The rapid rise of interest rates has provided a shock that is exposing companies with pre existing conditions to the rude reality of normalised monetary policy.
Yes the US Federal Reserve cash rate rises from zero in March 2020 to 4.50% in March 2023 is the steepest rate rise cycle for 158 years but… 4.5% is not an outlier when it comes to cash rates.
Many clients may have seen the news in regards to the SIVB bank – Silicon Valley Bank.
This is a bank that is not well known and given there are over 4,800 banks in the US that is probably not a great surprise.
It is a reasonably large bank with total assets of US$211.8 billion as at the 31st December 2022. Compare that to the NAB with total assets of $596.1 billion.
SVB grew very quickly, through venture capital firms pouring cash into it as they raised capital for potential start-ups.
(8 minute read)
I know it is a dry topic but these changes may have broader ramifications than you think and it has probably exposed an agenda that we will need to plan for.
As a precursor, we still believe Superannuation will be a critical part of the retirement savings landscape, but there are changes coming and they add complexity rather than reduce it.
Additionally, we have time to make adjustments and there are other options to discuss.
The economic backdrop continues to impact, both on sentiment and investment markets, but there are pieces within the puzzle that may point to a more positive year.
Despite much talk of rising interest rates and possible recession, here are a few reasons to stay the course and stick to your long-term investment strategy.
There has been much discussion of rising interest rates, recent inflation spikes and ongoing market volatility impacting investment and super balances. Add to that the increased chatter about the possibility of Australia falling into a recession and things certainly aren’t looking too hopeful for investors at present.
Countries are slowly moving into a new normal with Covid no longer driving the policies around tourism and travel – even China.
In gaming parlance, 2022 could be described as ‘the grind’. Picture any number of sports where there is a period where no one is scoring but you know fatigue will eventually set in and one side will get the upper hand. Usually in State of Origin, that is QUEENSLAND… but I digress.
Investing can be a little the same.
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