A lot of people would probably like to forget 19_20 but its impacts will continue to be felt. As we suspected back in March, we will still be dealing with this pandemic for some time and that has flow on effects for investment markets and certainly for Australian’s, their jobs and business’ and the world and Australian economy.

Before we get into the news, a quick shout out to all our Victorian clients, friends and their families who are having to deal with renewed lockdowns and some very drastic restrictions.

We are very aware that this could just as easily have been happening in Queensland or any other state and here, there is a collective sigh of relief at this stage.  We hope to see you back on track in the near future and look forward to getting down there again and having you up here as soon as possible.

RFS News:

Troy Theobald has been named in the Barron’s list of Australia’s Top 100 Investment Advisers (Barrons Top 100 Australian Advisers).  He has been ranked at 21St (we are taking that as a good omen for the 2021 financial year) and has now made this list for 3 of the last 4 years.  The Barron’s list is constructed using a comprehensive application process and formula. Successful advisers make ‘the list’ based on (1) assets (2) revenue and (3) quality of practice. This is a great result, not just for Troy, but for RFS Advice more broadly and the team is very excited.

For our clients, we hope this continues to give you comfort that no matter where we are based, we compete very favourably nationally and increasingly, even internationally.

Welcome Mardi McLean.  You will be hearing a new voice on the line when you ring into the office on a Monday and Tuesday.  Don’t worry, Chloe and Mel are still with us and you will still be hearing from them.

  • Chloe looks after the front office from Wednesday to Friday (she is busy chasing a very active toddler on Monday and Tuesday).
  • Melissah has moved 100% into the Ongoing Care team and you will still hear from her as she will be contacting you to organise progress meetings with your adviser – and probably randomly as she just likes people.

Thank you to all the clients who completed our survey.  We will share the results in the coming weeks as we receive the information from Business Health.

Investment markets and the new year:

2020_21 is in full swing and the numbers still look surprisingly good.  Markets are shrugging off some very negative Covid infection rates and that is probably because there has been some solid underlying economic rebounds.

  • Housing rates in China are up by 9.4% for May 2020 versus May 2019 (well before Covid) which is an indicator that that economy is rebounding quite strongly. We definitely have some geopolitical headwinds with Chinese Communist Party, both here and globally, but they are still our major export partner and our Iron Ore is still very much in demand, with Brazil struggling with supply.
    • Chinas manufacturing levels are also very solid so some of the supply side issues that have been impacting everywhere are softening. I could talk PMI’s but I don’t want to get you too excited!
  • The United States (US), which does not have the Social Security support put in place by the Australian Government, saw nonfarm payroll employment rise by 4.8million. A big portion of this is in leisure and hospitality https://www.bls.gov/news.release/empsit.nr0.htm.
    • I mention the social security system in US here; as you might be puzzled by how rapidly economic activity has improved in a country with escalating pandemic numbers. The reality is they need to get back to work – their safety net is very limited.
    • This only moves unemployment from 13.3% to 11.1% but the markets would consider this a positive sign.
  • While case numbers are increasing, death rates are down (no matter how I say that, it just sounds bad). Investment markets would see this as positive sign as it can indicate that our management of the virus is improving.  While there is no proven vaccine, scientists globally know a lot more about it now and we can assume their efforts can be more focused on measures that have provided results.
    • I am not intimating this virus is not still lethal, especially to our elderly. This is more the argument that better recovery rates can lead to a faster rebound economically as the general population becomes less fearful.
  • Europe has been able to ease its restrictions. It doesn’t seem that long ago we were talking about Spain, UK and Italy as the worst hit areas but now (9 July 2020) they only have 617 serious cases in Spain, 185 in the UK and 69 serious cases in Italy.
    • USA, Brazil, India and Russia are still the most severely impacted but if you look at deaths per 1 million of population, Spain, UK and the Italian numbers were 607, 657 and 578 respectively. The USA with 15,645 serious cases has a death rate per million of 410, Brazil: 326, India: 16 and Russia 74.  There is some scepticism, on the Indian and Russian numbers but…

The market may have overshot what we would have expected at this stage but our active managers have been very pleased with how the better quality businesses are performing and price to earnings ratios may still seem high but if earnings surprises are on the upside, then prices are not that bad.

Reality check this week:

As we can see from Victoria, these numbers can turn pretty quickly and whether you want to blame international processing, protest rallies or just negligence, it doesn’t really matter.  We still need to be vigilant, as we in the North are open for business (NSW- Qld opened today!) again and we want to keep it that way.

  • Just walking through Robina Town Centre today reminded me that only 6-7 short weeks ago, every shop front was closed and there were probably 200 people in the whole centre – now it looks positively thriving. Even our favourite café is open and the owners were definitely smiling.

I am sure that this is very much the opposite in Melbourne and the whole country is feeling for them.  I would think every business owner is very aware that this scenario is only an outbreak away so, no relaxation yet.

We would still suggest we are in the ‘not so bad’ part of the cycle but definitely on a more positive economic trajectory.

To everyone who can, have a great weekend, albeit a wet one!