In this Stockhead series, investment manager James Whelan from VFS Group offers his insights on the key investment themes and trends in domestic and global markets. From macro musings to the metaverse and everything in between, Whelan offers his distilled thoughts on the hot topic of the day, week, month or year, from the point of view of a professional money manager.

 

Good afternoon,

I’m often asked how much time/effort it takes to write a note like this. (Ed: Not as long as editing it)

Actually I’m not ever asked that. But apparently someone asked this guy so he felt it was worth dedicating his whole AFR column towards it.

“Ugh”– Jimmy James Whelan.

Also now might be a good time to reiterate that my views do not represent those of VFS, Stockhead, The Theory of Thing Podcast, or anyone else. Sane or otherwise.

I’m not here to get sued and I don’t play the game of derision in an industry in which it is so welcome.

Level steps and upright conduct are more my style and should be for my peers. With regards to Chris and whatever this piece of art was about in The Fin, I politely request that he pump the brakes on the ego.

Also in this regard I believe I speak from more experience than I intended to have in this industry when I say if you see a financial professional talk like this then raise your alert rating:

Dressing like Johnny Cash raises a whole host of other flags…

That being said…

As of this weekend just gone I am now the 40 years + National Champion for the 3 minute endurance and 30 second speed jump rope.

A great sense of pride in this, proving that with a few weeks notice, the right training and analysis and a little bit of luck, an individual is capable of some pretty cool things. (ED: We wish it was, but this is not fake news.)

I don’t get to choose my opponents…I definitely won’t get to choose them at Worlds in 2025. Japan here we come.

(ED: Actually, we did some digging and suspect there may a be a lot more to JW outside of finance than anyone lets on…

Ah-Ha! Via Daily Mercury

Also my youngest won National Champion again, making it 3x in a row, up against slightly younger and fitter opponents. So proud. But we don’t brag… (Ed: Total legend!)

Personal achievements aside this week is one for the ages. CPI tonight is going to be a doozy. One of the most watched in the history of the world.

A colleague sent me this and it seems reasonable enough with regards to US inflation. There’s a whole thread which is good if you are curious to get into the weeds of all the things coming together to create the US economic story.

Twitter Thread here, BTW

Not a great deal of time to dwell on it here but generally speaking the US economy is showing signs of really slowing. Or at least growing slower. Either is fine.

Is the US economy cracking? Possibly. People are running out of cash and delinquencies on Autos, Cards and mortgages are climbing.

I honestly believe something like that will happen in Australia and when it does it will be quicker than anything we can imagine occurring.

Phil Lowe really did it last week. He doesn’t have many tools to use so his hands are a little tied.

But he’s digging his own metaphorical grave with chatter about picking up a few extra hours to help pay the mortgage or living with your parents a little longer. Sending the whole country into a recession just to get the little line lower is actually going to cost lives. Be it either this month or the next but I believe we are right on the precipice of that colossal belt tightening that will take place as mortgages really decimate bank accounts.

I’ve spoken about it on the podcast many times but here’s the breakdown of the average family’s 2023.

7. Friday night we go out for pizza

6. Friday night we order pizza in

5. Friday night Dad picks up pizza

4. Friday night we’re having a nice woollies pizza

3. Friday night we’re having the cheap woollies pizza

2. Friday night we make our own pizza.

I’ve left 1 blank because it doesn’t even bear consideration.

I believe we are currently somewhere between 5 and 4 and in a month or two we find our way very swiftly to 2 or worse.

Now extrapolate that out to retail spending on the whole – and you can see how it looks for the back half of the year.

Although I’m continually told otherwise I will never be able to shake the view that interest rate rises impact the people who have already done, or are doing, everything they can to ease back. People with mortgages paid and money in savings are fine, relatively speaking.

Note: green line.

Heath and I had a good chat about it towards the back end of the most recent edition of the Theory of Thing podcast. Worth noting here.

For an idea of where we head we should look towards the US which has always been a step ahead of us in the rates cycle. Morgan Stanley ran the prediction that the first cuts by consumers in a pinch (based on their survey of expectations) is to travel and leisure based activities. I’ll just group it into services for our use.

I’m still working on the Australian piece with regards to our outlook so excuse me for now.

That’s about all the time I have today as I steadily work through a long weekend’s worth of research but I’ll leave you with these two little nuggets of interest and some good reasoning as to why we thinned out some tech and added to our bond holdings last week.


That is a substantially crowded trade.

Maybe my pizza theory is a little off… although that’s one hell of a good-lookin’ chicken burger.

Stay safe and all the best,

James

 

The views, information, or opinions expressed in the interview in this article are solely those of the writer and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.

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