Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Hyperinflation or hyperbole?
Specialist fund manager, NAOS Asset Management, which has a value focus and seeks to gain any edge it can, often focuses its attention on comments made by people in the know, such as CEOs or business leaders.
By doing this, it helps the team gain a better understanding of current market conditions and any trends that may be forming. Here are some of the direct quotes NAOS has listed in its CEO insights publication this week, which offers an insight into the events occurring in business around the world.
“Hyperinflation is going to change everything. It’s happening” Jack Dorsey, CEO, Twitter Inc/Square Inc.
The word “hyperinflation” is starting to do the rounds in the press. It’s a strange thing. Two years ago, people were questioning whether inflation was dead. Now, the expectation is for rapid and excessive rise in consumer prices.
Usually a rise of 50 per cent in a month is triggered by things like war, acute shortage of goods or excessive money printing. While Dorsey’s warnings of hyperinflation are alarming, the chances of this occurring are quite minimal. Recent spikes in inflation have been billed as “transitory,” a reaction to the global economy opening-up again after being shut down in the early stages of the pandemic.
If, however, inflation were to rise in a sustained manner, you can guarantee that interest rates would rise hand-in-hand with it, and the share market would give back its bull market gains. Investors would be tempted at some point to switch to government bonds and cash products.
“Shopping habits have ebbed and flowed over the last 20 months. But the underlying takeaway is that people want more choice, they want more information, more flexibility, and we don’t see this reversing — omnichannel is definitely in full force,” Philipp Schindler — chief business officer, Google Inc.
The pandemic caused a shift in consumer shopping behaviour. Foot traffic in shops tumbled while online shopping took off. As consumers return to shops, they demand a fast and convenient shopping model such as click-and-collect, pick-up in store or home delivery. ASX-listed companies championing the omni-channel theme are JB HiFi (ASX:JBH), Super Retail Group (ASX:SUL), Wesfarmers (ASX:WES) and Adairs (ASX:ADH).
“I think the weekends, people want to be out. It turns out they didn’t like being locked in their closets and basements and attics, and so they’re going to want to get out. And we’ve seen this pattern of very high demand on weekends. I think that will continue,” Christopher Nassetta, CEO, Hilton Worldwide Holdings, Inc.
A good example of a company that should rebound when patrons return is Crown Resorts (ASX:CWN). Shares were up after the decision was made to give Crown one more chance after the fallout from a cancellation of its gaming licence was deemed to be far worse an outcome. Without Crown, the Victorian economy would take a huge hit, from both tourism numbers and tax revenue.
“The China infant milk formula market has experienced unprecedented change over the past 12 months which has required us to adapt our growth strategy,” David Bortolussi, CEO, a2 Milk Company.
A recent class action, accusing A2M of misleading or deceptive conduct in breach of the Corporations Act, has placed pressure on the share price. A2 Milk however, denies any liability and will vigorously defend proceedings.
“We believe we’re currently experiencing BNPL 1.0. Individual fintechs and companies are cutting individual deals, merchant by merchant. Eventually, we believe the business model will evolve to BNPL 2.0…We’re already seeing this evolution begin to take shape,” Al Kelly, CEO, Visa Inc.
While much of the world has witnessed the BNPL phenomenon triggered by Afterpay (ASX: APT), the US market is only just catching on, Visa (NYSE: V) in particular. While new entrants are driving the BNPL trend, ultimately these players will not be able to scale products worldwide without Visa’s network. Players such as Visa and Mastercard (NYSE: MA) are finally looking to drive this trend: that’s BNPL 2.0.
“The regulatory environment in terms of new coins and lending products in crypto is uncertain and evolving,” Vlad Tenev, CEO, Robinhood Markets Inc.
This may be the case now, but the regulatory world is fast catching up. Recently the Select Committee on Australia as a Technology and Financial Centre chaired by Coalition Senator Andrew Bragg has made 12 recommendations which, if adopted, would reflect a radical move to regulate cryptocurrency and other digital assets in Australia. Similar moves by US President Joe Biden are being considered to regulate cryptocurrency and to stop the illicit use of cryptocurrency.
