The Rate Debate - Ep 41: Uncertainty abounds

in the face of economic challenges

Yarra Capital Management

August 2023

Funds operated by this manager:

What really matters in investing

Magellan Asset Management

August 2023

Global Portfolio Managers, Arvid Streimann and Nikki Thomas dissect what's important and what's a distraction in the investment world. They talk us through where they are currently finding opportunities and how they are positioning the portfolio to benefit from structural tailwinds. Investment Analyst, Emma Henderson joins them to provide a deep dive into our restaurant holdings and why we like them.

Funds operated by this manager:

Magellan Global Fund (Hedged), Magellan Global Fund (Open Class Units) ASX:MGOC, Magellan High Conviction Fund, Magellan Infrastructure Fund, Magellan Infrastructure Fund (Unhedged), MFG Core Infrastructure Fund

Important Information: 

This material has been delivered to you by Magellan Asset Management Limited ABN 31 120 593 946 AFS Licence No. 304 301 ('Magellan') and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation.  This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should obtain and consider the relevant Product Disclosure Statement ('PDS') and Target Market Determination ('TMD') and consider obtaining professional investment advice tailored to your specific circumstances before making a decision about whether to acquire, or continue to hold, the relevant financial product. A copy of the relevant PDS and TMD relating to a Magellan financial product may be obtained by calling +61 2 9235 4888 or by visiting www.magellangroup.com.au.

Past performance is not necessarily indicative of future results and no person guarantees the future performance of any financial product or service, the amount or timing of any return from it, that asset allocations will be met, that it will be able to implement its investment strategy or that its investment objectives will be achieved. This material may contain 'forward-looking statements'. Actual events or results or the actual performance of a Magellan financial product or service may differ materially from those reflected or contemplated in such forward-looking statements.

This material may include data, research and other information from third party sources. Magellan makes no guarantee that such information is accurate, complete or timely and does not provide any warranties regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material.  Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Magellan. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. No representation or warranty is made with respect to the accuracy or completeness of any of the information contained in this material. Magellan will not be responsible or liable for any losses arising from your use or reliance upon any part of the information contained in this material.

Any third party trademarks contained herein are the property of their respective owners and Magellan claims no ownership in, nor any affiliation with, such trademarks.   Any third party trademarks that appear in this material are used for information purposes and only to identify the company names or brands of their respective owners. No affiliation, sponsorship or endorsement should be inferred from the use of these trademarks. This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Magellan.

Hedge Clippings | 25 August 2023

Wow! What a funny old week that was... but then again when one stands back from the headlines, it was more like a slow moving train wreck - or in the case of Yevgeny Prigozhin's presumed mid-air "mishap", more a question of "what took so long"?  From what we can glean so far, and given that news out of Russia is curated to say the least, nothing is yet confirmed, other than the fact that a private jet crashed with the loss of all on board. Was Yevgeny among them, was he a target, or was it a way for him to "distance himself" from the long arms of his ex mate, the President? Sooner or later Putin, not widely known for forgiveness, would have found a way to extract his final revenge, either via poisoning Prigozhin's food (which would have been ironic considering he was reportedly once Putin's chef) or some other means.

If he was on the plane, it's difficult to have much sympathy. If he wasn't, the best advice would be to watch what you eat, and avoid tall buildings.

And then there's the case of Donald, once (and still) known as "President" Trump, facing up to Fulton County Jail to have his mug shot recorded for posterity, and no doubt a whole lot more, along with a dozen other of his co-conspirators. Once again Trump stole the show, having previously (according to some) tried to steal the 2020 US Presidential election, or according to him, having it stolen from him. Sounds more "banana republicanish" to us than Republican, but probably just symptomatic of where the world, or at least the US of A is heading. No doubt he'll garner even more applause and support from his followers, while (just like Prigozhin) it remains to be seen if he survives, or swaps his famous red tie for a more mundane uniform and a potential 641 years in the slammer.

Closer to home, even the government's chief media apologist the ABC was questioning the curious co-incidence of the PM's son winning the frequent flyer lottery, and ending up a member of the Qantas Chairman's Lounge. Soon to depart Qantas CEO Alan Joyce deflected questions on how that occurred, citing "privacy" concerns, while at the same time defending a full year profit of $2.47bn., and refusing to refund all or any of the close to $1billion in COVID-19 support the government handed out while he decimated the Qantas workforce. And while Qantas are enjoying record profits on the back of limited seat availability, Albo's transport minister refused to be drawn on the logic of refusing just 21 additional flights per week from Qatar Airways, citing Qantas as the "National Carrier" (actually a commercial and publicly listed company) as in the "national interest". Apparently, any benefits to the long suffering Australian traveling public don't come into the equation, maybe because Albo and co. either don't pay for their tickets, or fly on an RAF VIP aircraft.

Barring a complete fall out in the Chinese economy it looks as if Australia will avoid a major recession - unless of course Xi presses ahead with his stated intention of invading Taiwan. That would create a dilemma across the globe for governments, and businesses alike given the level of dependence on China as the world's manufacturer, and consumer. That might make Xi think twice, but in the meantime businesses are moving to reduce that dependence by moving or reducing their exposure. Either way, that's not going to assist China's current economic slowdown.

Finally, on a lighter note, we gather the Rolling Stones are quietly planning the release of a new album in September. Which brings us to the following image, or should that be the following question:

Whoever thought, back in the 60's, that Mick Jagger would still be around, let alone pumping out music?

News & Insights

Market Update July | Australian Secure Capital Fund

AI reaches an inflection point | Insync Fund Managers

July 2023 Performance News

Bennelong Emerging Companies Fund

Collins St Value Fund

Emit Capital Climate Finance Equity Fund

Kardinia Long Short Fund

Cyan C3G Fund

Equitable Investors Dragonfly Fund

PURE Income & Growth Fund

Argonaut Natural Resources Fund

Insync Global Capital Aware Fund

If you'd like to receive Hedge Clippings direct to your inbox each Friday

JOIN OUR MAILING LIST

Touchstone podcast: The state of consumer spending

Touchstone Asset Management

August 2023

"In Australia, consumer spending, historically, has been about 50% of GDP. This year it's been closer to 80% of GDP growth. There seems to be a view that, well, the RBA's ... more or less done what it's gonna do. I think what the market's missing, though, is there's a huge lag from when the RBA increases rates to when households actually have to pay the higher interest rates."

• 1:03 - Touchstone's philosophy and investment process
• 2:37 - Ron's observations from his recent Melbourne trip
• 4:23 - What secular stagnation is, and why it matters
• 6:16 - The real reason consumer spending is going down
• 8:31 - The impact of earnings being too high for consumer companies
• 11:33 - What Touchstone expects from reporting season

Funds operated by this manager:

Touchstone Index Unaware Fund

The content contained in this audio represents the opinions of the speakers. The speakers may hold either long or short positions in securities of various companies discussed in the audio. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely as an avenue for the speakers to express their personal views on investing and for the entertainment of the listener.