It’s Monday, the 8th of September. Red-hot US stock markets are facing the risk of a sharp pullback. Despite the S&P 500 climbing 11pc so far this year, analysts at Morgan Stanley, Deutsche Bank, Evercore, and top hedge funds are warning a 5-15pc correction could be coming. The red flags are rising tariffs, a slowing economy, and stock prices trading well above historical norms. Inflation may look tame for now, but manufacturers are delaying passing higher costs to consumers – costs that are already starting to hit sectors like food and electronics. If consumer spending slows, analysts say business profits could suffer.
The first weekend of the spring selling season saw the preliminary auction clearance rate hit 75pc. It's the fourth week in a row at this level or higher, although auctioneers say some vendors are delaying selling until the government's first home buyer scheme starts next month.
Coles has backflipped on its promise to ditch caged eggs this year, delaying the phase-out until 2030. The supermarket giant says recent bird flu outbreaks have hammered supply, pushing up prices, and leaving shelves bare.
Qantas’ soaring share price has handed former CEO Alan Joyce a parting bonus worth almost $4 million, pushing his total remuneration over 17 years to $117 million. Joyce’s final bonus comes despite the airline withholding $9 million last year after damning court rulings over its treatment of workers.
Japan’s Prime Minister Shigeru Ishiba has quit, less than a year into the job, following pressure from his party to take responsibility for a major defeat in July’s parliamentary elections.
Apple’s getting ready to unveil the iPhone 17 line-up this week in California, and analysts say the iPhone Air will be Apple’s slimmest ever at just 5.5 millimetres thick. But the trade-off? A much smaller battery, meaning more time at the charger.
Fear-o-meter
Matt Wacher, Chief Investment Officer Asia Pacific at Morningstar, shares his take on the outlook for investors:
Investors have benefited from staying invested this year as markets climb a wall of worry. Returns year to date are above long-term averages vs inflation rates and cash returns. As we’ve noted before, the global economy has turned out better than feared, with a rebound in today’s Artificial Intelligence leaders and big gains for the perceived beneficiaries of President Donald Trump’s reign.
Stock prices have also risen in response to better-than-expected corporate profits in the face of potential slowing growth. Investors, like us, that look through the nose have benefited handsomely from this environment.
What next? Well, we think investors should expect US government action to continue to surprise and add to market volatility, now that ‘pay-to-play’ policy is being applied more broadly. What started with trade has spread to defence and now the treatment of individual companies.
With trade, foreigners pay Uncle Sam higher tariffs for the privilege of selling into the world’s wealthiest country, though in many cases this catches US companies too because their supply chains are global.
Closer to home, the Australian government must now think of its policies not only in the context of what will benefit Australians, but also how they may be perceived in the US. Australian companies are being impacted in ways not comprehended even a year ago.
Fear & Greed Q+A today
On growing optimism about the economy, and also the importance of immigration:
"As an economist, immigration is a really important part of the economy, but like so many things in economics, you can have too much too quickly. I think what we saw in the immediate aftermath of the pandemic and the reopening of the borders was basically a million people came in in a very short period of time, and created a lot of pressure on housing, rents and these sorts of things.
And now it's coming back, the government's... aiming for about 185,000 [people]. And that is back to sort of where we were pre-pandemic... So in a sense, that level is an optimal amount.
The government is trying desperately to make sure that the bulk of the new immigrants have the skills that we need for the labour market. Even though the unemployment rate has crept up, there are still shortages of labour in building and construction. Another pet project of the government - they want to build lots more houses over the next few years, and you need lots of tradies to do that, and we don't have enough.
If we can pick and choose those with the skills that we need, it actually helps the labour market and helps the economy to sustain... [and] it actually helps productivity as well. If we're importing young, skilled workers into the economy, we're getting a bit of a free kick from that."
AppleTV+ and Netflix both increased prices last month - for Netflix, it was the sixth increase since it launched in Australia nearly a decade ago. According to Calum Jaspan, writing in Nine newspapers, the streaming platform is now 133pc more expensive now than when it launched.
