Welcome to 2024 and for anyone visiting their superannuation balances in January, they would have been pleasantly surprised. Christmas runs happen infrequently, but this year we were all beneficiaries with the ASX 200 index has moved up by 12% in the space of three months – October to December 2023. Essentially we have received one year’s return in the space of a few months and while most of the Nation was on leave.

Much of this market return has been driven by the sentiment that inflation is in retreat – the “inflation beast is dead”. Australia’s inflation has come down to 4.3% which is certainly less than where we were 12 months ago when it was at 11-12%. Despite this, cost of living pressures remain paramount to most Australians and to the electoral fortunes of the current Government in their first term. Many are hoping interest rates will fall, but remember Australia was slow to raise rates and logically, interest rates for take longer to fall. With a new Reserve Bank Governor, she will not be keen to let the “inflation genie” back out of the bottle.  

Geo-political tensions are not going away soon it seems. Aside from the ongoing Ukraine/Russian war, we also have a continuing Israel Gaza conflict widening to the Red Sea and Suez and the Taiwan issue stoked further by the outcomes of their recent election. Throw into the pot a US election with Donald Trump the front runner for the Republicans and we are in for a very interesting year.

Here at home we have bigger government, increased emphasis on defence spending and migration levels which may mitigate as it becomes apparent that housing starts are at their lowest levels and we simply do not have the tradespeople to build the houses or the accompanying infrastructure. Throwing money at it will not solve the problem and only serve to drive up prices and inflation. The stage three tax cuts seem to be assured at this stage, but then again next month could be different. A week is a long time in politics, and it seems that much of the economics is now driven by politics. ( I make no excuse for my cynicism – I have seen too much).

On a positive note, the Team congratulates Jeremy Bogovac, whom many of you will know, who this month became accredited as a Financial Adviser. Great work Jeremy!