It’s not looking great if you’re planning an overseas holiday. But if you’re not, then this just may be what you’ve been waiting for.
About 10 years ago, Australia made the decision to develop a LNG export industry. Multinational oil and gas companies invested $70 billion to build a number of LNG export terminals on Gladstone Island, in Queensland.
What if something more fundamental is going on that we don’t really know about yet? This is the scenario I’m leaning towards, and it all comes down to the poor performance of the emerging markets this year.
International currencies have all slipped against the US dollar. This means that global liquidity is tightening. So it's time to be cautious.
With trade war tensions escalating between the US and China, it’s surprising to see that Aussie stocks have powered ahead. Ironically enough, we have a falling Aussie dollar to thank for this.
The message here is clear. The US Federal Reserve is slowly draining excess liquidity from emerging markets. That makes investing during these times particularly tricky.
The RBA reckons China’s debt is now around 260% of GDP. If the US and European economies slow into the second half of 2018 and into 2019, then China will feel the effect. How will this impact Australia?
If you’re caught up wondering/hoping how much you’re going to get from the budget, you’re on the path to putting security over freedom. Because when you want the government to provide for you, it’s pretty much all over.
Australia, as an investment destination, suffers from an increase in risk perceptions. Foreign capital is less willing to invest here, or buy debt issued by the banks to fund the mortgages of Aussie battlers. As a result, the Aussie dollar falls. However, the ‘magic’ of a falling dollar is that it increases the purchasing power of foreign currency.
Amongst all the panic and hand-wringing over what the volatility of the past week means, we haven’t heard much about China. Which is kind of crucial, especially for Australia. Put simply (and accurately) if China holds up, Australia will be fine. So, is China holding up?