Share market wobbles

Equity markets have fallen back in the last couple of weeks due to a stated surge in CV-19 cases, particularly in Europe. In addition, the uncertainty over the US Election has likely contributed to the turbulence.

In 2016, markets were hugely volatile as it became apparent Donald J Trump was on his way to the White House. Initially, they sold off strongly, before a euphoric rise. I expect a Trump win will be hugely positive for markets. He’s lower tax, pro-business compared to the Democrats. Moreover, a Biden win seems to be largely priced into markets (Sportsbet currently has Biden around $1.44 vs Trump $2.75).

However, my bet would still be on Trump and thus a rebound in markets. Similar thoughts to this article, particularly voters voting with their hip pocket.

https://nypost.com/2020/10/28/forget-the-polls-these-rust-belters-offer-real-election-insight-devine/

It looks like an asymmetric bet to me. The markets have already taken some pain, how much more would they sell off if Biden won – as expected? Maybe a little more, but I suspect not majorly.

So, I’ve been buying. I took some profits on a stock which had a massive run in Australia and bought some beaten down value stocks in the US.

I’m also bullish on the market as people are currently cashed up. Eventually people are going to realise they have to put that money to work or it will wither on the vine and die in relative terms.

https://www.theage.com.au/politics/federal/cashed-up-australians-squirrel-away-100-billion-20201030-p56a4m.html

We await.

Share market wobbles

The curious case of car prices

An interesting development this year has been the surge in car prices in Australia.

As this article discusses: https://thenewdaily.com.au/finance/finance-news/2020/08/19/used-car-prices-carsales-results/ , the effect of CV in 2020 has led to a run on cars as people shun public transport. On the supply-side, disruption to supply chains has limited new cars reaching consumers – compounded by the decimation of our local manufacturing capability (sigh).

This isn’t a small move in car prices.

I’ve been idly keeping my eye on the car market as I’ve been thinking about a potential upgrade. With the moon-shoot in car prices, that has taken a backwards seat (excuse the pun).

Hopefully this will see some normalisation as supply chains return to normal and the run-on from consumer ebbs. In the short-term, it doesn’t look like a great time to buy a car if you can avoid it.

This is a surprise development in a way as the prior trend had been towards jettisoning cars to embrace a sharing model (ride share, public transport etc). I’m still not positive on car ownership longer term.

One only has to look at what has happened to parking spaces. In the ACT, I’ve seen carpark after carpark disappear for new residential/commercial development – as the population continues to grow! Operating cars are expensive as well.

Flash in the pan?

The curious case of car prices

House price falls slow

Accordingly to CoreLogic, house prices fell by 0.27% in September 2020 across Australia. Unsurprisingly, Melbourne led the declines with a hefty 0.9% fall (for any readers outside Australia, Melbourne has been most severely affected by lockdowns and restrictions in 2020). The next worse off was Sydney at -0.31%. It looks like time for the smaller capitals to sparkle.

My previous post talked about population shifts, which broadly look good for smaller capitals and regional centers. There was some real strength in the normally sleepy Adelaide (+0.84% m-o-m) and Brisbane & Gold Coast (0.46%). If you can believe it Darwin roared 1.6% higher over September – however data tends to be quite volatile for Darwin due to its size.

However, broadly price falls are slowing after five months according to CoreLogic:

There’s a fair amount of concern about the effect of waning government support (JobKeeper / JobSeeker) on the housing market, but personally I think the worry is overdone.

Many of those on those programs are renters not homeowners and so distressed sales don’t look to be significant. Moreover, stock levels are down, which is not just common to Australia but other countries such as the US. The affect of restrictions on building has been touted as a reason, reducing new supply to the market. Maybe as well there is psychological safety in owning your own home in precarious times – even with a mortgage. Who knows?

But the proof is in the pudding, the property market is improving right now.

House price falls slow