Ending December 5, 2025
Video Overview
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The ASX has lost a portion of the YTD gains in the last month, so we will need a decent Santa rally if we want to end the year on a fairly positive note.
THIS IS VERY IMPORTANT
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These statements appear outrageous until you realise that the NASDAQ lost 83 percent in the dot com bubble. That wiped out all the returns back to 1996 and it took 14 years to get back to it's previous peaks.
Macro Moments
- Venezuela getting hot.
- Russia gets heavy with Europe.
- Oz - 2 percent growth. Not exactly knocking the lights out. But wages are looking better. And AI data centre spending contributes.
The Oz Economy
A Fund Manager's View
According to Fund manager Martin Conlon, Australia's economy is built on an unsustainable mix of high house prices and immigration. "No one's ever been able to hold up a Ponzi scheme forever."
An economy driven by, and dependent on, very high house prices that are supported by what Conlon says are unsustainable levels of immigration, is not healthy, and cannot last in the long term.
"It's easy to stand back and say, oh, don't worry, we can keep on importing people to hold up a Ponzi scheme. No one's ever been able to hold up a Ponzi scheme forever," Conlon says. "Affordability has to matter, global competitiveness of wages has to matter. It gets more dangerous when you move a long way away from sustainable policy."
Our View
We think it is important to watch the property market since that is where the most debt is. It should be no surprise that investors are increasingly taking most of the loans because the more prices rise, the more people especially FHBs are shut out of the market. Even with a 5 percent deposit, the loan repayments are too large for most potential buyers. So the only ones who can buy and sell are existing property owners and investors who can afford to leverage further using existing assets as collateral.
An important point to remember is that when you want to sell a property, the potential buyer must be willing and able to borrow (in most cases). As the pool of potential borrowers shrinks, the seller must accept a lower price or hold the property. At some point buyers gains the upper hand.
The property market debt levels impact the stock market since it is not easy to simply pivot from property to stocks. Excessive debt will see investor losses and there may well be less money for the stock market.
Lesson of the Week
The TMM Podcast
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