Arminius

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So far Arminius has created 61 blog entries.

Geldzug: AUSTRALIA’S BANKS ARE ON THE ROAD TO RECOVERY

13 November 2020 The ANZ, NAB and WBC results for the September half-year suggest that their bad loan problems will be smaller than expected, because loan deferrals are falling faster than feared. NAB had the best underlying result. Banking sector profits are likely to bottom in FY21, then recover at 10% to 15% pa for the next two years, taking dividends to about 4.5% fully franked. Risks to this scenario include more outbreaks in Australia and renewed economic downturns in the US and Europe. We continue to believe that, although the banks will recover over the next two years, they [...]

2020-11-23T15:35:48+00:00November 23rd, 2020|

Geldzug: STAYING OVERWEIGHT JAPAN

15 November 2020 The Bank of Japan’s regular Financial Stability Report helps Arminius update our investment view on Japan. Because the country has suffered very few coronavirus deaths, the Japanese economy will recover very quickly from the lockdowns in the first half of this year. Consensus forecasts are for GDP to fall by -5% in 2020, but to rebound with +3% growth in 2021. Most importantly, the average Japanese company carries very little debt – many have a net cash position. Corporate Japan’s leverage to the East Asian economies will cause a sharp improvement in profits. Therefore we recommend maintaining [...]

2020-11-23T15:02:21+00:00November 23rd, 2020|

Geldzug: THE PRESIDENTIAL VOLATILITY KINK

20 October 2020 The US share market is the biggest in the world, accounting for 60% of total market capitalization. (The Australian share market is only 2%.) Therefore, when investors in the US are getting scared, the rest of the world sits up and pays attention. The chart below shows how investors have become increasingly worried about the outcome of the next US Presidential election. The VIX (for “Volatility Index”) measures investor fear by measuring how much investors are willing to pay in order to buy option protection against downside risk in the US share market. Investors can buy or [...]

2020-10-21T20:18:58+00:00October 21st, 2020|

Geldzug: IF CHINA REBOUNDS, AUSTRALIA GETS AN ASSIST

30 September 2020 China is a major factor in Australia’s economic recovery because China buys more than a third of our exports. This is why global investors like to use the Australian dollar as a proxy for the Chinese economy – if China does well, Australia will benefit, so our dollar will rise (provided that the Australian government does not provoke any more trade retaliation). August marked a sharp improvement in China’s economy. Exports leaped 9.5% year-on-year, after a 7.2% rise in July. The rapid resurgence is partly due to Western companies re-stocking their supply chains after the COVID-19 disruptions [...]

2020-09-29T20:26:38+00:00September 29th, 2020|

Geldzug: AUSTRALIAN MARKETS – THE AUGUST 2020 REPORTING SEASON

15 September 2020 Twice a year we summarise the half-year and full-year results of the companies in the ALCE portfolio. Although the COVID-19 pandemic has affected some of the results for the June 2020 half year, the companies in the portfolio remain strong. Several – e.g. APA, Amcor, BWP, Spark NZ, Steadfast, and Waypoint – have not been materially affected by the pandemic. Others – e.g. ASX, Coles, and Wesfarmers – have done very well in recent months. Power utility AGL unsettled investors with a net profit which was lower than expected, but it also promised dividends which were higher [...]

2020-09-17T15:21:28+00:00September 17th, 2020|

Geldzug: WILL THE US DOLLAR BECOME ANOTHER CASUALTY OF COVID-19?

22 July 2020 The economic consequences of the COVID-19 pandemic in the US are expected to trigger a fall in the US dollar against major global currencies over the next four years. By 2024 the Australian dollar could rise as high as $0.84 (US 84 cents) The fall in the US dollar (USD) will be probably be associated with rising inflation in the US, from the present level of less than 2% to as high as 5%. This does not mean there will be worldwide inflation – other countries will be able to decide how much inflation they allow in [...]

2020-07-23T14:26:15+00:00July 23rd, 2020|

Geldzug: WILL COVID-19 CRIPPLE THE 4 BANKS?

18 June 2020 Bank profits have been falling since 2015, but the latest half-year was particularly dismal. Loan growth was weak even before COVID-19 arrived on the scene, and the banks were already paying hefty remediation charges for their crimes against their clients. Are the COVID-19 loan impairment charges going to be the straw that breaks the camel’s back... [read more]

2020-06-19T13:25:01+00:00June 19th, 2020|

Geldzug: HOTWIRING THE CHINESE ECONOMY

9 June 2020 The Chinese economy has stalled. The manufacturing PMI for May was an anaemic 50.6, a touch worse than April’s 50.8. The PMI is a dispersion index, which means that figures above 50.0 indicate expansion, and figures below 50.0 indicate contraction. So manufacturing growth is only just in positive territory. Trivium’s National Business Indicator tells the same story. In the first week of June it had reached 87.8%, compared to 85.3% a month earlier. In particular, new export orders remain very weak as the rest of the world struggles with COVID-19... [read more]

2020-06-08T13:50:28+00:00June 8th, 2020|

Geldzug: WARREN BUFFETT IS NOT BUYING RIGHT NOW

5 May 2020 Warren Buffett provided a couple of surprises at Saturday’s annual meeting of Berkshire Hathaway. First, he admitted that he had made a mistake in owning airline shares, because the industry was unlikely to bounce back quickly, so he sold out of all four big US airlines in April... [read more]

2020-05-04T16:47:11+00:00May 4th, 2020|

Geldzug: CHINA IS RECOVERING

1 May 2020 China is recovering, not only from COVID-19, but also from the GDP collapse caused by its lockdown. We know this because the central government has begun to relax several key restrictions on travel and spending. First, China’s children are being allowed to go back to school. All provinces are phasing in the resumption of regular classes over the next six weeks. In the land of the one-child policy, the return to school is psychologically very important. Even though COVID-19 very rarely kills young people, no Chinese government wants to be responsible for any child mortality. Remember the [...]

2020-05-01T20:26:08+00:00May 1st, 2020|
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