Strange Times – 01.05.2020

Global Markets Wrap

Markets shrugged off bleak economic data and rallied throughout the week to end the month up almost 12%. Last night the US reported that its economy contracted by 4.8% in Q1. The second quarter fall is likely to be much more severe. US equity markets are now back to levels seen in October 2019 and are fully pricing in a sharp V-shaped recovery from late 2020. Given the economic destruction that has been wrought by the virus and the lockdown, we feel markets are displaying irrational exuberance and remain cautious.

Global Debt Binge

One of things that concerns us is that the world is so much more indebted now than at the time of the Global Financial Crisis in 2007. Australia holds the dubious record for the highest amounts of household debt but we do possess relatively low levels of government debt. Government debt has soared in the US and Europe, and China has witnessed an explosion in corporate debt. This, of course, can’t last forever.
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Coronavirus Data Watch

This week, the US recorded 1 million infections and 60,000 deaths from the Covid-19 virus. However, both the infection and death rate curves are flattening across the globe. Despite the risk of second wave infections, there is mounting political and business pressure to start scaling back the shutdowns. Governments are running up huge debts to try to save jobs, which will burden future taxpayers for a generation. Economic contractions and unemployment rates are heading for 1930s Great Depression-era levels.

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Tread Carefully Before Giving Adult Children Financial Help

A thought provoking article ($) in this week’s Fin Review from Louise Biti of Aged Care Steps on the perils of loaning or gifting money to your adult children who may have been financially impacted by the lockdown. Tread with care – gifts and loans can impact your age pension entitlements, can affect their ability to access hardship payments and may cause future estate challenges. Please speak to your adviser before gifting.

Where in the World is Oil Produced?

A fascinating short time-series video highlighting the changing fortunes of the world’s oil producing nations since 1973. Note the transformation of America from oil-importer to the world’s largest oil producer starting in 2011 when fracking really took hold. With oil now at $20 a barrel, are the US frackers toast?

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The Last Post and the Last Word

Last Saturday, many of us set our alarms to be up and on the street at 6am to pay our respects to those who have given their lives so that we may enjoy ours. Here’s some of the photos sent in by our staff and a beautiful rendition of the Last Post by one Niamh O’Neill

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