Its policy rate is well below the Fed’s. That can’t last: the RBA can’t indefinitely fight and must ultimately follow the Fed. In a recent wire, I substantiated my doubts that central banks in Australia and the U.S. will be able to return the genie of consumer price inflation to its bottle (their targets) as easily or quickly as many people suppose (see Farewell low … [Read more...] about The Risk of Higher Rates the RBA’s Overlooking
Why Australia won’t become a “renewable energy export superpower”
To sustain their grids, world leaders of “renewables” import power. Australia can’t, so it’s either fossil-fuelled backup or blackouts. In a joint media release with Victoria’s Minister for Climate Change and Energy (note the order of the words, which seems to reflect their order of importance to the state government) on 19 December, Chris Bowen, the federal Minister for … [Read more...] about Why Australia won’t become a “renewable energy export superpower”
Farewell low “inflation” and interest rates?
Investors are assuming the “Great Moderation” remains intact. But the tectonic plates are shifting – and bode ill for long-term returns. On 7 February, Jerome Powell, the Chairman of the Federal Reserve’s Board of Governors, summarised the challenge confronting central bankers in the U.S., Australia and elsewhere: “We have a significant road ahead to get (the Consumer Price … [Read more...] about Farewell low “inflation” and interest rates?
“Global Energy Transition” – Fact or Fiction?
Most believe that it’s a fact, but they’re ignoring or denying data. An examination of these data demonstrates that it’s mostly fiction. “Energy transition,” said S&P Global in 2020, “refers to the global energy sector’s shift from fossil-based systems of energy production and consumption – including oil, natural gas and coal – to renewable energy sources like wind and … [Read more...] about “Global Energy Transition” – Fact or Fiction?
Will 2023 be beautiful or ugly?
Will 2023 be “beautiful” (as Ken Fisher asserts) or ugly (as Harvard professor and former IMF chief economist Kenneth Rogoff fears)? “After 2022’s woes,” says Ken Fisher (“Big Year for Stocks, Bonds,” The Australian, 16 January), this year “markets are primed for beautiful gains. Last year’s fear fest and global bear market has many (people) dreading more (losses this year). … [Read more...] about Will 2023 be beautiful or ugly?
Why fossil fuels are ethical and their opponents aren’t
Taking into proper consideration advantages and benefits as well as costs and disadvantages, any conventional investment portfolio shouldn’t merely consider fossil fuels, their producers and consumers; they should underpin any portfolio that claims to be ethical. These portfolios should also shun as unethical the producers of intermittent and hence unreliable (“renewable”) … [Read more...] about Why fossil fuels are ethical and their opponents aren’t
The factual case for fossil fuels
In my previous wire (How we’ve prepared for the next bust, 28 November), I noted that recessions can have salutary effects: they usually damage and sometimes destroy the “conventional wisdom” which inflates the boom and bull market – and later collapses into bust and bear market. I demonstrated that “what everybody knows” at the height of a boom simply isn’t so. Moreover, I … [Read more...] about The factual case for fossil fuels
How we’ve prepared for the next bust
My two most recent wires (Recessions usually crush shares – but investors can always reduce their ravages, 31 October and How low could stocks go in 2023? 14 November) established six key conclusions: Investors can’t accurately predict the timing, still less the duration or severity, of recessions. Nor, it’s hardly worth adding, can central bankers and economists. … [Read more...] about How we’ve prepared for the next bust
How Low Could Stocks Go in 2023?
Shane Oliver believes that during the year to come Australia will likely avoid a recession (see, for example, Seven reasons why Australia should avoid a recession, 9 November). But it’s quite possible that it won’t: on 28 October in Shane Oliver’s guide to riding out a “year to forget” he reckoned that “the chance of recession in Australia is 40%.” Owners of Australian … [Read more...] about How Low Could Stocks Go in 2023?
Recessions usually crush shares – but investors can always reduce their ravages
According to Ashley Owen (“Recessions Are Usually Good for Sharemarkets,” Firstlinks, 12 October), “history shows that economic contractions have been mostly good for share prices.” Specifically, “the Australian share market has actually increased during the majority of economic recessions in Australia. The same is true for the U.S. share market during U.S. recessions.” In … [Read more...] about Recessions usually crush shares – but investors can always reduce their ravages