economic insights Archives - Jennings Financial Services

Market update perspective with MLC

Key takeaways • The disorderly rollout of America’s new trade policy has rattled sharemarkets (Chart 1), and investors must prepare to navigate greater uncertainty and volatility through Mr Trump’s four-year presidential term. • Global sharemarket returns have been strong over the past two years driven mightily by investor appetite for US technology stocks, especially the Magnificent Seven (Apple, Microsoft, Google’s parent Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla). This trend resulted in such stocks’ valuations hitting great heights, which has left them as well as markets vulnerable to a correction. • We estimate that for every 1% increase in effective tariffs, US GDP declines 0.05%. • While the trade stoush is a headwind, President Trump’s tax cutting and deregulatory ambitions are a counter-veiling force and thus we expect US corporate earnings to be higher over 2025, which may boost investors’ morale. • Current events are a reminder that macroeconomic factors are ever present, sometimes with more force than usual, [...]

Thorn bushes have roses

An article from Vector Insights by Brad Livingstone-Foggo, Head of Marketing - Australia, VanEck. He highlights the importance of understanding loss aversion and staying focused on long-term goals, despite short-term market fluctuations and psychological biases. Recent share market volatility and the threat of higher interest rates have scared investors afraid of losing money. These are thorns. Look for roses because loss aversion can be overcome. The lead-up to this past week’s RBA interest rate announcement and the week’s market volatility echoed two sentiments about investing we couldn’t overlook. Firstly, Morgan Housel, the author of The Psychology of Money, has said, “Volatility is the price of admission. The prize inside are superior long-term returns. You have to pay the price to get the returns.” And the second, from French novelist Jean-Baptiste Alphonse Karr, “We can complain because rose bushes have thorns, or rejoice because thorn bushes have roses." Volatility and price moves go hand in hand with investing. They may cause short-term [...]