Why do you pay attention to financial forecasts?

It’s that time of year when inboxes get flooded with 2019 economic and financial market forecasts. As the CFA institute points out, at the beginning of 2018 the median analyst forecast for the S&P 500 calendar year return was +10.3%. The actual result ended up being -6.2%.

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The central bank bar tab

A primary focus for global financial markets in Q4 2018 was the growing fear that the FED has tightened monetary policy too far, too fast and risks tipping the US economy into recession. This culminated in a severe global equity sell-off, which accelerated after the December FED meeting.

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Ghosting in the US job market

We’ve covered US wage growth and the resulting upside risk to inflation in a number of prior commentaries and now see more leading indicators suggesting that theme is accelerating.

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Wages, Wages, Wages

Despite strong domestic job creation, wage growth in Australia remains subdued and is part of the reason we believe the RBA’s policy tightening cycle will lag the US.

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