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Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm

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Speaker 1: James Kirby, the editor at The Australian. Welcome aboard everybody,

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Speaker 1: and welcome to the first in our short series of

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Speaker 1: special summer editions. And the idea of the series is

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Speaker 1: to give you a perfect launching pad for your investment

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Speaker 1: ambitions in the year ahead. Now, over the coming episodes,

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Speaker 1: we're going to talk about shares, We're going to talk

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Speaker 1: about property, we're going to talk about all aspects of

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Speaker 1: investing in twenty twenty five. Today we launch the series

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Speaker 1: with the first of a two part episode on your

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Speaker 1: Shares in twenty twenty five. We're going to talk today

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Speaker 1: about share markets, the actual outlook for the wider markets,

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Speaker 1: the ASIX, the SMP, then NASDAC next week we'll talk

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Speaker 1: about individual shares. My guest today is Mark Jokum. He

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Speaker 1: is the investment strategist at global x ETFs.

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Speaker 2: How are you Mark? Doing really well?

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Speaker 3: James, Thanks for having me on the show. I always

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Speaker 3: enjoy our chats.

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Speaker 1: Thanks for volunteering for this one. This is the hot seat, Mark,

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Speaker 1: This is the one for people will ring you and

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Speaker 1: said you were on that show and you said such

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Speaker 1: and such, what's going to happen, So we put that

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Speaker 1: provisor out there.

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Speaker 2: That no one knows what's going to happen.

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Speaker 1: But let's take a look systematically. I think if we might,

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Speaker 1: we might start with the ASEX a pretty good year

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Speaker 1: for our market this year. We can always rely on

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Speaker 1: our dividend need which comes in at a little over

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Speaker 1: four percent, and that does make the AX a more

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Speaker 1: stable market, but unfortunately it seems to be a slower

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Speaker 1: dollar market at recent years.

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Speaker 2: Mark, Is that a fair thing to say?

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Speaker 3: Yeah, I think that's quite fair to say, James. We've

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Speaker 3: seen the ASX performed well for the year. It's after

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Speaker 3: just over sixteen percent year today, but a lot of

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Speaker 3: that has come from the income site. In Australia, we

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Speaker 3: have been lucky to have a high dividend yield relative

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Speaker 3: to the broader developed markets. That being said, the dividen

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Speaker 3: yield has actually fallen to some of the lowest levels

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Speaker 3: we've seen in the last few years, so people familiar

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Speaker 3: with the four to five percent may have to get

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Speaker 3: used to maybe the three to four percent range. And

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Speaker 3: if you look in terms of what's really been driving

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Speaker 3: the Australian share market, it hasn't been the earnings growth,

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Speaker 3: it's been the price that investors have been willing to

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Speaker 3: pay for some of these companies, the banks who have

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Speaker 3: been on an absolute tear this year, and given they

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Speaker 3: performed well, they've got relatively high dividen yields. Next year,

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Speaker 3: when we're looking into twenty twenty five, earnings growth might

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Speaker 3: be relatively muted and we might see the multiple that

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Speaker 3: people are willing to pay for ASEX stocks for which

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Speaker 3: is why a lot of consensus is predicting that the

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Speaker 3: AX will be relatively flat over the next twelve months.

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Speaker 3: But like you said, that cushion or buffer of what

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Speaker 3: investors been Ossie's love income, particularly trusted forms of income,

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Speaker 3: may see a flight of capital come into the Australian

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Speaker 3: market as well.

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Speaker 1: So looking at twenty twenty four, when we say at

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Speaker 1: sixteen percent or so they are there, about three to

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Speaker 1: four percent of that was dividends and the rest was

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Speaker 1: price growth. So if you say that when people talk

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Speaker 1: about next year have been flat, if twenty twenty five

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Speaker 1: was flat, that would mean that the ASEX is more

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Speaker 1: or less where it is at the moment on the

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Speaker 1: eight thousand mark. But we still get that three or

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Speaker 1: four percent in view, so it's flat price wise, but

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Speaker 1: for us there's always the dividend. Do we pay too

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Speaker 1: high a price as a market for that four percent

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Speaker 1: of deal or as you say, it's even less than that.

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Speaker 3: Now, yeah, sometimes some people might say that we're paying

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Speaker 3: a little bit high. I mean, if you look at

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Speaker 3: some of our Australian banks, they are some of the

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Speaker 3: most expensive banks in the world, trading at nineteen times earnings.

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Speaker 3: And when you think about the equity risk premium or

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Speaker 3: how much willing to risk to invest in shares over bonds,

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Speaker 3: when you're looking at some of the risk free rates

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Speaker 3: or some of the bond neil that some of these

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Speaker 3: big banks are paying same, some may argue, why am

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Speaker 3: I taking such a higher risk for a lower return profile.

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Speaker 3: Banks themselves have been a fantastic source of dividends, fantastic

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Speaker 3: source of return. Funnily enough, James, most of the banks

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Speaker 3: returns from a capital perspectives, their price returns have actually

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Speaker 3: been negative over the past decade, with the exception of

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Speaker 3: a few like Macquarie and CBA. So with an environment

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Speaker 3: that we're heading in lower interest rates, we might have

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Speaker 3: a bit of net interest margin pressures of some of

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Speaker 3: the banks, and these dividends have risen, but the payout

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Speaker 3: ratios of these banks are providing have also risen as well.

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Speaker 3: So for a lot of investors they may think, well,

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Speaker 3: how sustainable are these dividends that are going to be

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Speaker 3: paid for the banks? If you've had pout ratios rise

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Speaker 3: from around about seventy percent to closer to eighty percent.

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Speaker 3: So overall, even though you know bank earnings went backwards

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Speaker 3: really in twenty twenty four, there could be expected of

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Speaker 3: rebound next year. That's why people have bit up these

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Speaker 3: banks a lot. So are we paying too much potentially?

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Speaker 3: But overall there's still is a lot of from an

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Speaker 3: income perspective, a lot of attraction within the Australian banks.

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Speaker 1: So the powers that be, the Brain's Trust, for want

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Speaker 1: of a better word, are saying that they don't think

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Speaker 1: Australian share markets will do much in twenty twenty five.

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Speaker 1: They have a variety of reasons for that. One of

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Speaker 1: them is pure mathematics that the earnings growth isn't there,

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Speaker 1: and I imagine there's also some skepticism that we could

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Speaker 1: repeat what we did in twenty twenty four. Now here's

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Speaker 1: the thing, Mark the market ASEX performance, that terrific performance

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Speaker 1: of sixteen percent or so, which is double what you

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Speaker 1: might reasonably expect on an average year.

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Speaker 3: Yeah. I mean, if you look at historically since the

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Speaker 3: early nineteen hundreds, Australian share market is done around nine

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Speaker 3: or ten percent, so that is a little bit above average.

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Speaker 2: It's quite a bit above average.

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Speaker 1: So all these people who are telling us that the

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Speaker 1: market won't do anything in twenty twenty five and could

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Speaker 1: finish the year of where it is now, these same

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Speaker 1: people all said sell banks, and the banks are up

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Speaker 1: above thirty percent. It druwed the whole market. They turned

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Speaker 1: the whole market. It's the reason we did the sixteen.

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Speaker 1: It's the key reason we did the sixteen. So should

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Speaker 1: we listened to them?

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Speaker 3: Well, I guess this is too earlier, point James, around

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Speaker 3: the perils of forecasting. There always seems to be some

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Speaker 3: consistency that emerges with these forecasts. There's a tendency for

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Speaker 3: large institutions to cluster, particularly around what consensus are thinking

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Speaker 3: or rounded figures, and there's generally either unfounded optimism right

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Speaker 3: or pessimism within asses.

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Speaker 1: But they feel comfortable if they all say the same thing,

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Speaker 1: then nobody stands out as being particularly hopeless.

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Speaker 3: Well yeah, again, the analogy is, you know, back in

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Speaker 3: the ninety nineties, no one got fired for recommending IBM,

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Speaker 3: So yeah, there's this essence of job security as well.

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Speaker 3: But I always am on the believer that short term

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Speaker 3: forecasts have little relevance. It's really about the long term,

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Speaker 3: but also around the earnings growth. So even though a

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Speaker 3: lot of big banks have said to sell on banks, well,

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Speaker 3: it's proven that it's actually been a bit of a

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Speaker 3: bad strategy going into this year. It's really about how

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Speaker 3: you want to position your portfolios, whether you want to

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Speaker 3: take certain sectoral bets or have an overarching view of

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Speaker 3: the entire market which encompasses a lot of different indices.

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Speaker 3: And from the Australian market, banks have absolutely smashed the

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Speaker 3: lights out compared to the miners and resources. There may

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Speaker 3: be some sluggish growth coming out of the Chinese demand

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Speaker 3: which could be a bit of a headwind for some

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Speaker 3: of these companies, but a lot of people are thinking

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Speaker 3: there could be mean reversion and some of the miners

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Speaker 3: and resources could drawback some of our performance. So overall,

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Speaker 3: it still is a reason to be invested into shares,

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Speaker 3: particularly the Australian market, but in terms of which sectors

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Speaker 3: are going to dominate, very hard to say leading into

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Speaker 3: twenty twenty five.

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Speaker 1: Okay, now those forecasts, the census being that the market

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Speaker 1: does very little price plays, it's so much variation. Are

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Speaker 1: there extremes that either around other peoples the market's going

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Speaker 1: to drop twenty percent or twenty percent?

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Speaker 2: Is there anyone saying that?

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Speaker 3: No one's incredibly bearish. I have seen some forecasts from

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Speaker 3: some of the big US investment banks that have forecasted

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Speaker 3: price target to be around seventy nine hundred, so that

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Speaker 3: does imply a little bit of before of a few percent.

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Speaker 3: But there's no one who's been incredibly bullish either, which

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Speaker 3: is why some consensus has been around that eighty four

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Speaker 3: eighty five hundred target, which as of recording today is

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Speaker 3: relatively flat, a little bit different to some of our

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Speaker 3: US counterparts, where we have seen a little bit more

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Speaker 3: dispersion in some of the price targets too.

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Speaker 1: And looking inside the sectors then you know, I mean

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Speaker 1: our market is very much banks sort of sense that

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Speaker 1: banks won't run in turn twenty five and miners, I mean, yes,

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Speaker 1: there's always issues around China, but I see iron ore

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Speaker 1: again cruising over the one hundred dollars a ton mark,

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Speaker 1: signaling robust health. You to have to suggest for our

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Speaker 1: miners who are very much iron oral miners, and the

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Speaker 1: big stocks even more so, so, is there only sort

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Speaker 1: of sectoral forecast.

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Speaker 3: What's Yeah, if you look at the underlying earnings of

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Speaker 3: some of the companies, there probably is a bit more

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Speaker 3: upside within some of the targets for some of the

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Speaker 3: miners versus the banks, which are expected to decline a

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Speaker 3: little bit. I think most of the analysts have cell

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Speaker 3: side ratings or either a whole position on some of

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Speaker 3: the banks versus the miners where there is a bit

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Speaker 3: more of a buying or an overweight. But like you said,

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Speaker 3: iron ore prices are relatively subdubed at the moment around

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Speaker 3: one hundred dollars a ton, and that's on the back

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Speaker 3: of a lot of the It's really a story about

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Speaker 3: China and what that demand's going to do relative to

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Speaker 3: the Australian economy. But you've still got a diverse set

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Speaker 3: of miners who are operating in different areas. Outside of

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Speaker 3: iron or copper has been incredibly popular in terms of

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Speaker 3: its electrification and application towards artificial intelligence. There may be

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Speaker 3: a turnaround in the lithium market leading into an election

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Speaker 3: year where we've got the opposition party who's a lot

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Speaker 3: more bullish on sectors like uranium. That could play a part.

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Speaker 3: For uranium mining, Australia's got about a third of the

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Speaker 3: reserves where it comes to uranium, so there's other vectors

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Speaker 3: that people could be looking at as well. So far

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Speaker 3: this year, technology has been one of the best performing

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Speaker 3: underlying sectors here today, followed by financials, whereas some of

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Speaker 3: the worst performing sectors have actually been energy and materials

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Speaker 3: so far. So there could be a little bit of

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Speaker 3: mean reversion, but that's where it makes sense to own

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Speaker 3: a broad market. Or let's say you actually don't want

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Speaker 3: to own the banks or some of the miners, and

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Speaker 3: you want to play more on the industrials, the tech side,

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Speaker 3: or really the other half of the market. You could

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Speaker 3: look at funds that actually exclude both banks and miners

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Speaker 3: for your addie allocation. So various ways to play it

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Speaker 3: based on your sector positioning next year.

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Speaker 1: As an investment strategist, are you a believer in reversion

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Speaker 1: to the me Do you think that what did you

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Speaker 1: say ten percent every year on the Australian's share of

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Speaker 1: market since nineteen hundred. Do you think like that's it?

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Speaker 1: It's always ten percent.

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Speaker 3: I am a believer in mean reversion, but not over

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Speaker 3: the short term, because things can run hot for a

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Speaker 3: long period of time, like we've seen with the whole

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Speaker 3: idea of growth versus value. Everyone is saying that value

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Speaker 3: stocks and the value factor has to eventually come back,

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Speaker 3: but they can go on wild rise of our performance

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Speaker 3: for a long period of time. So eventually there will

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Speaker 3: be reversion. But in terms of calling that, and I

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Speaker 3: think that's a tough thing. With predictions. It's not only

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Speaker 3: do you have to get the call right on which

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Speaker 3: sector you want to be positioned in or which stock,

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Speaker 3: but you have to get the timing right around when

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Speaker 3: to buy and also the timing right of when to sell,

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Speaker 3: which is a trifecta or a very hard recipe for

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Speaker 3: investors to do. So to answer your question, I am

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Speaker 3: a believer in mean reversion, but when it will come,

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Speaker 3: no one really knows that.

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Speaker 1: I've had some deeply frustrated value investors on the show,

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Speaker 1: and they really thought that they had come in twenty

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Speaker 1: twenty four. They really thought it was all going to

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Speaker 1: follow to Jason, it didn't be our performance in the

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Speaker 1: market Internation twenty four Whatus Technology and Finance stops suggest

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Speaker 1: that at all we take a break and look at

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Speaker 1: an extreme version of what we're saying, which is the

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Speaker 1: US market, which of course is going to treat the

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Speaker 1: world share market and it's going to dicteat our own

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Speaker 1: ASX Market Internation twenty five. Back in a moment, Hello

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Speaker 1: and welcome back to the Australian's Money Puzzled podcast. I'm

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Speaker 1: James Kirby. I'm talking to Mark Jocum of Global XCTFS,

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Speaker 1: and we are talking about what is going to happen

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Speaker 1: in twenty twenty five on the share markets. Now, Mark,

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Speaker 1: cast your mind back this time last year, people would

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Speaker 1: have been saying, well, that was a very good year

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Speaker 1: on the US market. You can't expect that ought to

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Speaker 1: happen again. You can't expect subdued or modest ordinary earnings

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Speaker 1: growth and terrific price appreciation.

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Speaker 2: On the market.

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Speaker 1: You can't expect Donald Trump to win again, good God,

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Speaker 1: and have the whole Trump bump again. And of course

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Speaker 1: it all came to pass. And just to top it off,

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Speaker 1: you had the whole thematic excitement around a to the

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Speaker 1: point that the world's biggest share is now Nvidia, which

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Speaker 1: was virtually unknown I would say a year ago.

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Speaker 2: So let's see.

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Speaker 1: I think that was a very good approach for a

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Speaker 1: listeners market. What we did there and what you did

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Speaker 1: at the first segment of the show where you give

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Speaker 1: an idea, because we have to have something to hang

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Speaker 1: our hat on, and we're not saying we believe these forecasts.

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Speaker 1: We're all smart enough to know the forecast. For forecasts,

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Speaker 1: nobody knows the future. However, let's at least know what

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Speaker 1: they are. So the contensus forecast for the AX was

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Speaker 1: basically that the share prices will go nowhere and the

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Speaker 1: dividends would come in and we might do three or

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Speaker 1: four percent totally return.

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Speaker 2: Now that's not the situation in the US. Tell us

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Speaker 2: about what the US markets are looking like, what the

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Speaker 2: forecasts are looking like.

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Speaker 3: Very interesting market, And like you said, James, not many

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Speaker 3: people would have expected the S and P five hundred,

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Speaker 3: which is the I guess the benchmark that a lot

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Speaker 3: of people refer to for US equities to have done

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Speaker 3: so well on close to thirty percent for the year

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Speaker 3: on the back of a great year for twenty twenty

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Speaker 3: three that i'd had before, and looking into twenty twenty five,

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Speaker 3: we've actually seen a lot more abolishness that continues within

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Speaker 3: the US share market, and I think one of the

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Speaker 3: reasons for that is the US share market is projected

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Speaker 3: to drive most of the earnings growth versus some of

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Speaker 3: the other markets. In Australia, you're relatively flat, maybe a

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Speaker 3: few percent in terms of earnings growth, but companies in

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Speaker 3: the SMV five hundred are expected to generate earning's growth

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Speaker 3: of about twelve percent. So a lot of price targets

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Speaker 3: for the US market at SP five hundred are hovering

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Speaker 3: around sixty five hundred, which implies a bit about eight

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Speaker 3: percent upside from where we are now, but you'd have

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Speaker 3: a lot more divergence compared to the Australian market, where

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Speaker 3: you have seen some banks being as bearish as around

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Speaker 3: fifty eight hundred, so a little bit of a decline,

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Speaker 3: whereas some banks being as bullish as reaching around seven

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Speaker 3: thousand points, and we've just reached six thousand, which has

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Speaker 3: been a record high. A lot of people are confused

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Speaker 3: record highs, doesn't that mean it's due for a pullback,

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Speaker 3: but the valuations are justified because a lot of this

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Speaker 3: has been supported by stronger earnings growth from these underlying companies.

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Speaker 3: And you mentioned before the likes of Nvidia and Apple.

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Speaker 3: Funny enough, they are playing a bit of a tag

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Speaker 3: between who's the most valuable company. Right now it's Apple,

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Speaker 3: the next day it changes. So really really big earnings

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Speaker 3: growth from a lot of these tech giants as well

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Speaker 3: driving a lot of that US share market return.

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Speaker 1: So even if it came to pass, and let's talk

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Speaker 1: about that consensus this books is a consensus estimate or

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Speaker 1: the price appreciation or the percentage increased would occur on

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Speaker 1: US markets as represented by the S and P five hundred,

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Speaker 1: and what the brokers are seeing is that they're expecting

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Speaker 1: something in the order of eight percent for that market. Now,

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Speaker 1: eight percent is perfectly solid, good return. However, a couple

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Speaker 1: of things, it would be less than a third of

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Speaker 1: the return this year they've been joined in the US.

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Speaker 2: That's one thing.

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Speaker 1: The second thing is that the dividend years, where we

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Speaker 1: talked about. In Australia, you always for toically returned on three.

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Speaker 2: To four percent for the dividends. You don't add on

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Speaker 2: much in the US. Ad all what would you said

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Speaker 2: to be added.

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Speaker 3: On usually one to two percent for the US. A

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Speaker 3: lot of the US companies reinvest in their growth, They

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Speaker 3: spend a lot on capex, dividends, and income is not

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Speaker 3: a big focus for US investors. That being said, there

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Speaker 3: are ways to get income from the US by focusing

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Speaker 3: on high dividend yielding sectors, whether it be industrials, telcos

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Speaker 3: and other sectors. But if you look at the US index,

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Speaker 3: predominant of it is in communications intech, and.

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Speaker 1: Their high dividend would be like three or four percent,

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Speaker 1: while our high dividend would be four and five percent,

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Speaker 1: and then you get franking on top of that taking

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Speaker 1: home six or seven. So there's the still competition on

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Speaker 1: that front.

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Speaker 2: Is there really exactly right?

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Speaker 3: You get the aut attacks benefits of having exposure to

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Speaker 3: high dividends in Australia, but it's really important James, that

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Speaker 3: a lot of investors apply a total return approach to investing.

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Speaker 3: You incorporate both the capital and the dividend side. So

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Speaker 3: whilst the Australia market can definitely provide income and maybe

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Speaker 3: that's where a lot of investors who are income orientator

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Speaker 3: want to focus, there still is this huge market being

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Speaker 3: the US, which is expected from an earning's perspective to

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Speaker 3: grow close to double digits. You could be missing out

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Speaker 3: on that capital side if you only focus on income.

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Speaker 3: So we still have I guess from global access perspective

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Speaker 3: of view that the US will continue to march on.

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Speaker 3: They continue to be in this mid cycle expansionary phase.

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Speaker 3: Considering that we've seen this renewed optimism from the US election,

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Speaker 3: there's a bit of animal spirits in the air, bit

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Speaker 3: of a risk on sentiment. Some of the key appointments

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Speaker 3: from Trump seem to be very bullish for the market overall,

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Speaker 3: and US companies they've got some of the biggest capitalist

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Speaker 3: machines in the world. So a lot of people might think, well,

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Speaker 3: I have to be involved in the megacap tech names

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Speaker 3: to get those big returns, because that's where a lot

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Speaker 3: of the returns have come. But funnily enough, the contribution

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Speaker 3: of these magnificent seven names, the likes of Nvidia, Apple, Microsoft,

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Speaker 3: has actually decreased in twenty twenty four. In twenty twenty three,

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Speaker 3: they contributed close to two thirds of the total markets gained,

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Speaker 3: whereas this year, James they've actually contributed around about half.

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Speaker 2: Still a lot.

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Speaker 3: Don't get me wrong, but you're starting to see a

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Speaker 3: bit more of a potentially broadening of the concentration is

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Speaker 3: more a feature than it is a bug of markets,

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Speaker 3: because naturally there's only a handful of companies that drive

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Speaker 3: the majority of total share holder returns. When you're seeing

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Speaker 3: this broadening out of the markets, we could see a

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Speaker 3: bit more interest in smaller companies in the US or

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Speaker 3: other sectors. As there seems to be this diversification of

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Speaker 3: earnings and improved sentiment, we may see new players come

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Speaker 3: in to the leading performers of the US market. If

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Speaker 3: you look at some of the leading companies in the

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Speaker 3: US so far, Nvidia and some other companies have been

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Speaker 3: huge contributors. But there's also other companies that have done

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Speaker 3: exceptionally well.

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Speaker 1: Just tell us who they are outside the magnificence of

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Speaker 1: and outside the tech titans.

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Speaker 3: Yeah, so in VideA has been the biggest one. They

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Speaker 3: are put about one hundred percent year to date. But

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Speaker 3: then you've got other companies like energy companies. There's a

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Speaker 3: Texas based company called Vista co Operation. They up over

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Speaker 3: three hundred percent year to date. You've got other companies

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Speaker 3: such as Texas specific Land corp as well. They also

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Speaker 3: more involved in land and resource management. They up around

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Speaker 3: two hundred percent for the year. So you are seeing

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Speaker 3: this broadening and are.

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Speaker 1: There what about the blue chips, the original Dow blue Chips.

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Speaker 2: How have they come to the party yet?

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Speaker 3: Yeah, I mean the Dow Jones is at what around

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Speaker 3: about forty four thousand at the moment, forty five thousand

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Speaker 3: at all time highs. So you're still seeing strong support

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Speaker 3: for US equities. And that's why I think it's important

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Speaker 3: to remain invested. You can be invested in the megacap

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Speaker 3: tech names or the fang names, but having exposure to

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Speaker 3: the blue chips, where it's your Dower Jones, looking at

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Speaker 3: smaller cap names, looking a bit more of a broadening trade.

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Speaker 3: It's important, particularly because Trump is very pro business, pro deregulation,

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Speaker 3: reducing corporate taxes. We're in a disinflationary environment. He's also

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Speaker 3: very supportive of energy companies as well. You know the

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Speaker 3: Mantra Drill, Baby Drill.

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Speaker 1: It's and I suppose Mark the rational part of this

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Speaker 1: is you cut corporate taxes, you immediately lift corporate profits,

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Speaker 1: You immusuitly lift earnings. Share prices should go up, so

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Speaker 1: This is a real driver in the short term, but

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Speaker 1: what about the longer term? Like any government that gets

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Speaker 1: selected on promises and various policy changes, their honeymoon ends.

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Speaker 2: We don't know how it lend, but it will end.

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Speaker 1: And we have deeper concerns about tariffs with the US

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Speaker 1: and how that would actually ultimately so everything YouTube in

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Speaker 1: the US.

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Speaker 3: Yeah, I think you're totally right, James, and tariffs in

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Speaker 3: itself is in fact inflationary when you think about the

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Speaker 3: impact of the underlying consumer, the underlying US companies, and

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Speaker 3: even though what we're seeing, particularly within global markets is

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Speaker 3: economies are flexing their geopolitical power, and the US has

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Speaker 3: come out to say we want America for tariffs on everything.

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Speaker 3: That in itself could create some pressures for some of

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Speaker 3: the underlying companies given that their input costs may rise.

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Speaker 3: So yes, you may see more development coming out of

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Speaker 3: the US. But I think a lot of these measures

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Speaker 3: which is the opposite of what we've been used to.

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Speaker 2: It's all been about.

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Speaker 3: Free trade agreements, globalization. Things are changing, but the US

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Speaker 3: is definitely still keen to power on and if you

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Speaker 3: look at some of the key appointments I was mentioning

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Speaker 3: before that Trump is built out there, does seem this

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Speaker 3: idea of maturity coming in. They've got Scott Bessant, who's

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Speaker 3: the Treasury Secretary, and he's come in with this three

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Speaker 3: three three policy. He wants three percent GDP growth, he

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Speaker 3: wants to reduce the budget deficit by three percent, and

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Speaker 3: he wants to increase the barrels of oil they're producing

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Speaker 3: by three million barrels a day. So you are getting

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Speaker 3: this element even though there's less globalization and tariffs. The

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Speaker 3: whole idea of Trump two point zero when he gets

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Speaker 3: inaugurated in January may create some uncertainty. These US companies

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Speaker 3: strong franchises are going to continue to generate significant profits

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Speaker 3: unless there is regulatory intervention trade wars. Will need to

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00:22:09,160 --> 00:22:11,520
Speaker 3: monitor those risks closely. It can be a challenge for

439
00:22:11,560 --> 00:22:15,119
Speaker 3: growth if these tariffs materialize. But overall, we are seeing

440
00:22:15,440 --> 00:22:18,960
Speaker 3: some of the greatest capitalist machines experiencing strong earnings growth

441
00:22:19,000 --> 00:22:22,080
Speaker 3: in twenty twenty four, set to continue into twenty twenty five.

442
00:22:22,119 --> 00:22:24,200
Speaker 1: Actually, one thing I wanted to choose this segment off

443
00:22:24,240 --> 00:22:27,960
Speaker 1: on is the theory that as it trickers down through

444
00:22:27,960 --> 00:22:32,840
Speaker 1: the US and the Magnificent seven already feeding as a

445
00:22:32,960 --> 00:22:39,399
Speaker 1: contributor to the overall market returns. Excellent market retires are

446
00:22:39,400 --> 00:22:41,960
Speaker 1: coming out of the US. Then there's the theory that

447
00:22:42,000 --> 00:22:44,040
Speaker 1: the hardest part of the market will be small caps.

448
00:22:45,600 --> 00:22:48,000
Speaker 1: What do you think of that US market small caps?

449
00:22:48,960 --> 00:22:52,240
Speaker 3: The thing about these large tech companies, all these hyper

450
00:22:52,240 --> 00:22:55,280
Speaker 3: scalers as they're known, they're expected to increase their capital

451
00:22:55,320 --> 00:22:59,840
Speaker 3: expenditure into twenty twenty five to hundreds of billions of dollars.

452
00:23:00,160 --> 00:23:03,640
Speaker 3: That significant spending will benefit a wide variety of sectors,

453
00:23:03,680 --> 00:23:07,919
Speaker 3: whether you're looking at data centers, engineering and construction, nuclear,

454
00:23:08,000 --> 00:23:11,840
Speaker 3: renewable power, gas power, electricity, there's so many different sectors

455
00:23:11,840 --> 00:23:13,880
Speaker 3: that could benefit from it, which is why you're seeing

456
00:23:13,880 --> 00:23:16,359
Speaker 3: a lot more interest in this broadening out of the trade.

457
00:23:16,560 --> 00:23:18,359
Speaker 3: A lot of people are thinking, well, a lot of

458
00:23:18,359 --> 00:23:21,960
Speaker 3: these tech companies that are reporting, not only James, do

459
00:23:21,960 --> 00:23:24,679
Speaker 3: you need to beat Earning's expectations, but you almost need

460
00:23:24,760 --> 00:23:27,200
Speaker 3: to beat the beat, if that makes sense. And that's

461
00:23:27,240 --> 00:23:30,080
Speaker 3: why you'll see so much scrutiny on these big tech companies,

462
00:23:30,400 --> 00:23:32,080
Speaker 3: which is why a lot of people are saying there

463
00:23:32,080 --> 00:23:34,439
Speaker 3: has to be this broadening out of this trade, this

464
00:23:34,560 --> 00:23:38,520
Speaker 3: reversion of small companies which is underperformed versus large cap companies,

465
00:23:38,840 --> 00:23:41,040
Speaker 3: and we do see quite a bit of growth happening

466
00:23:41,080 --> 00:23:43,760
Speaker 3: in some of these smaller companies relative to where they're

467
00:23:43,800 --> 00:23:46,159
Speaker 3: trading at the moment, because if you look at where

468
00:23:46,200 --> 00:23:48,439
Speaker 3: the S and P five hundred is trading at, it

469
00:23:48,480 --> 00:23:51,000
Speaker 3: may look elevated, but as long as the earnings continue

470
00:23:51,040 --> 00:23:53,760
Speaker 3: to support it, that will justify the valuations. There's been

471
00:23:53,800 --> 00:23:56,320
Speaker 3: a bit of compression in the small companies area, so

472
00:23:56,359 --> 00:23:58,320
Speaker 3: there could be a bit of a rotation, and we've

473
00:23:58,320 --> 00:24:00,800
Speaker 3: started to see it more money flow into to smaller

474
00:24:00,800 --> 00:24:03,240
Speaker 3: companies or broader sectors.

475
00:24:02,920 --> 00:24:08,280
Speaker 1: That would be small company tfs, small capfs, Yeah, small

476
00:24:08,320 --> 00:24:09,280
Speaker 1: companies ETFs.

477
00:24:09,400 --> 00:24:12,359
Speaker 3: You've got different companies that are a bit more evenly

478
00:24:12,400 --> 00:24:15,920
Speaker 3: distributed as well. But yeah, we have seen more flow

479
00:24:16,040 --> 00:24:18,359
Speaker 3: into some of these smaller companies where it be both

480
00:24:18,440 --> 00:24:21,280
Speaker 3: active or index based strategies. And I guess those a

481
00:24:21,320 --> 00:24:23,800
Speaker 3: little bit different to your broad cap because you're not

482
00:24:23,840 --> 00:24:26,520
Speaker 3: only holding the magnificent seven, but you're holding hundreds, if

483
00:24:26,520 --> 00:24:30,640
Speaker 3: not thousands of companies that have different characteristics and exposures

484
00:24:30,960 --> 00:24:33,560
Speaker 3: to the megacap companies. If you look at a small

485
00:24:33,600 --> 00:24:37,240
Speaker 3: cap index, it's around about twenty percent financial, maybe fifteen

486
00:24:37,280 --> 00:24:39,919
Speaker 3: percent industrial, whereas tech is only around about ten to

487
00:24:39,960 --> 00:24:44,520
Speaker 3: fifteen percent. Very different to your megacap indices such as

488
00:24:44,520 --> 00:24:46,720
Speaker 3: the S and P five hundred or the Nasdaq one hundred.

489
00:24:47,080 --> 00:24:49,680
Speaker 1: Okay, now we'll take a short break and folks, people

490
00:24:49,760 --> 00:24:51,440
Speaker 1: to be back and we will take a quick look

491
00:24:51,480 --> 00:24:56,680
Speaker 1: at some other areas of the markets in twenty twenty five.

492
00:24:56,680 --> 00:24:59,879
Speaker 1: Will take a look at the NASDAK, possibilities emerging mar

493
00:25:00,920 --> 00:25:05,080
Speaker 1: and a quick glimpse at gold, which I would put

494
00:25:05,119 --> 00:25:21,119
Speaker 1: in this very tradable area. Okay, back in a moment, Hello,

495
00:25:21,200 --> 00:25:24,000
Speaker 1: welcome back to the Australian's Money Puzzle. James kirk Be

496
00:25:24,080 --> 00:25:28,119
Speaker 1: talking to Mark Jogum of Global x ETPs. We're talking

497
00:25:28,160 --> 00:25:29,440
Speaker 1: big picture here today, folks.

498
00:25:29,520 --> 00:25:31,399
Speaker 2: We really are NASDAK.

499
00:25:31,480 --> 00:25:35,159
Speaker 1: Then we would traditionally expect NASDAK to shoot out the

500
00:25:35,240 --> 00:25:38,639
Speaker 1: lights that if that if the SMP was doing eight percent,

501
00:25:38,720 --> 00:25:41,560
Speaker 1: we might think the nasak's got to do sixteen percent

502
00:25:41,640 --> 00:25:43,840
Speaker 1: or something like that. What are they talking about on

503
00:25:43,880 --> 00:25:45,080
Speaker 1: the Nasdaq, Mark.

504
00:25:46,720 --> 00:25:48,879
Speaker 3: Yeah, we talked about the S and P five hundred

505
00:25:48,880 --> 00:25:51,399
Speaker 3: being a key contributor, but the Nasdaq, which holds a

506
00:25:51,440 --> 00:25:54,159
Speaker 3: lot of these megacap names that we were talking about before,

507
00:25:54,440 --> 00:25:57,080
Speaker 3: they've done exceptionally well to pull the NASDAK to record

508
00:25:57,119 --> 00:25:59,560
Speaker 3: high at about twenty one hundred points at the moment,

509
00:26:00,040 --> 00:26:03,080
Speaker 3: where the price targets are looking closer to twenty three

510
00:26:03,119 --> 00:26:05,639
Speaker 3: hundred leading into next year. So that to me is

511
00:26:05,640 --> 00:26:08,720
Speaker 3: saying that there's still potential upside for the Nasdaq one

512
00:26:08,800 --> 00:26:10,919
Speaker 3: hundred to do a lot of the heavy lifting. And

513
00:26:10,920 --> 00:26:13,639
Speaker 3: that's because earning's growth. We talked about it before with

514
00:26:13,680 --> 00:26:16,040
Speaker 3: the S and P five hundred to do low double digits.

515
00:26:16,560 --> 00:26:19,000
Speaker 3: The Nasdaq is looking at doing closer to eighteen or

516
00:26:19,119 --> 00:26:22,399
Speaker 3: nineteen percent next year from an earnings growth perspective. For

517
00:26:22,480 --> 00:26:25,920
Speaker 3: a lot of investors who want exposure to US shares

518
00:26:25,960 --> 00:26:29,360
Speaker 3: In particular, the Nasdaq has been this market dialing of

519
00:26:29,400 --> 00:26:31,680
Speaker 3: being a great driver of share market return.

520
00:26:31,720 --> 00:26:33,720
Speaker 1: So it did about thirty percent or sill, which is

521
00:26:33,760 --> 00:26:36,480
Speaker 1: an amazing figure except that we've seen it so often.

522
00:26:36,520 --> 00:26:40,040
Speaker 1: But it did thirty one percent or still in twenty

523
00:26:40,080 --> 00:26:44,359
Speaker 1: twenty four. The NASTAK we've ignored the dividend ut here entirely.

524
00:26:44,600 --> 00:26:47,879
Speaker 1: What are they saying as a forecast as a percentage

525
00:26:48,840 --> 00:26:50,800
Speaker 1: growth for Nasdaq in twenty twenty five.

526
00:26:51,200 --> 00:26:52,240
Speaker 2: So according to.

527
00:26:52,200 --> 00:26:54,080
Speaker 3: The consensus you're looking at at a target of around

528
00:26:54,160 --> 00:26:56,200
Speaker 3: nine to ten percent upside, which is a little bit

529
00:26:56,200 --> 00:26:58,240
Speaker 3: more than the SMP five hundred, and.

530
00:26:58,160 --> 00:27:00,560
Speaker 1: That's cool for a NASDAK listened to it.

531
00:27:01,240 --> 00:27:03,240
Speaker 3: I mean, the Nasdaq tends to be a little bit

532
00:27:03,280 --> 00:27:05,639
Speaker 3: more volatile than broad indices like the S and P

533
00:27:05,800 --> 00:27:09,560
Speaker 3: five hundred, so you may experience perhaps wilder divergences like

534
00:27:09,640 --> 00:27:11,760
Speaker 3: we saw in twenty twenty two where the Nasdaq fell

535
00:27:11,760 --> 00:27:13,639
Speaker 3: a lot more than their S and P five hundred.

536
00:27:14,280 --> 00:27:16,960
Speaker 3: But overall, I think because a lot of these companies

537
00:27:16,960 --> 00:27:19,840
Speaker 3: continue to derive a lot of their revenue from technology

538
00:27:19,960 --> 00:27:25,280
Speaker 3: and how much of these exposures are to NASDAK related indices,

539
00:27:25,880 --> 00:27:29,520
Speaker 3: you could see these hyperscalers and these tech companies continue

540
00:27:29,560 --> 00:27:32,920
Speaker 3: to do looking long term, despite concerns around the rich

541
00:27:33,000 --> 00:27:35,879
Speaker 3: valuations and the Nasdaq or the broader US market trading

542
00:27:36,160 --> 00:27:40,040
Speaker 3: at a pretty expensive premium, that doesn't necessarily mean a

543
00:27:40,119 --> 00:27:42,879
Speaker 3: reason not to be invested, because, like we said, the

544
00:27:42,920 --> 00:27:45,399
Speaker 3: business cycle is still an expansion. You've got a pretty

545
00:27:45,400 --> 00:27:49,080
Speaker 3: healthy labor market and a lot of these Nasdaq returns

546
00:27:49,080 --> 00:27:52,640
Speaker 3: have been driven from AI related activities and that can

547
00:27:52,720 --> 00:27:57,080
Speaker 3: continue to drive We're seeing huge forecasts being expected for

548
00:27:57,160 --> 00:28:00,840
Speaker 3: some of these AI related possibilities, and I think a

549
00:28:00,840 --> 00:28:04,639
Speaker 3: lot of these companies are beginning to monetize a lot

550
00:28:04,680 --> 00:28:08,480
Speaker 3: of their services. Looking at companies like open ai, who

551
00:28:08,840 --> 00:28:12,040
Speaker 3: who use the technology of chat GPT. They expected to

552
00:28:12,080 --> 00:28:15,160
Speaker 3: finish twenty twenty four with about five billion dollars in revenue,

553
00:28:15,400 --> 00:28:18,200
Speaker 3: and that's expected to grow to ten billion dollars next year.

554
00:28:18,600 --> 00:28:22,280
Speaker 3: With clear momentum and expanding use cases, AI is going

555
00:28:22,320 --> 00:28:24,800
Speaker 3: to be a really compelling investment theme leading into twenty

556
00:28:24,840 --> 00:28:28,359
Speaker 3: twenty five. That is very compelling for companies involved in

557
00:28:28,359 --> 00:28:30,600
Speaker 3: those industries which tend to be on the Nasdaq overall.

558
00:28:31,040 --> 00:28:33,920
Speaker 3: So yes, could be another good year for the Nasdaq overall.

559
00:28:34,000 --> 00:28:36,159
Speaker 3: A lot of the growth is priced in because of

560
00:28:36,160 --> 00:28:38,440
Speaker 3: the projected earnings growth that a lot of these companies

561
00:28:38,440 --> 00:28:40,680
Speaker 3: are planning to do. It might just be more on

562
00:28:40,720 --> 00:28:43,640
Speaker 3: the top line, more from a revenue perspective, whereas this

563
00:28:43,760 --> 00:28:46,160
Speaker 3: year has been from an earnings perspective.

564
00:28:45,760 --> 00:28:47,480
Speaker 2: Which is what the market really loves.

565
00:28:47,720 --> 00:28:52,440
Speaker 1: All right, very interesting, So folks, I think the more

566
00:28:52,880 --> 00:28:56,880
Speaker 1: risk in the market, the less useful the forecast. I

567
00:28:56,960 --> 00:29:02,520
Speaker 1: would be considably more persuaded by a forecast for the

568
00:29:02,560 --> 00:29:06,080
Speaker 1: AX whatever that might be because you're working off certain

569
00:29:07,280 --> 00:29:09,600
Speaker 1: known gnomes, if you know what I mean, and the

570
00:29:09,720 --> 00:29:12,520
Speaker 1: risk element is subdued because we have a lot of

571
00:29:13,000 --> 00:29:16,320
Speaker 1: blue chips, police banks, supermarkets and minus where you could

572
00:29:16,440 --> 00:29:19,600
Speaker 1: have a very good idea of their business. In the US,

573
00:29:19,720 --> 00:29:22,640
Speaker 1: you have a whole elevated risk and risk taking which

574
00:29:22,800 --> 00:29:26,360
Speaker 1: gives wonderful results, but also means someone talking about nurse

575
00:29:26,400 --> 00:29:28,240
Speaker 1: actor in ten percent next year is kind of like

576
00:29:28,320 --> 00:29:28,960
Speaker 1: in a way.

577
00:29:30,520 --> 00:29:32,320
Speaker 2: It's supposed extreme, utterly useless.

578
00:29:33,240 --> 00:29:35,640
Speaker 1: I don't mean to I'm sure you actually agree with me,

579
00:29:35,680 --> 00:29:37,160
Speaker 1: even though I don't know if you agree with me,

580
00:29:37,280 --> 00:29:37,560
Speaker 1: do you?

581
00:29:37,920 --> 00:29:38,920
Speaker 2: I totally agree with you.

582
00:29:38,960 --> 00:29:40,560
Speaker 3: If you look at the average forecast for the S

583
00:29:40,600 --> 00:29:42,840
Speaker 3: and P five hundred in twenty twenty four, James, so

584
00:29:42,840 --> 00:29:44,680
Speaker 3: we're recording this at the end of twenty twenty four,

585
00:29:44,760 --> 00:29:48,600
Speaker 3: the average forecast was forty six hundred, and the upper

586
00:29:48,680 --> 00:29:50,520
Speaker 3: range of that limit in terms of who was the

587
00:29:50,560 --> 00:29:53,760
Speaker 3: most bullish was fifty four hundred, and we've blown through

588
00:29:53,800 --> 00:29:56,520
Speaker 3: six thousand points. So there was one research company in

589
00:29:56,520 --> 00:29:59,120
Speaker 3: those forecasts that had an era of around seventy seven

590
00:29:59,160 --> 00:30:02,400
Speaker 3: percent because they were too bearish. That shows there is

591
00:30:02,440 --> 00:30:05,600
Speaker 3: an issue. While the price factor was wrong, the earnings,

592
00:30:05,600 --> 00:30:08,400
Speaker 3: funnily enough, was right. So a lot of these people

593
00:30:08,400 --> 00:30:11,760
Speaker 3: who were who were forecasting their earnings growth were very accurate.

594
00:30:12,000 --> 00:30:14,160
Speaker 3: But the reason it's so hard to predict is you

595
00:30:14,200 --> 00:30:16,720
Speaker 3: don't know what investors are willing to pay for those earnings.

596
00:30:17,000 --> 00:30:19,440
Speaker 3: And in twenty twenty four, the answer was they are

597
00:30:19,480 --> 00:30:21,080
Speaker 3: willing to pay for a lot for some of these

598
00:30:21,120 --> 00:30:24,000
Speaker 3: earnings growth. So yes, with a word of caution, take

599
00:30:24,080 --> 00:30:26,200
Speaker 3: anything that I say or what the market consensus is

600
00:30:26,200 --> 00:30:28,200
Speaker 3: saying with a grain of salt, because there's a lot

601
00:30:28,280 --> 00:30:29,520
Speaker 3: of perils in forecasting.

602
00:30:29,640 --> 00:30:32,440
Speaker 1: Absolutely, as you say, people who were seventy percent of

603
00:30:32,480 --> 00:30:34,400
Speaker 1: oubts just pretty bad.

604
00:30:35,040 --> 00:30:37,120
Speaker 2: If we can't quickly two areas.

605
00:30:36,680 --> 00:30:39,560
Speaker 1: That people who had ETFs and they were looking or

606
00:30:39,600 --> 00:30:42,400
Speaker 1: people who were trying to diversify their portfolio. Our listeners

607
00:30:42,400 --> 00:30:46,000
Speaker 1: on chair markets who were using funds with ETFs to

608
00:30:46,040 --> 00:30:48,800
Speaker 1: do so, would be looking to complete the picture. They

609
00:30:48,880 --> 00:30:50,800
Speaker 1: might look at emerging markets who they might look at

610
00:30:50,800 --> 00:30:52,920
Speaker 1: gold are the emerging markets?

611
00:30:53,560 --> 00:30:55,400
Speaker 2: It would seem the election.

612
00:30:55,160 --> 00:30:59,440
Speaker 1: Of Trump and he's talk about tariffs, a strengthening US

613
00:30:59,480 --> 00:31:03,400
Speaker 1: donor could possibly be good for emerging markets.

614
00:31:03,440 --> 00:31:04,240
Speaker 2: Perhaps I'm wrong.

615
00:31:04,400 --> 00:31:06,200
Speaker 1: What's the story on that side of things.

616
00:31:07,480 --> 00:31:10,040
Speaker 3: No, James, your sentiment is correct in terms of a

617
00:31:10,040 --> 00:31:12,600
Speaker 3: lot of people thinking that the Trump trade is going

618
00:31:12,680 --> 00:31:15,760
Speaker 3: to be quite bearish for some emerging markets, given a

619
00:31:15,760 --> 00:31:20,400
Speaker 3: lot of the issues around tariffs, higher for longer interest rates,

620
00:31:20,920 --> 00:31:23,560
Speaker 3: a strong US dollar because a lot of emerging market

621
00:31:23,680 --> 00:31:26,480
Speaker 3: debt is denominated in US dollars, so a rising US

622
00:31:26,560 --> 00:31:30,360
Speaker 3: dollar is generally bad for them, tightening financial conditions. You're

623
00:31:30,360 --> 00:31:33,040
Speaker 3: not seeing too much out of China, and I think

624
00:31:33,080 --> 00:31:35,600
Speaker 3: on China it is a pivotal player in the emerging

625
00:31:35,680 --> 00:31:41,000
Speaker 3: market story. It's grappling with modest stimulus efforts that seem

626
00:31:41,320 --> 00:31:44,520
Speaker 3: relatively insufficient to spur a bit of a meaningful recovery.

627
00:31:45,080 --> 00:31:48,080
Speaker 3: And considering we've seen this like we saw during twenty

628
00:31:48,080 --> 00:31:51,720
Speaker 3: eighteen and twenty nineteen, China still is a very big

629
00:31:51,760 --> 00:31:56,680
Speaker 3: global manufacturing powerhouse. It dominates that sective estimate around thirty

630
00:31:56,680 --> 00:31:58,760
Speaker 3: five to forty percent, so it is quite crucial from

631
00:31:58,760 --> 00:32:01,800
Speaker 3: a global supply chain. So for investors, China is a

632
00:32:01,800 --> 00:32:05,520
Speaker 3: bit of a mixed picture. The outlook remains challenging. Corporate

633
00:32:05,560 --> 00:32:09,440
Speaker 3: earnings might be weaker and predictable. Elsewhere in emerging markets,

634
00:32:09,520 --> 00:32:11,960
Speaker 3: there might be some bright spots. We've seen the likes

635
00:32:11,960 --> 00:32:16,040
Speaker 3: of Taiwanese companies like taiwan Semon Conductors key play in

636
00:32:16,080 --> 00:32:20,239
Speaker 3: the technological revolution, but we've found that India has been

637
00:32:20,280 --> 00:32:23,520
Speaker 3: a standout performer and one of the fastest growing economies

638
00:32:23,560 --> 00:32:27,640
Speaker 3: as well, bolted by strong balance sheets, fiscal maturity, and

639
00:32:27,760 --> 00:32:31,640
Speaker 3: unlike China, India is driven from domestic revenue. You might

640
00:32:31,640 --> 00:32:33,959
Speaker 3: be able to insulate some of that risk associated with

641
00:32:34,040 --> 00:32:37,200
Speaker 3: global trade tensions, even though India is becoming a part

642
00:32:37,200 --> 00:32:41,160
Speaker 3: of the global environment. It's a very compelling growth story,

643
00:32:41,720 --> 00:32:45,960
Speaker 3: powered from elevated profit margins, strong earnings expectations. As a

644
00:32:45,960 --> 00:32:49,520
Speaker 3: big demographical shift as well, India has become the world's

645
00:32:50,120 --> 00:32:54,520
Speaker 3: largest population, overtaking China. In terms of the Emerging Markets Index,

646
00:32:54,600 --> 00:32:57,040
Speaker 3: India is likely to be a bigger player. I still

647
00:32:57,080 --> 00:32:59,880
Speaker 3: see some opportunities emerging within emerging markets.

648
00:33:00,160 --> 00:33:03,600
Speaker 1: They're up with the country based other than the category.

649
00:33:03,760 --> 00:33:06,479
Speaker 3: Yeah, there might be a bit of country divergence. Overall,

650
00:33:06,600 --> 00:33:09,360
Speaker 3: A lot of the forecasts are expecting even though they

651
00:33:09,440 --> 00:33:11,880
Speaker 3: might be stronger earnings growth with some of these companies,

652
00:33:12,320 --> 00:33:15,920
Speaker 3: and because they're trading at such heavy discounts relative to

653
00:33:16,080 --> 00:33:18,960
Speaker 3: where they valued, you might not see as much upward

654
00:33:18,960 --> 00:33:21,960
Speaker 3: growth in terms of the price predictions as the US market.

655
00:33:22,200 --> 00:33:25,120
Speaker 3: So we're also talking about single digits here. But from

656
00:33:25,160 --> 00:33:27,760
Speaker 3: a country perspective, yes, it could be that there might

657
00:33:27,760 --> 00:33:30,600
Speaker 3: be a divergence that a lot more people are interested

658
00:33:30,600 --> 00:33:33,520
Speaker 3: in emerging markets like India. If you look at what's

659
00:33:33,560 --> 00:33:36,720
Speaker 3: happening with this AI strategic revolution and some of the

660
00:33:36,760 --> 00:33:40,000
Speaker 3: associated themes semi conductors or the companies that are making

661
00:33:40,000 --> 00:33:41,480
Speaker 3: some of these chips, it's still going to be a

662
00:33:42,440 --> 00:33:45,760
Speaker 3: key component within next year's earnings for people who are

663
00:33:45,800 --> 00:33:47,960
Speaker 3: looking for these types of companies. Doesn't mean that you

664
00:33:47,960 --> 00:33:50,560
Speaker 3: shouldn't look within emerging markets. It just might mean people

665
00:33:50,640 --> 00:33:52,920
Speaker 3: might be a little more tactical with how they allocate

666
00:33:52,960 --> 00:33:54,000
Speaker 3: towards emerging markets.

667
00:33:54,040 --> 00:33:57,360
Speaker 1: Okay, people just saying I won't push any harder because

668
00:33:57,360 --> 00:33:59,160
Speaker 1: I don't think anyone could possible to give an answer

669
00:33:59,200 --> 00:34:02,120
Speaker 1: With India, you know it's going to finally come through

670
00:34:02,760 --> 00:34:05,600
Speaker 1: in the way that many people have thought it could

671
00:34:05,760 --> 00:34:09,920
Speaker 1: and would that for every individualistic to make their own better.

672
00:34:10,400 --> 00:34:13,000
Speaker 2: Okay, before you go, one last thing. Gold.

673
00:34:13,320 --> 00:34:16,360
Speaker 1: Now, gold has been good and has been good for

674
00:34:16,440 --> 00:34:19,560
Speaker 1: quite some time, and you find that even the bullers

675
00:34:19,560 --> 00:34:24,399
Speaker 1: and bears like gold. In this environment, gold investors will

676
00:34:24,440 --> 00:34:28,319
Speaker 1: always find competing reasons to buy gold under any conditions

677
00:34:27,920 --> 00:34:31,880
Speaker 1: to today's conditions. I dealt there's a consensus as to

678
00:34:31,920 --> 00:34:33,360
Speaker 1: what gold will do in a year.

679
00:34:33,239 --> 00:34:33,560
Speaker 2: Is there?

680
00:34:34,680 --> 00:34:36,560
Speaker 3: I mean a lot of people are in the business

681
00:34:36,560 --> 00:34:38,520
Speaker 3: of making predictions of what the gold price is going

682
00:34:38,560 --> 00:34:40,959
Speaker 3: to do, and at the moment, James, the goal price

683
00:34:41,000 --> 00:34:43,560
Speaker 3: is hovering around about twenty six twenty seven hundred dollars

684
00:34:43,600 --> 00:34:46,840
Speaker 3: an ounce. I've seen some forecasts from some leading banks

685
00:34:46,880 --> 00:34:49,959
Speaker 3: who have very smart analysts, way smarter than me looking

686
00:34:50,000 --> 00:34:52,040
Speaker 3: at and they've got models of how they have their

687
00:34:52,040 --> 00:34:55,400
Speaker 3: price forecast looking as high as close to three thousand

688
00:34:55,520 --> 00:34:58,800
Speaker 3: dollars in terms of proyouns on a US dollar basis.

689
00:34:59,160 --> 00:35:01,400
Speaker 3: I think because of the there's a lot of tailwinds

690
00:35:01,440 --> 00:35:04,640
Speaker 3: within the demand for the precious yellow metal. If you

691
00:35:04,840 --> 00:35:08,160
Speaker 3: are worried about raising geopolitical tension, gold is naturally that

692
00:35:08,520 --> 00:35:11,799
Speaker 3: safe haven. When Trump did initially come into power, we

693
00:35:11,840 --> 00:35:13,760
Speaker 3: did see a little bit of a selloff in gold.

694
00:35:14,080 --> 00:35:16,439
Speaker 3: It was a rising US dollar. People were a little

695
00:35:16,440 --> 00:35:19,719
Speaker 3: bit more confident, but there could be still some ongoing

696
00:35:19,920 --> 00:35:22,480
Speaker 3: geopolitical tensions. I know there's been a bit of a

697
00:35:22,560 --> 00:35:25,960
Speaker 3: ceasefire at least a promise within the Middle East, but

698
00:35:26,040 --> 00:35:28,799
Speaker 3: who knows around ongoing tensions that's going to happen, and

699
00:35:28,840 --> 00:35:31,680
Speaker 3: that boats quite well with the gold price. In terms

700
00:35:31,719 --> 00:35:34,279
Speaker 3: of inflation being put back in the genie bottle. Who

701
00:35:34,320 --> 00:35:37,799
Speaker 3: knows whether we may get a reflationary trade. Everyone is

702
00:35:37,840 --> 00:35:40,560
Speaker 3: talking about disinflation and we're getting close to that target

703
00:35:40,640 --> 00:35:43,960
Speaker 3: band where most economies want inflation to be. But if

704
00:35:44,000 --> 00:35:47,200
Speaker 3: there is a bit of inflationary surprise to the upside,

705
00:35:47,560 --> 00:35:52,960
Speaker 3: gold is a proven commodity to provide that hedge against inflation.

706
00:35:53,560 --> 00:35:57,040
Speaker 3: And Trump's policies may be inflationary, there could be more

707
00:35:57,080 --> 00:36:00,759
Speaker 3: from a fiscal deficit perspective, people wantrorried about how much

708
00:36:00,800 --> 00:36:04,640
Speaker 3: debt is involved in the global economy. There still could

709
00:36:04,680 --> 00:36:07,400
Speaker 3: be a lot of tailwinds for gold. And if rates

710
00:36:07,440 --> 00:36:10,239
Speaker 3: do continue to fall and real yields continue to fall,

711
00:36:10,280 --> 00:36:13,200
Speaker 3: that also bodes well for the gold price. So overall,

712
00:36:13,280 --> 00:36:16,160
Speaker 3: plenty of tailwinds for the precious yellow metal. Very important

713
00:36:16,200 --> 00:36:20,440
Speaker 3: part of clients investment portfolios, particularly as a defensive hedge,

714
00:36:20,760 --> 00:36:22,879
Speaker 3: because I always say that if gold is the worst

715
00:36:22,920 --> 00:36:25,680
Speaker 3: performing acid in your portfolio, it means the rest is doing.

716
00:36:25,680 --> 00:36:29,160
Speaker 1: It was a good year assuming you have a diversi

717
00:36:29,239 --> 00:36:30,040
Speaker 1: folked portfolio.

718
00:36:30,080 --> 00:36:30,480
Speaker 2: Exactly.

719
00:36:30,480 --> 00:36:33,400
Speaker 3: This year has been different where gold has performed exceptionally

720
00:36:33,440 --> 00:36:36,400
Speaker 3: well in terms of relative returns to the broader market.

721
00:36:36,920 --> 00:36:39,680
Speaker 1: The point you're making is its performed very well. I

722
00:36:39,719 --> 00:36:40,719
Speaker 1: still did everything else.

723
00:36:40,920 --> 00:36:45,400
Speaker 3: It was coordinators, which exactly or are you Sometimes normally

724
00:36:45,480 --> 00:36:48,280
Speaker 3: you have different correlations within gold and other asset classes

725
00:36:48,360 --> 00:36:51,200
Speaker 3: over the long term, but this year there's been different drivers.

726
00:36:51,280 --> 00:36:54,200
Speaker 3: You've seen major demand from central banks. You've seen flows

727
00:36:54,239 --> 00:36:58,120
Speaker 3: coming back into ets for gold. People are wanting that

728
00:36:58,200 --> 00:37:00,880
Speaker 3: as a safe haven. You're seeing strong and from emerging

729
00:37:00,880 --> 00:37:04,319
Speaker 3: economies because gold also has that industrial application, It's got

730
00:37:04,360 --> 00:37:07,719
Speaker 3: the jewelry application as well. We've seen India stockpile leading

731
00:37:07,760 --> 00:37:11,560
Speaker 3: into the celebratory season as well. But overall, great diverse

732
00:37:11,640 --> 00:37:14,520
Speaker 3: fire to having your portfolio. Yes, it has performed quite well,

733
00:37:14,680 --> 00:37:16,640
Speaker 3: but it's not meant to be the return driver. It's

734
00:37:16,640 --> 00:37:19,160
Speaker 3: meant to be the defensive cushion you have in your

735
00:37:19,200 --> 00:37:22,080
Speaker 3: portfolio when everything else doesn't perform well.

736
00:37:22,400 --> 00:37:25,520
Speaker 1: Well, that was a terrific round the world with Marked

737
00:37:25,520 --> 00:37:28,600
Speaker 1: Your come in forty four minutes, as it turned out,

738
00:37:28,960 --> 00:37:33,880
Speaker 1: terrific Marked Global gctf's investment stressages. Thanks very much for

739
00:37:33,880 --> 00:37:34,640
Speaker 1: coming on the show.

740
00:37:34,920 --> 00:37:37,400
Speaker 3: Thanks for having me James, Well, look.

741
00:37:37,239 --> 00:37:39,879
Speaker 1: Forward to having you again on the show Cross Finally Fire.

742
00:37:39,960 --> 00:37:43,720
Speaker 1: Well we will return to see how some of these

743
00:37:43,760 --> 00:37:46,960
Speaker 1: consensus predictions turned out over the year. Thanks very much

744
00:37:46,960 --> 00:37:50,120
Speaker 1: everybody for listening. Keep those emails rolling. Love to have

745
00:37:50,160 --> 00:37:53,600
Speaker 1: some correspondence from you the Money Puzzle at the Australia

746
00:37:53,760 --> 00:37:57,160
Speaker 1: dot Com Dot You. Today's show was produced by Leah

747
00:37:57,280 --> 00:38:02,120
Speaker 1: Samuel glup Toku Soon the Wood

748
00:38:04,560 --> 00:38:04,680
Speaker 3: Cho