This is our last "Hedge Clippings" for the year. Thank you for your support and feedback over 2018, we hope our various Friday afternoon musings have been to your liking - or at least if not, of interest. We'll be back after the break, but in the meantime would like to take this opportunity of wishing you and your families a Happy Christmas and a Healthy and Prosperous New Year.
Looking back it was a year when the music stopped on a number of fronts - although it had been becoming pretty discordant for some time. It's been a year when geopolitics has been the dominant theme - or themes, with markets and economists trying to work out what's next, and getting the wobbles in the process:
Brexit - David Cameron will be remembered for making an offer he didn't need to, and giving 36% of the UK electorate control over an outcome he didn't want. It was always going to be ugly, but it has turned out to be a disaster where no one is likely to be happy with whatever the eventual outcome holds. What on earth was he thinking? The truth is he probably wasn't, so he neatly sidestepped his responsibility, leaving it to his stoic but hapless successor to sort out the mess he created.
Trump - Where do you start? The Donald seems immune to any kind of advice or what one might call statesmanlike behaviour. He thrives on confrontation and apportioning blame and responsibility for his mistakes to others - aides, Chiefs of Staff, Lawyers - and even the Federal Reserve. He has certainly achieved certain gaols - to what extent they'll be of the own goal variety (or maybe that should be in goal?) remain to be seen.
China - The music hasn't stopped but it is getting louder! The Chinese Communist Party finally seems to be being held to account for wanting to dominate the world's economy, and is not liking the pushback it is receiving from the incumbents.
Australia - A combination of the Hayne Royal Commission, and the revolving door at the Lodge are threatening what's been a record economic run. The HRC has helped to put the skids under an overly heated residential property market - something the Reserve Bank had been trying to do more subtlety for a while. Either way the above combinations - along with the strong chance of a change of government next year - are likely to see consumer confidence erode further, with the risk that the economic record comes to an end.
The music may not have stopped, but the tune will have changed significantly.
