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Hedge Clippings | 23 May 2025 This week's rate cut following the RBA's meeting on Tuesday was pretty much a fait accompli, and apart from one big bank economist who was backing a 50 bps move, it was widely expected. Had it not been for the election getting in the way, there's a good chance the RBA would have moved at their previous board meeting. We ran a webinar immediately after Tuesday's decision featuring a panel of three well-respected fund managers - Nick Chaplin from Seed Funds Management, Winston Sammut from Euree Asset Management, and Alex Pollak from Loftus Peak. While there were no surprises regarding the outcome, there were plenty of interesting insights from them on the outlook from here. If you missed it, you can watch a recording from the link in the news section below. For rate move enthusiasts, the focus now will be on how many more cuts there may be this side of Christmas. While the consensus is for two more, taking the cash rate down to 3.35% at least (assuming 0.25% each), it is worth remembering the consistent use of the word "uncertain" in the RBA's statement. Locally one big variable will be the strong labour market, with the ABS announcing wage and salary growth of 5.8% in the year to March. Of course there's always an element of uncertainty in economic forecasting, but throwing in the unpredictability of Donald Trump's policy zig-zags and U-turns makes it particularly difficult to see far ahead. Overseas, the FED's Jerome Powell is sticking to his guns given the uncertain effects of the US vs. China and the rest of the world's tariff policy. The Donald seems to have at last caught on that the uncertainty of both the magnitude and timing of the eventual outcome is harming the US economy as much as anyone else's. Trump loves to use the analogy of holding a strong hand in negotiations, but China (so far) seems to be holding their nerve. There are a number of opinions on Trump, but it's worth listening to what Anthony 'The Mooch' Scaramucci, head of SkyBridge Capital, and who served as White House Director of Communications for just 11 days in July 2017 during Trump's first term, has to say. Actually, if you Google the Mooch, you'll find he has plenty to say about everything, but particularly Trump. One wonders how he has time to run SkyBridge given the time he spends on, or in, the media. As far as Trump vs. China is concerned, his view is that Trump will have to capitulate, although if and when that occurs there's no doubt Trump won't admit to it, or frame it that way. For another view on China, it's worth reading, (here) or watching (here) Deputy Governor of the RBA Andrew Hauser's address to the Lowy Institute yesterday. Hauser is understandably less direct than Scaramucci, but having visited China just a week after Trump's (then) Liberation Day announcement, he was well placed to judge Chinese reaction first-hand. We suspect that beneath the RBA speak, Hauser may be at least on the same side, or hold a similar view as the Mooch. Changing tack, it seems at last there's some pushback against the Treasurer's plans for changes to super balances above $3 million. The issue is not really about higher taxes (30%) on large balances. Most taxpayers accept that concept on their everyday wages and salaries. It is probably not even about not indexing the $3 million level to adjust for inflation, because, as Chalmers points out, that can be left for future governments. The completely ludicrous, unfair, dangerous, and we would have thought unworkable aspect, is taxing unrealised capital gains. Sadly, post-election, jumping up and down now is a classic case of too little, too late, or closing the stable door after the horse has bolted. What were the Liberals thinking by not making the most of that argument when they had the chance, rather than now, when no one is really listening to them? Although looking back at the election result, it seems not many (or enough) voters were listening to them during the election campaign either. News | Insights | Webinar Webinar Recording | Impact of Tuesday's RBA rate decision Investment Perspectives: The clear themes emerging from the tariff chaos | Quay Global Investors Market Commentary | Glenmore Asset Management April 2025 Performance News 4D Global Infrastructure Fund (Unhedged) Canopy Global Small & Mid Cap Fund |
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