Wednesday, August 13, 2025
July 2025 snapshot: Share markets up for 4th month, inflation easing, more rate cuts soon
Another month of good gains on global share markets across almost all industry sectors and countries, despite Trump’s frenzy of deals, adjustments, backflips, side-deals. Inflation continues to ease, but central banks remain cautious and reluctant to cut rates further for now. But bond yields rose at the long end, reflecting fears of higher inflation ahead. Global growth, spending, and employment all remain reasonably strong – defying wide-spread predictions of slowdowns & recessions. On commodities markets, oil and gold kept rising on inflation and Middle East troubles. Iron ore was finally boosted by much-awaited Chinese stimulus.
US Government has previously defaulted on Treasuries. They are not entirely risk-free!
As the US government teeters toward yet another debt crisis, it is useful to remember that US government defaulting on Treasures is not new. The US failed to pay maturing treasury bills three times in 1979 when Congress didn't legislate to raise the debt ceiling in time. The creditors sued for unpaid interest but were denied by the Courts. These were 'temporary' defaults and were rectified quickly (the principal, not the interest), but they shocked people who had believed the US government would always pay its debts. The default crisis was a final nail in the coffin for Jimmy Carter and Keynesianism, paving the way for the 1980s boom under Reagan with the revival of free market capitalism. Are we at another turning point now? Today, the US deficit and debt load are more than THREE TIMES WORSE (relative to GDP) than in 1979.&
What asset mix will double your money in 10 years? - Let me know your answer!
This relatively simple 10-year goal appears straightforward, but the outcomes seem little more than a coin toss based on when you happen to start. Using a simple shares/bonds mix is hard enough, but it becomes even more difficult for more complex real-world investment goals. (For under 30s - 'Bitcoin, bro!') (For under 25s - 'Borrow $100 from your mum, create a meme-coin, pump it & dump it, and make a killing in 10 minutes!)
Who wants to buy US debt? (lend to Uncle Sam?) Most of the world but me! Who’s buying, selling, why?
Just about everyone is rushing in to lend more money to the profligate US government – except China, Russia, Iran (and me). China has dumped $413b of US debt (one third of its peak holdings) since Trump started his trade war in 2018, and accelerated since Russia’s invasion of Ukraine. But the UK soaked up all of that and more, increasing its holdings by $515b.
High Yield Debt case study - Virgin Notes
Last week I wrote about the Virgin Airlines disaster for shareholders. That was only half of the story of Virgin's last shot as a listed public company. Here is the other half of the sorry tale - the fate of the buyers and owners of $325m of Vigrin Notes - on the debt side of the balance sheet. It makes a great case study in high-yield / high-risk debt. Are there any new lessons to be learned? &
May 2024 Snapshot: Inflation, trade wars, but shares stronger. How is your 2023/4 year shaping up?
May 2024 Snapshot: inflation sticky, trade wars escalate, but shares heading for another good year. How is your 2023/4 year shaping up?
The Debt Olympics - How do we rate?
Australia and Australians loaded up on debt in the GFC and again in Covid, but how do we stack up against other countries? How do we rate on: Government debt? Corporate debt? Household debt? Is debt good or bad? When does it become a problem? The answers are probably very different to what you may have thought.
April 2024 snapshot - rate cut hopes finally dashed - is this the big one?
Here is my essential 1-page snapshot for Aussie investors - covering Australian and US share markets, short- and long-term interest rates, inflation, and the Aussie dollar. Share and bond markets fell back a little as investors finally realised that central banks are not going to cut rates hard and fast. 'Is the is the start of the big correction?' - or 'Are we done for now?
The Low Inflation era of great returns is over. Investing just got a whole lot harder!
Investors enjoyed unusually high returns in the past couple of decades because EVERY asset class posted above average returns when inflation was low. A blind-folded monkey with a dart board picking any random mix of asset classes would have done well! But that era of great returns from low inflation is over. What types of assets do best in different inflation conditions? What is the best inflation hedge? How to build long term portfolios for high(er) inflation?
March 2024 Snapshot - Shares keep rising despite strong economy + sticky inflation
March 2024 snapshot – Fed + RBA warn inflation not yet contained, but shares keep surging Here is my essential 1-page snapshot for Aussie investors – What is happening in local and global investment markets and Why.
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