Are gold stocks heading for a bull-market?
Following a necessary correction, the gold miners’ stocks have spent much of recent months bottoming. This healthy basing process is rebalancing sentiment, preparing the way for this sector’s next bull-market upleg. That is looking to coincide with gold stocks’ spring rally, one of their strongest times of the year seasonally. That stiff tailwind blowing behind…
The justification of Tesla’s share price
Elon Musk is now the world’s richest person, edging out previous title holder Amazon’s Jeff Bezos. His rocketing fortune is due to the booming share price of Tesla, the maker of electric vehicles and clean energy technologies. In the past week Tesla’s share price surpassed US$880, ten times its March 2020 low of US$85, giving…
The pivotal fight between China and the US is over the microchip
The campaign for dominance in semiconductors could hurt both countries. Japan’s Kioxia Holdings, which in the early 1980s invented flash memory computer chips, was set for one of the country’s biggest initial public offers for 2020. In September, however, the semiconductor maker reduced the asking price of its offer by 25%. Days later, the company…
Investing in high-voltage transmission lines
When, in the midst of the pandemic, the Economic Society of Australia invited 150 of Australia’s keenest young thinkers to come up with “brief, specific and actionable” proposals to improve the economy, amid scores of ideas about improving job matching, changing the tax system, providing non-repayable loans to businesses and accelerating telehealth, two proposals stood…
Climate financing moves into the mainstream
Green finance is a rapidly growing market. Almost US$400 billion of green, sustainability and social bonds were issued in 2019. The great majority were certified green bonds – and sales were up by 53 per cent. Almost US$31 trillion of funds worldwide (encompassing a range of asset types) were held in sustainable or green investments…
Negative interest rates explained
A week ahead of Thursday’s budget update, it finally happened. Instead of the government paying to borrow in a way that would add to the burden on the budget (as has happened since time immemorial) it actually got paid to borrow. Think about that. Investors with millions of dollars to lend went to the Australian…
Why zero interest rates are here to stay
It’d be wrong to interpret last week’s Reserve Bank decision to cut its cash rate to 0.10% as an emergency response to the COVID crisis. The implication would be that once the pandemic is controlled the economy will return to something like the pre-crisis “normal” and the ultra-low interest rates will end. In reality, in…
Is a flood of liquidity entering markets?
As interest rates creep lower and asset-buying programs expand, contrarian investors have been steamrollered by liquidity and momentum. Yet abundant liquidity and plausible storytelling can only sustain markets for so long, and every story needs an ending. We prefer to leave expensive technology businesses to others, while focusing on neglected long-duration businesses with proven earnings…
Super low interest rates come with side effects
Ultra-loose monetary policy could even be counterproductive for economies. Sitting on the desk of Reserve Bank of Australia Governor Philip Lowe most days when he arrives at work are letters from the public. Many are from retirees who have one complaint in this world of low interest rates. “It’s not uncommon for people to say…
US senate result could reverberate for decades
The US senate result could reverberate for decades if under Democrat control the filibuster goes. Any quest to alter the constitutional order would be more proof of how primary contests are destabilising US politics. Mitch McConnell, first elected to the US senate in 1984, became senate majority leader in 2015 when Republicans regained control of…
