This is an edited version of a live discussion with Head of Investments at Walk The World Funds and Nucleus Wealth, Damien Klassen. In a time of tariffs and with markets in turmoil, how do we protect and survive?
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I have highlighted the indisputable fact that the share of Government funding taken from households, via higher taxes, and freezing the bands so fiscal drag means we pay more, and despite the promise of tax cuts, has lead to the highest proportion ever. In fact, it is a bigger impost on households that the higher interest payments thanks to rate hikes.
This is also a function of Corporations paying less, thanks to their ability to structure their affairs, get massive Government handouts, and their capacity to pressure our elected officials.
Given the fact that the federal budget is facing a structural deficit, perhaps it should be no surprise that a new front in taxing more is opening. And that relates to taxing assets, and especially unrealised gains. It starts with superannuation, but it is unlikely to stop there. Tuesday’s budget indeed revealed Labor is full steam ahead on taxing unrealised capital gains.
In the budget forward estimates it reveals Labor expects to tax an extra $9.7 billion from superannuation funds over the five years from 2024-25 to 2028-29, compared to what was forecast in MYEFO. And it is worth reading the small print.
If Labor is re-elected with this policy intact, this could be the thin end of the wedge. As well as freezing the protected level to $3million, which means over time more will get dragged, in, so yet another form of fiscal drag. The $3 million cap, unindexed, is a sneaky ‘tax on young people, tomorrow’ that is dressed up as a ‘tax on rich people, today’ so its a deceptive tax grab that borrows from young people’s future by ignoring that in 40 years when today’s 25-year-olds are retiring, $3 million will not be considered a very high balance!
And the precedent would be set to tax unrealised gains is taxing a profit you may never receive. As day follows night, this would be widened, potentially hitting a lot of farmers, small businesses, and entrepreneurs and even eventually perhaps the family home.
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It seems that markets are beginning to read the room, as the unwinding of the so-called rules based order – which really was based on a Pax Americana Hegemony, is falling apart. After the 25% auto imports tariffs were announced this week, the so called “Liberation Day”, on April 2, when Trump said he plans to announce reciprocal tariffs to end the days of other nations ripping off the US, or “T “ day is looking to be the next milestone.
No surprise then that safe-haven gold hit a fresh record high on Friday with the futures at $3126 and up more than 18% this year, even as the MSCI index of global shares fell, down 1.58%, and down year to date too, while the STOXX 600 European index fell 0.77% on Friday but is still up 6.79% this year. The SP500 was down 1.97% on Friday erasing -$1 TRILLION of market cap and posted its largest daily decline since March 10th and it’s down 5.11% year to date while the ASX 200 was up 0.16% as the election was announced, but down 2.17% so far this year, all weighed down by worries over a looming trade war sparked by tariff decisions from U.S. President Donald Trump.
With the price of BTC down over 4% this week from weekly highs of $89,000 to $83,654, it really has not value anchor so this may not be the end of the pain for holders of Bitcoin and, of course, other crypto assets, as when the leader falls, others follow.
But sometimes, it only takes one number to shift sentiment on the market, and this time, that number came from the latest inflation report. The price of Bitcoin has now lost a crucial technical support level – the 200-day moving average – after the latest Personal Consumption Expenditures (PCE) data was released, adding more weight to an already uncertain macroeconomic backdrop. For Bitcoin, which tends to struggle in tight liquidity conditions, the break below the 200-day moving average could signal further downside if macro pressures persist. What comes next? That depends on whether inflation slows or if markets have, once again, been too eager to price in victory too soon.
This is our weekly market update, where we start in the US, cross to Europe and Asia, and end in Australia, covering commodities and crypto along the way.
It was another complex week, with the interplay of tariffs, central bank non-decisions, and company reports plus the witching trades on Friday adding to the mix. Never-ending market disruptions are upending investment blueprints everywhere in 2025, while hitting sentiment across US stocks. This week the Fed, Bank of England and Bank of Japan left interest rates unchanged as they assessed the economic impact of U.S. President Donald Trump’s trade tariffs against global trading partners. Many of the world’s major central banks sent a strong message this week that the uncertainty caused by U.S. President Donald Trump’s trade wars is weighing on growth, stoking inflation, and dramatically reducing visibility on the interest rate outlook.
For the week the MSCI global index was 0.7% higher, but still down nearly 4% lower over the past month and flat year to date. Compare that to the European STOXX 600 which is up more than 8% year to date, while the SP500 is down 3.64% from 1 Jan, and the ASX 200 is down 2.79%.
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This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto along the way.
World markets on Friday ended another choppy week on an upbeat note as investors pushed aside growing concerns over the global trade war and bought back beaten down stocks, although few will be confident a definitive market bottom has been reached yet. U.S. President Donald Trump’s tariff agenda is very much in place, and markets remain vulnerable to the next escalation in tensions. The lack of any new announcement from Trump on Friday was, for investors, perhaps a classic case of ’no news is good news’.
The U.S. Senate did pass a stopgap spending bill, averting a partial government shutdown, after Democrats backed down in a standoff driven by anger over President Donald Trump’s campaign to slash the federal workforce. After days of heated debate, top Senate Democrat Chuck Schumer broke the logjam on Thursday night, saying that he would vote to allow the bill to advance. Schumer said he did not like the bill but believed that triggering a shutdown would be a worse outcome as Trump and his adviser Elon Musk were moving swiftly to slash spending.
And another dose of good news on Friday came from Germany, where Chancellor-in-waiting Friedrich Merz secured support from the Greens to revise the country’s debt brake and unleash the biggest fiscal package since 1990, proposals that should deliver a massive boost to German and European growth.
But frankly, the broader horizon is filled with dark, ominous clouds, indicated by some key market moves and economic data on Friday – safe-haven demand propelled gold above $3,000 an ounce for the first time, while U.S. consumer confidence fell to its lowest in nearly two and a half years and longer-term inflation expectations hit their highest since 1993.
In a post on X, former US treasury secretary Larry Summer said: “I am convinced there is nearly a 50 per cent chance of recession, and maybe even a far greater risk of recession, unless the current policy approach of tariff threats lurching is altered.”
Although markets clawed higher on Friday, the global MSCI Index was down a further 1.77% across the week, while the European STOXX 600 was down a further 1.22% over the 5 trading days.
In the US, The S&P 500 confirmed a correction on Thursday with the index closing down more than 10 per cent from its February 19 record high amid heightened uncertainty about President Donald Trump’s tariff moves and his determination to revamp the US federal government. That said, U.S. stocks rebounded on Friday as investors hunted for bargains at the end of a tumultuous week. S&P 500 +2.13% Dow +1.65% NASDAQ +2.61%. The S&P 500 and NASDAQ logged their biggest one-day percentage gains since November 6, the day after the U.S. presidential election. It was a broad rally, with recently battered tech-related megacaps enjoying a comeback.
The S&P/ASX 200 closed on Friday with its third-largest weekly loss this year despite a rally in Australian iron ore and gold mining stocks. The index shed almost 2 per cent of its value this week. It closed 9 per cent off its February 14 peak of 8555 points, after hovering at correction levels for days. It rose 0.5 per cent, to 7789.7 – its first day in the green since Monday. But Morgan Stanley has recommended clients avoid Australian equities citing their close correlation to Wall Street after a torrid start of the year for both markets as they hover at or near correction territory.
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I caught up with sound money advocate Lynette Zang, who is the Founder and CEO of Zang Enterprises. We spoke about the value destruction rife across markets, what’s behind it, and what we can do about it.
Zang, a self-described “prepper” says the current fiat monetary system is dying, we need to think differently about money, and how to secure our individual futures. Governments and Central Banks are part of the problem!
This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia, covering crypto and commodities along the way. As expected, markets continue to wrestle with mega levels of uncertainty, largely driven by US President Trump as Investors are grappling with dramatic policy change around the world. Trump’s back-and-forth implementation of fresh tariffs on Mexico, Canada and China exacerbated broad concerns about the economy. In another U-turn, Trump decided to exempt products covered by the 2018 United States-Mexico-Canada Agreement (USMCA) from the recent imposition of 25% tariffs until April 2. “The new U.S. Administration’s highly uncertain tariff policy looks to be damaging confidence and impacting activity,” said analysts at ING, in a note.
Under the new Trump administration, the barrage of initiatives on trade and other issues, such as federal workforce cuts, has fed uncertainty for businesses and consumers. Market unease is also rising. The Volatility index jumped this week and was around its highest level since late last year and up 41% compared with the start of the year. “Volatility is here to stay for a while because we do not have economic and trade policy certainty,” said Irene Tunkel, chief U.S. equity strategist at BCA Research.
Markets were also shaken by Germany’s surprise spending plans, which drove a selloff in the benchmark German Bund. The German 10 year rose by 19% over the past week, to 2.835. Beyond that, deep questions about the future of NATO, and Ukraine have forced European nations to reset their defence spending.
Stocks swung wildly on Friday, with the S&P 500 little changed in afternoon trade. Major indexes cut losses following mid-day comments from Federal Reserve Chair Jerome Powell, who told an economic forum that the economy “continues to be in a good place.” Despite that the benchmark S&P 500 marked its worst week in six months. Its down more than 4% from a month ago. The tech-heavy NASDAQ Composite on Thursday ended down more than 10% from its December all-time closing high, confirming it has been in a correction for several months. The Dow is also off highs from last year down more than 3%.
The Global MSCI index rose 0.2% on Friday and was down 1.26% across the week and saw a decline of 5% since its record high on February 18. In contrast the European STOXX 600 was down 0.46% on Friday, and 0.69% from Monday but is still up 9% year to date. But the Australian ASX 200 fell 1.81% on Friday and was down 2.74% across the week and down more than 6% over the past month.
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This is an edited version of a live discussion with Head of Investments at Walk The World Funds and Nucleus Wealth, Damien Klassen as we consider whether stagflation is a potential outcome from recent policy changes in the US, and how global markets are facing into the greater levels of uncertainty. How do we separate signal from noise, when considering an investment strategy.
You can ask a question live.
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Volatility in crypto has pulled the value of Bitcoin towards $80,000 USD, as the so-called Trump bump continues to fade across markets. With a pro-growth president devoted to deregulation, and bent on asserting US dominance over everyone else, the conventional wisdom was to pile into US assets and crypto, and brace for bond yields and the dollar to surge higher. All that happened in the weeks after the election. But since Donald Trump actually took office on Jan. 20, and particularly in the last week, all the Trump trades have reversed.
It is quite likely we will continue to see extreme volatility in the sector, and the journey up and to the right quite possible, given the limited supply of Bitcoin, so while, as a speculative trading asset people will continue to play with it, as a cornerstone of a secure wealth building strategy, I am less convinced.
My point here is that market uncertainly is broader than just crypto, but Bitcoin and other coins are likely to continue to magnify the volatility also visible in other markets.
No wonder perhaps that a critical detail from the 2025 meeting is that Warren Buffett’s Berkshire Hathaway’s cash pile hit a record high to over $330 billion, suggesting the Oracle of Omaha and his investment Colossus are on the sidelines.
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Today I want to look at the question of refinancing after the RBA rate cut, and whether a long term fixed rate mortgage in Australia would be a good idea.
While the ‘big four’ banks have committed to passing on the full 0.25 percentage point RBA driven rate cut to their customers, meaning those on variable rates will have their interest rate reduced by that amount in the next few months, if your mortgage rate is currently in the high sixes or 7 per cent, then you should definitely look and see if you can get a better rate following the RBA’s rate cut on Tuesday.
Beyond that, there is a fundamental difference between the mortgage markets in the US and Australia. A 30-year fixed mortgage is a dominant product in the US, where they account for about 70 per cent of outstanding mortgages but in Australia the bulk of loans are variable rate loans, which move in line with market rates, and indirectly the RBA cash rate, together with short term fixed rates which are again priced off the yield curve.
In the US, In the US, government-backed institutions like Fannie Mae and Freddie Mac provide liquidity to banks so they can sell 30-year fixed-rate mortgages. As a result, Banks in America are able to offer the riskier loans because of the existence of these so called government-sponsored enterprises (GSEs).
BlackRock chief executive Larry Fink suggested that Australia should introduce 30-year mortgages. The chief executive of the $18 trillion investment giant BlackRock said “We believe Australia should be building a 30-year fixed-rate mortgage market,” in an interview reported in the AFR. Fink, who was a pioneer of the mortgage-backed securities market during the 1980s, says Australia is uniquely positioned to pursue such a development because of the size of its $4 trillion superannuation pool.
Seems to me that engineering long term fixed rates in Australia may sound attractive to the big investment houses, the banks, and even the Government, but I am not convinced it is good for ordinary Australians. And it is worth remembering that through the GFC, US mortgage borrowers defaulted in droves, due to rate resets from low teaser rates, allowing those same investment houses to subsequently hoover up stressed property for a song. They are on the side of investors not prospective home owners.
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