Quarterly Compass: Spring 2023

Quarterly Compass: Spring 2023

Spring has sprung in earnest which has brought a whole lot of change. We have been working hard at Wealtheon and Huxter Estate and are implementing a few big things that we are excited about launching in 2024.

Some of these new launches I need to keep tightly wrapped but something I can shed some light on is that we are adding some great new features to our values research and alignment with goals and portfolios and possibly building out some new incredible technology for all of our clients to benefit from. We are also changing some of our review format which has had great feedback so far and I am looking forward to running through it with all of our ongoing clients.

At Huxter Estate we have had bud burst and all of the vines are coming out in full swing. It’s crazy how fast spring changes the vineyard.

Lauren and I have also added a new addition to the Wealtheon and Huxter Family. Our little Kelpie pup named Bones joined the team and he is quickly finding his feet. He has some big shoes to fill but I think Marley would be very impressed with his progress.

The last quarter saw some big developments so let’s get started.

What’s Happening In The Economy?

Developed nations still seem to be in a watch and wait mode hanging off every central bank and how they will interpret inflation figures. Interest rates are still one of the topics of economics but most markets are anticipating that we have successfully orchestrated a ‘soft landing’ which means markets believe we will still see some economic growth over the year.

I personally take a slightly different view. I think here in Australia, the impact of interest rates has not come anywhere near it’s full effect. I think the household sector is putting on a brave face with working families who have bought into big housing markets with high debts facing a huge hurdle in front of them. I think we will see a turbulent pre-Christmas run before households really tighten their belt after xmas.

What’s happening in Australian investment markets?

After a really strong start to the year, this quarter has seen some of the volatility we have been warning about. The ASX is down -0.77% for the quarter and whilst it is still up for the year, the markets have lost nearly 3% in the last month. I expect some big swings up and down for the rest of the year with a big focus on earnings season in November. Energy, IT and consumer discretionary are the big performers this year and with health care under performing, there may be scope to re-align positions to take advantage.

Our property market has held out to be relatively resilient in the face of higher rates with the major factor being a reduction in supply and reduced rates entering the market. Builders are still suffering from inflation issues.

What’s happening in global markets?

International markets have had a belter first 6 months of the year but we are seeing some significant drops over the last 3 months. The “Magnificent 7” (Alphabet, Apple, Microsoft, Amazon, Tesla, Nvidia and Meta) all declined and as these seven companies have been a main contributor to growth in the US markets, it has had a significant effect. Inflation mostly remains in a downward trend which is good but with strong labour markets, we likely won’t see interest rates across the world drop any time soon.

What does all of this mean for you?

Overall, this all means that Australia is very close to or at the bottom of the trough of economic growth in my opinion. I think that we will likely see a few more rate rises but the prior year has shown just how strong the economy has been. Now if we move into recession territory, the RBA has plenty of scope to reduce rates again and agitate economic growth.

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