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Market Update

September Market Update

PWA September Market Commentary NZ economy slowing We have had an incredibly positive decade of growth in New Zealand, on the back of strong demand from offshore for local assets, and globally falling interest rates. This has led to strong business growth/confidence and a reducing unemployment rate, as well as an ever more expensive New Zealand share market. Data released in the last week of August showed that business confidence in New Zealand has dropped from a high of over 60% positive in 2014 to 40% negative today. The last time business confidence was at such low levels was back […]

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July Market Update

Is this as good as it gets? The US share market had a challenging June with the S&P falling 3% from its mid-month high before starting a slow recovery. As at 9 July 2018 the S&P500 was still 4.10% below the high reached at the end of January 2018. The US economy has just completed an outstanding second quarter with annualised GDP growth now at 3.40%. The last quarter also saw record high increases in corporate earnings of c.25% y.o.y, but is this sustainable? This outstanding growth in earnings has come on the back of record low interest rates, and […]

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June Market Update

PWA June Market Commentary The next Eurozone crisis may be building – “Quitaly” One of the outcomes of the Quantitative Easing (QE) that has occurred since the 2008 Global Financial Crisis (GFC) is that anyone with investments has seen their wealth grow, while those without investments have struggled. This has led to the gap between the “haves” and the “have nots” increasing substantially. In the democratic world, where the majority can vote for change, the widening gap has led to a rise in power for the “populist parties”. The most recent example of this is in Italy where the Five […]

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May Market Update

3% US 10-Year Government Bonds – for one day As inflationary pressures continue to increase in America, we have seen bond markets continuing to price in a higher expectation of rate rises soon from the US Federal Reserve. Rising inflation, and the unwinding of US quantitative easing (QE), led the US 10-year government bond yield to move above 3% for the first time since December 2013. It stayed at this level for only one day, but this breach of what had previously been the upper bound of yields caused the market to finally take notice of the real risk of […]

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April Market Update

Markets driven lower by tech scandal & trade wars In the quarter ending March 2018, we have seen further volatility and uncertainty in the markets. All developed markets have produced a negative return, while the emerging markets have managed to maintain a small positive return. The S&P500 had the worst first quarter performance since 1929 according to Bloomberg, bringing the S&P500 Price to Earnings ratio back to 16.5 times. A level not seen since early 2016. Over the last year, ending March 18, market indices have been positive. The lowest annual performance came from the UK (0.22%) and Europe (2.17%). […]

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The Importance of Independence

If you’re interested in understanding why people behave in the manner they do, have a read of Freakonomics. An economist and a journalist team up to provide some pretty compelling evidence to show you that not all is what it seems. An obvious example is whether your real estate agent really is motivated to get you the best possible price on your house. Or in reality, scratching out an extra $10,000 for you is really only worth a few hundred dollars to them, if that – so you really should accept this tabled offer, right? As a financial adviser, the […]

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February Market Update

Moving closer towards the new norm? The share and bond markets have long been overdue a correction as they have reached and blown past previous record high levels. The recent volatility we have witnessed over the last couple of weeks has been excellent “click bait” for news websites. They love to sensationalise anything that will get their audience to click through to read their opinion. Beyond the sensationalism, in reality we cannot be certain this is the long-awaited selloff. At the time of writing, the concern is not so much the global sharemarkets – which may have a short sharp […]

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November Market Update

Labour/NZ First/Greens are in – what does this mean? National won the NZ election with 44.4% of New Zealand’s voting for them right……? In the First Past the Post era this would have been true, but not with Mixed Member Proportional. Even after National received the most votes, and seats in Parliament, Labour has formed a coalition with NZ First and the Green Party to give them 50.40%, and 63 seats in government. So, what does this new coalition mean for New Zealand? Expected outcomes There is a lot of commentary around how Labour will negatively impact the NZ economy […]

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August Market Update

Where is the top this time? We have been concerned around the levels that local and global share markets, and bond markets, have been trading at for some time, however this has not stopped the US share markets continuing to reach and break record levels in share prices. Below we have included a chart showing the Shiller Cyclically Adjusted Price to Earnings (CAPE) Ratio for the Dow Jones index. This measure which looks at the cyclically adjusted ratio of the price of shares to the earnings of the share, is a reasonably good indicator of when a share market is […]

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March Market Update

We are now seeing the “whites of the eyes” of global inflation In late 2016 Janet Yellen, the Head of the US Federal Open Market Committee (FOMC), stated that there would not be rate hikes until they saw the “whites of the eyes” of inflation. In late February 2017 they finally saw this when the US jobless claims came in at 246,000, the lowest it has been in nearly 44 years. This higher level of US employment is expected to lead to increased wage inflation which in turn adds pressure to the Fed to increase cash rates. This better than expected […]

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