Category: Geld Zug

18 June 2021

• Central bank digital currencies (CBDCs) are already operating in the Bahamas and being trialled in China. They will be introduced by many countries over the next five years.
• CBDCs enjoy the crucial advantage of total security, because a central bank can’t go broke. But, in order to achieve broad acceptance, CBDCs also need to be cheaper or faster or more efficient or more private or more convenient than the alternatives.
• CBDCs differ from other cashless payment instruments such as credit transfers, direct debit, stablecoins, or cryptocurrencies, because they are “government money”, being direct liabilities of the central banks. Issuing this “extra currency” involves costs, but CBDCs also allow central banks to see real-time transactions, create audit trails, monitor criminal activities, and prevent money laundering.
• Although an Australian CBDC is unlikely in the near future, the technology is evolving rapidly, and may have important effects on the global financial system.

INTRODUCTION

We’ve all heard of digital currencies like Bitcoin, Dogecoin, and other cryptocurrencies… [read more]

23 April 2021

Back when coins were originally made out of an alloy of silver and gold it was uncommon but not impossible to debase one’s currency. The death penalty as a consequence of currency debasement seemed to inhibit the practice. The Lydian Empire in 700 BC (before they fell to the Persians) lays claim to inventing “coinage”. Once the use of coins as a medium of exchange became commonplace, the Greeks were known to debase their currency from time to time… [read more]

28 February 2021

Twice a year we summarise the half-year and full-year results of the companies in the ALCE portfolio. Most of the companies in the portfolio reported strong earnings recoveries in the December half-year, and dividend payouts were higher than our forecasts… [read more]

25 February 2021

• China’s top leaders have set out their top priorities for 2021 to 2025: achieving self-reliance in science and technology, and “dual circulation”.
• Self-reliance in science and technology means accelerating the development of vital high-tech industries such as semiconductors to ensure that China can develop regardless of US “threats”.
• Dual circulation means encouraging production for domestic markets as well as for export markets, and upgrading China’s internal logistics systems so as to build a unified national market.
• China is also committed to restructuring the energy sector and energy-intensive industries so as to meet the target of peak carbon emissions by 2030.
• The investment implications are obvious: China’s demand for Australian coal and iron ore will not be rising.

 

4 February 2021

In November 2008 a panicked Chinese government launched a stimulus package equivalent to 12% of then GDP. The package propelled China out of the GFC, but it created more problems than it solved, e.g.:

• A tenfold increase in corruption
• Useless or non-economic projects: “bridges to nowhere”
• A surge in banks’ bad loans
• A sharp increase in the ratio of debt to GDP
• Unsafe buildings, and highways that collapsed

20 January 2021

• Coronavirus vaccines will help us return to normal, but there will be risks, obstacles, and delays through 2021.
• 2021 will bring a W-shaped recovery in the economy and the share market: two steps forward, one step back.
• The Australian dollar is headed toward USD 90c much faster than we expected.

After the grim events of 2020, the November news of three coronavirus vaccines set off a surge of investor optimism about the future… [read more]

18 December 2020

• History indicates that the US share markets are kinder to Democratic Presidents than under Republican Presidents.
• The most important thing is to stay invested, because the share market rises under almost every President.
• Although the Biden Administration will probably have to deal with a hostile Senate, it can still accomplish many of its policy objectives by executive actions and some bipartisan cooperation.
• Presidential policies usually have more impact on individual sectors than on the market as a whole, so we think that the probable winning sectors are:
  • Pollution control and environmental restoration
  • Construction
  • Building materials
  • Railroads
  • Battery minerals producers
  • Renewable energy utilities and equipment manufacturers… [read more]

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 will underperform the market in the long term.

NAB had the best underlying earnings for the year ended 30 September 2020, in terms of a rising net interest margin and solid profits before provision charges… [read more]

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 a high exposure to the Japanese share market… [read more]

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 sell futures contracts on the VIX index. Each futures contract has a specified maturity date in every month. The higher the price of buying a futures contract, the higher the perceived risk that the market will fall before that month’s contract matures… [read more]