of above-trend output.
In Australia, we had official figures released showing gross domestic product increased 0.7 per cent in the June quarter, down from 1.9 per cent in the three months to March.
The 0.7 per cent rise in Q2 was broadly in line with the Reserve Bank of Australia’s expectations and we suspect that as a result it will likely press ahead with tapering its asset purchases this month.
However, looking ahead, we expect a 1.5 per cent quarter-on-quarter decline in output in Q3 as the recent spate of COVID-19 lockdowns, especially in NSW and Victoria, weighs heavily on activity.
Download it for free in the App store or the Webapp below:
Important Information
If you have read all or any part of our email, website, or communication then you need to know that this is factual information and general advice only. This means it does not consider any person’s particular financial objectives, financial situation, or financial needs. If you are an investor, you should consult a licensed adviser before acting on any information to fully understand the benefits and risk associated with the product. This is your call but that is what you should do.
You may be surprised to learn that RAIZ Invest Australia Limited (ABN 26 604 402 815) (Raiz), an authorised representative AFSL 434776 prepared this information.
We are not allowed, and have not prepared this information to offer financial product advice or a recommendation in relation to any investments or securities. If we did give you personal advice, which we did not, then the use of the Raiz App would be a lot more expensive than the current pricing – sorry but true. You therefore should not rely on this information to make investment decisions, because it was not about you for once, and unfortunately, we cannot advise you on who or what you can rely on – again sorry.
A Product Disclosure Statement (PDS) for Raiz Invest and/or Raiz Invest Super is available on the Raiz Invest website and App. A person must read and consider the PDS before deciding whether, or not, to acquire and/or continue to hold interests in the financial product. We know and ASIC research shows that you probably won’t, but we want you to, and we encourage you to read the PDS so you know exactly what the product does, its risks and costs. If you don’t read the PDS, it’s a bit like flying blind. Probably not a good idea.
The risks and fees for investing are fully set out in the PDS and include the risks that would ordinarily apply to investing. You should note, as illustrated by the global financial crisis of 2008, that sometimes not even professionals in the financial services sector understand the ordinary risks of investing – because by their nature many risks are unknown – but you still need to give it a go and try to understand the risks set out in the PDS.
Any returns shown or implied are not forecasts and are not reliable guides or predictors of future performance. Those of you who cannot afford financial advice may be considering ignoring this statement, but please don’t, it is so true.
Under no circumstance is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.
This information may be based on assumptions or market conditions which change without notice and have not been independently verified. Basically, this says nothing stays the same for long in financial markets (or even in life for that matter) and we are sorry. We try, but we can’t promise that the information is accurate, or stays accurate.
Any opinions or information expressed are subject to change without notice; that’s just the way we roll.
The bundll and superbundll products are provided by FlexiCards Australia Pty Ltd ABN 31 099 651 877 Australian credit licence number 247415. Bundll, snooze and superbundll are trademarks of Flexirent Capital Pty Ltd, a subsidiary of FlexiGroup Limited. Lots of names, which basically you aren’t allowed to reproduce without their permission and we need to include here.
Mastercard is a registered trademark and the circles design is a trademark of Mastercard International Incorporated.
Home loans are subject to approval from the lending institution and Raiz Home Ownership makes no warranties as to the success of an application until all relevant information has been provided.
Raiz Home Ownership Pty Ltd (ABN 14 645 876 937), an Australian Credit Representative number 528594 under Australian Credit Licence number 387025. Raiz Home Ownership Pty Ltd is 100% owned by Raiz Invest Australia Limited (ABN 26 604 402 815).
23-08-2021
George Lucas, Raiz Group CEO
China is in the spotlight this week. The Asian superpower’s economy is likely to continue to slow in the coming months which will be a headwind for commodity-linked currencies like Australia, Indonesia, and Malaysia over the next couple of years. Remember, I am not saying China will cease growing, but that the growth rate will not be as high as in the past, and that this will have knock-on effects.
Your super balance often forms a significant part of growing your long-term savings for retirement. It may surprise you to know there are currently government schemes available to support you in getting the most out of your super, including the co-contribution program.
After first publishing this blog in June 2021, the ASX200 Index has notched up two straight months of gains, taking its run to ten consecutive months of gains. European markets have recorded six consecutive months of gains, and US markets also continue to hover near records.
Thursday 5th August 2021 signalled a significant day in American policy, with Biden signing an executive order calling for half of new vehicles sold in the US to be electric by 2030 as part of plans to slash transport emissions. Not only do we believe this is a step in the right direction for the planet, but the additional investment into the green sector and job creation could also be the triple win we all need right now. Read Post
09-08-2021
George Lucas, Raiz Group CEO
In the US, 80 per cent of S&P 500 companies have now reported second-quarter results, with a record 86 per cent exceeding expectations on profits, according to data from S&P.
There is always a lot of interest from our community in the performance of our portfolios. We are pleased to announce the one and three year performance of our portfolios, where five of our portfolios outperformed the relevant three year Chant West industry benchmark (for Moderately Conservative there is no corresponding benchmark and Sapphire only has 1 year of performance).
At Raiz we strive to make your investing journey as straightforward as possible, and we think that these three graphics from our App guide show some of the ways that you can interact with the Raiz App as you save and invest.
26-07-2021
George Lucas, Raiz Group CEO
We’ve seen the US Q2 earnings season start, and it has so far been a strong start. Just over 20 per cent of the firms in the S&P 500 have reported Q2 earnings, and the news has overwhelmingly been very good, with a record high 88 per cent of firms beating analyst consensus expectations.
