Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 333

Welcome to Firstlinks Edition 333

  •   20 November 2019
  • 1
  •      
  •   

This week, JP Morgan downgraded its global growth outlook for 2020 by 0.2% to 2.3%, blaming 'population ageing'. Then Treasurer Josh Frydenberg said:

"It is estimated that the ageing of the population will reduce annual average real growth in revenue by 0.4 percentage points ... this equates to an annual cost to the budget of around $36 billion ... As our ageing population puts pressure on our health, aged care and pension systems, we need to develop policies that respond effectively to this challenge."

This sounds like a new policy agenda, but the Government has ruled out many changes which might be electorally unpopular. Without heavy lifting and tough-to-sell policies, we are left with:

"However, with Australians in work currently undertaking 80% of their training before the age of 21, this will have to change if we want to continue to see more Australians stay engaged in work for longer."

'Work longer' is hardly a breakthrough policy. Last week's survey on attitudes to generational inequity was particularly timely. While I am not so brazen to claim Firstlinks created two debates in mainstream media, our recent surveys were well ahead of the curve.

The 'OK Boomer' survey received the most personal and heartfelt feedback we have ever received. The 1,800 responses included over 600 comments, many describing the decades of work and sacrifice required to build retirement independence. Pre Boomers and Boomers reveal their years without holidays, working multiple jobs, 18% interest rates and no dining out (although some reminded me of the legendary 'Four Yorkshiremen' sketch. 'Luxury'). Younger generations lament missing the major city property booms, and many will need parental assistance. Leisa Bell summarises the poll results, with complete comments in a PDF report. More feedback welcome.

The other survey on the home in the pensions assets test has also become more widely discussed, although the Treasurer has ruled it out. Our survey results are here. New data from the ANU shows of the $50 billion in total pensions paid each year, $37 billion goes to home owners and $6 billion is paid to home owners in houses worth over $1 million.

Total pensions paid ($billion) by house value and tenure type, 2019-20


Source: ANU Centre for Social Research and Methods, 28 October 2019

We reprise a classic article with Nobel Laureate, Robert Merton, including his surprising views on pensions and reverse mortgages.

Our Interview Series continues with Peter Meany of First Sentier Investors discussing infrastructure hot spots. There are 13 listed infrastructure stocks in Australia (value $72 billion) but 350 worldwide (value $2.4 trillion). The case for investing in global infrastructure is strong.

After a good year, the All Ords Price Index all-time high of 6958 is within striking distance, and the US is in its longest and biggest bull market run in history, up about 450% since its trough on 9 March 2009.

So it is welcome, as Kate Howitt shows, that some semblance of reality and price rigour is being enforced, with active managers refusing to accept over-hyped and over-valued new issues.

We also have reality checks from both Peter Moussa, who sees room to run further but the final steps of the bull are nearing, and leading futurist Phil Ruthven, who describes the new world order as we head into the uncertainties of 2020 and beyond. The Sponsor White Paper from Neuberger Berman reports the most recent meeting of its Asset Allocation Committee.

Early December will be a massive moment for large super funds, as APRA will release its 'heat maps' judging MySuper funds. Dark red is bad. Raewyn Williams explains APRA is also looking for greater innovation and funds must overcome internal barriers to creative solutions.

APRA's Helen Rowell gave a sneak peak at the heat map in this presentation, and warned:

"Unlike a sea of numbers on a spreadsheet, a row of red across the heatmap sends a message so clear and strong it nearly jumps off the screen."

Example of a MySuper heat map on investment performance


Finally, on the subject of Firstlinks leading the debate, the AFR ran a long article on Wednesday called, 'LICs in the spotlight over returns'. Chris Cuffe covered this issue in detail in this 2017 article, pointing out the inadequate reporting adopted by most LICs.

 

Graham Hand, Managing Editor

For a PDF version of this week’s newsletter articles, click here.

 

banner

Most viewed in recent weeks

Which generation had it toughest?

Each generation believes its economic challenges were uniquely tough - but what does the data say? A closer look reveals a more nuanced, complex story behind the generational hardship debate. 

100 Aussies: seven charts on who earns, pays, and owns

The Labor government is talking up tax reform to lift Australia’s ailing economic growth. Before any changes are made, it’s important to know who pays tax, who owns assets, and how much people have in their super for retirement.

The best way to get rich and retire early

This goes through the different options including shares, property and business ownership and declares a winner, as well as outlining the mindset needed to earn enough to never have to work again.

A perfect storm for housing affordability in Australia

Everyone has a theory as to why housing in Australia is so expensive. There are a lot of different factors at play, from skewed migration patterns to banking trends and housing's status as a national obsession.

Chinese steel - building a Sydney Harbour Bridge every 10 minutes

China's steel production, equivalent to building one Sydney Harbour Bridge every 10 minutes, has driven Australia's economic growth. With China's slowdown, what does this mean for Australia's economy and investments?

Supercharging the ‘4% rule’ to ensure a richer retirement

The creator of the 4% rule for retirement withdrawals, Bill Bengen, has written a new book outlining fresh strategies to outlive your money, including holding fewer stocks in early retirement before increasing allocations.

Latest Updates

Economy

The ‘priced out generation’ and what they should do about it

A fiery interview on housing exposed deep generational divides, sparking youth outrage and political backlash. As homeownership drifts out of reach, young Australians face a choice: fight the system - or redefine success.

Taxation

Maybe it’s time to consider taxing the family home

Australia could unlock smarter investment and greater equity by reforming housing tax concessions. Rethinking exemptions on the family home could benefit most Australians, especially renters and owners of modest homes.

Superannuation

Meg on SMSFs: Ageing and its financial challenges

Ageing SMSF members can face issues funding their pension income as cash reserves dwindle. Potential solutions include involving adult children in contributions to secure future financial stability.

Economy

US earnings season was almost too good to be true

The second quarter US earnings season has wrapped up, with a record 82% of S&P 500 firms beating earnings estimates. As tailwinds fade, Q3 may reveal whether AI momentum can offset rising economic headwinds. 

Gold

Does gold still deserve a place in a diversified portfolio?

9,000 years and no devaluations later, gold is the world’s most enduring store of value. It remains attractive as the value of several paper currencies, including the US dollar, are threatened by deficits and rising debt.

Shares

Checking in on the equity market's silent engine

Consumer spending directly impacts corporate earnings, sector performance and market sentiment. The latest data from different economies uncover risks and pockets of opportunity for investors.

Fixed interest

6 key themes driving bond markets

The Fed could soon be prompted to join other central banks in cutting interest rates. This would have ripple effects across global fixed income markets and provide an especially attractive backdrop for emerging market bonds.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.