Jackson Hole, NFTs, Ovarian Lottery & SB Recommends!
All eyes on Jackson Hole Symposium
Today, the Federal Reserve Bank of Kansas City will hold its 45th annual Economic Policy Symposium virtually, as opposed to in its traditional Jackson Hole setting in Wyoming.
The symposium has been held for more than three decades and brings together central bankers, private economists, policymakers and government officials to discuss common issues and challenges relevant to the current market and political climate.
As the world faces issues surrounding the pandemic and the new delta variant, increasing middle east and far east tensions, and escalating climate issues, the Jackson Hole Symposium is even more relevant today than ever.
Fed Chair Jerome Powell is set to give a closely watched speech on the economic outlook, which will divulge more of his and the central bank’s thinking about the timing and scope of tapering the Fed’s pandemic-era asset purchase program.
Some recent comments from Fed officials have led to speculation that a shift away from accommodative monetary policy may come in the near term. This has raised tensions and anticipation for the next formal guidance. The markets will hang on every carefully chosen word in Powell’s speech.
August Market Wrap
Equity markets in the US and Australia will most likely end the month in the green. The S&P 500 climbing 2.5% and the All Ordinaries rising by 1.5% with one trading day remaining in July. The story was quite different mid-month as markets began pricing in the realisation that the covid battle is far from over given the threat imposed by the delta variant. With lockdowns enforced in Australia and lockdowns looming in the US, markets showed signs of trading in a similar way to earlier in the pandemic – airline, cruise and hotel stocks selling off while vaccine makers and work from home stocks rallied.
As July comes to an end, the 2nd quarter earnings season in the US is only halfway done. So far, the aggregate results for earnings and revenues are smashing records and expectations. Year over year earnings are up 86% which is the highest since Q4 2009, and revenues are up 21%. Expecting the economic recovery to continue, analysts have also increased estimates for Q3 and Q4.
IFA Excellence Awards
We are very pleased this week to have been shortlisted as a finalist in the IFA Excellence Awards 2021, in the category of Self-Licensed Firm of the Year. Awards are about allowing us to benchmark our innovation, our service, and our performance against the elite of our profession to ensure we remain at the top of our industry. It is very pleasing for the entire Stanford Brown team to be recognised again as one of the leading Self-Licensed Firms in Australia.
NFT – Your next investment?
NFT, which stands for non-fungible token, is a unique digital asset designed to signify ownership of a virtual item that represents real-world objects like art, music, in-game items, and videos. Unlike cryptocurrencies, NFTs can’t be exchanged like-for-like with other NFTs. Advocates say this makes them scarce, driving up their value.
Although they’ve been around since 2014, NFTs are gaining notoriety now because they are becoming an increasingly popular way to buy and sell digital artwork. NFTs are also generally one of a kind, or at least one of a very limited run, and have unique identifying codes.
A total of US$897 million in NFT sales were recorded during the 30 days up to 18 August, according to the most recently available data from the NFT tracking site NonFungible. Recent high-profile NFT sales over the past month include a cartoon rock (above) that went for $1.3 million, a version of a famous “friendship breakup” meme that sold for $51,500 and a NFT version of a Polish influencer’s love that sold for $250,000.
Credit card company Visa recently bought a rare CryptoPunk NFT for $150,000 and declared that the assets will “will play an important role in the future of retail, social media, entertainment, and commerce.”
While unlikely to form the core part of a Stanford Brown investment strategy anytime soon, NFT may just be your next speculative play.
Low yield silver lining for UK pensions
Investors are waiting for future moves from the US Fed or the RBA to lift interest rates. For those with a UK defined-benefit super scheme who are thinking about transferring it to the Australian super system, now may be the time to consider your options. Low bond yields have inflated the transfer value of UK defined benefit pensions. Whether it makes sense for you depends on your own circumstances and your adviser can help you get the right experts involved to make an informed decision.
Buffett on luck, taxes, and a challenge.
Some academics spend their lives investigating luck versus skill in investing, and there are shelves of business books on the topic, but an excellent recent article by Graham Hand in Firstlinks discusses Warren Buffett’s views on the fundamental luck at the start of our lives, or what has been termed the ‘ovarian lottery’. Buffett explains:
“Just imagine that it is 24 hours before you are born. A genie comes and says to you in the womb, ‘You look like an extraordinarily responsible, intelligent, potential human being. [You’re] going to emerge in 24 hours and it is an enormous responsibility I am going to assign to you, the determination of the political, economic, and social system into which you are going to emerge.
You set the rules, any political system, democracy, parliamentary, anything you wish. You can set the economic structure, communistic, capitalistic, set anything in motion, and I guarantee you that when you emerge, this world will exist for you, your children, and your grandchildren. What’s the catch? One catch – just before you emerge, you have to go through a huge bucket with 7 billion slips, one for each human. Dip your hand in and that is what you get …” Read more at Firstlinks.
The Delicate Retirement Balance
How to help adult children, while balancing one’s own retirement, is a common concern that families raise with us and we recently shared the paper written by Private Wealth Adviser Kirsten Lynn on this topic.
For those of you that prefer to digest your information on the go we have also recently recorded a podcast where Kirsten speaks to her paper and discussed her work with families on navigating the complexities of intergenerational wealth.
You can listen and subscribe to the SB Talks Podcast on Spotify here.
Not on iTunes or Spotify? Click here.
As challenging as the recent lockdowns across much of the country have been, they are accompanied by one silver lining. That is, a gradually improving vaccine roll-out, and a slow march toward that essential 70% to 80% fully vaccinated levels.
The Guardian provides an excellent tracker on the rollout across the nation, including estimates as to when we may reach the 70% and 80% milestones. For those of you interested in keeping track of the global vaccine roll-out, we again share the Financial Times rolling tracker.
Had enough of endless pandemic press conferences, aspiring to freedom? Extra Gum in the US have created a commercial celebrating a very entertaining take on life after lockdown. Hopefully we don’t quite get to this stage!
At Stanford Brown we are very proud of the depth of talent we have across our team, and we are introducing a new segment to SB News allowing you get to know us better. You will hear from various SB personalities sharing their recommendations across books, podcasts, music and more.
Today we bring you Private Wealth Adviser and Principal, Cris Abellar, with her two book recommendations. Enjoy.
Take care and have a wonderful weekend.