After the rough ride of 2021-22, the last financial year turned out to be a good one for investors as shares rebounded thanks to falling inflation and hopes rates are near the top.
Shares are at risk of a pull back as central banks remain hawkish and recession risks are high. However, returns over the next 12 months should still be reasonable as falling inflation takes pressure of central banks enabling rate cuts.
The past financial year provides yet another reminder of just how hard it is to time investment markets – with shares rebounding just when everyone was most gloomy about inflation and interest rates. The key as always is to adopt a long-term investment strategy and turn down the noise.
Getting our personal finances right can be a challenge at times. And the surge in interest rates has arguably made it even harder for many. The article below looks at 15 common-sense personal finance tips that may be of use.
Shares are at risk of a short term pull back and volatility will likely remain high on central bank and recession risks.
However, we remain reasonably upbeat on a 12-month view as falling inflation takes pressure off interest rates.
Seven key charts worth keeping an eye on remain: global business conditions PMIs; inflation and our Inflation Indicators; unemployment and underemployment; inflation expectations; earnings revisions; the gap between earnings yields and bond yields; and the US dollar. So far so good.
For nearly 30 years Australia had benign economic cycles so the current environment may be a bit of a shock for many.
Still low unemployment and still high inflation despite slowing economic growth are not that unusual because they both normally lag big swings in the economic cycle.
The RBA and other central banks need to tread carefully and allow for the lags from the rapid rise in interest rates to work through – lest they end up pushing unemployment far higher than they need to in order to return inflation to target.
Please feel free to contact us with any questions about our articles in this newsletter on or email info@ldmwealth.com.au.
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