Saying Goodbye to the 2019 / 2020 Financial Year – Is Australia still the lucky country?

The harder I practice, the luckier I get” Jerry Barber

No country in the world has escaped the impact of COVID-19, but here in Australia and particularly WA, we have managed to avoid the levels of infection see in Europe and the USA. Let’s hope Victoria can get their second wave under control.

With early lockdown and strict quarantine measures, our infection rate was kept very low. People followed government guidelines and worked towards the greater good.

Of course, there was some good fortune involved too. Australia being an island means we have greater control of our borders, and Perth being one of the most isolated cities in the world certainly helped us keep our distance. Secession anyone?

We also have a well-financed health system that is possibly the envy of the Western world. And our proximity to our Chinese neighbours probably acted as an early warning system.

 

Markets

We have been on a bit of a roller coaster over the last 5 months.

We looked to be in for a great year when the S&P / ASX 200 peaked at over 7,000 in the last week of February.

But then came the coronavirus drop – the steepest ever monthly decline.

Then we experienced the rebound, with the index hovering around 6,000 mark by the first week of July.

Now, where are we?

Some retail and travel stocks look to be in serious trouble, while online communication and eCommerce companies have prospered. The Big 4 tech companies; Apple, Facebook, Amazon and Alphabet Inc (Google’s parent company) are thriving, though Alphabet did experience a little hiccup.

The fragmented US response to coronavirus has hurt both the economy and the dollar, and with a turbulent run-up to November’s election expected, we could see gold becoming even more attractive.

The UK seems to be heading towards a no deal Brexit now that the deadline for an extension to the transition period has passed. Europe has taken the gloves off and effectively told Boris Johnson
“You asked for Brexit – you’re going to get it”. In a statement at the beginning of July, Michael Barnier pointed out this meant British banks could lose ‘passporting’ rights to the EU financial markets.

What does all this disruption mean for investors?

Obviously, you should be reviewing your risk profile to see it is aligned with “the new normal”.

However, as a general observation the markets are to some extent bring propped up by the huge stimulus that various governments are throwing at their economies.

They are also looking beyond the short-term pain of the next 6 to 12 months, to a point where the virus is either contained or there is a vaccine. There is also an expectation that the stimulus (which is likely to continue in both America and Europe) when combined with unprecedented low interest rates, will provide something of a tailwind for an economic recovery in the second half of 2021. This may well be the forecast but in the shorter term there is considerable uncertainty that will likely lead to more volatility. It could be a bumpy ride.

 

Entertainment

Of the two most anticipated releases of 2020, only one of them will be with us this year. Daniel Craig’s final outing as James Bond, No Time to Die, should be hitting Australian multiplexes in mid-November.   Be prepared to hear a lot of 18-year-old Billie Eilish singing the theme song in amongst all the Christmas songs.

Avatar 2 was originally slated to be the big Christmas blockbuster but now won’t be arriving on our shores until December 2021. For once, that’s something that we can’t blame on the coronavirus.  Director James Cameron has been continually postponing the release of Avatar sequel since 2015.  Apparently, he wanted to complete the scripts for FOUR sequels before completing the first one.  Well, at least that’s your family outing for the next 4 Christmases sorted.

The big story in entertainment has been SVOD (streaming video on demand).  Apart from the growth of Netflix, we’ve also seen the arrival of Apple, Disney + and mini video platform Quibi. Plus of course, the charge into the mainstream of the dance/music platform driving every parent crazy, TikTok.

With Britbox due to launch “sometime in the second half of 2020” as well, it seems certain Australians will be paying more this year than the average $35 a month they were paying for SVOD subscriptions in 2019.

Lastly, farewell Olivia de Havilland (the last of the Hollywood Golden era) celebrated for her role in Gone with the Wind and Dame Vera Lynn “There’ll be bluebirds over…”

 

Sport

Has it really been almost a year since the baggy greens retained the Ashes in England? Sadly, it doesn’t look like we’ll see any international cricket in Australia until the ICC T20 World Cup which starts in October.

The good news is that England are now playing 2 short test series’ against the West Indies followed by Pakistan, so you can still get your test match fix. Just be prepared for eerie crowd silence and commentators apologizing for the player’s bad language.

For a short time, there was speculation that a bid to relocate the English Premier League to Perth might turn into something serious. Sadly, it was not to be, and Liverpool marched to their first league title in 30 years on home soil. Have to say “you will never walk alone” is getting on this Man Utd’s fans nerves.

AFL is back on TV and live in Perth where we were the first to host a crowd at a stadium since March.

Formula 1 is also back with a compressed calendar and even some new races. In 2017, Silverstone was in danger of losing the British Grand Prix. This year it’s staging two British Grand Prix.

As they say, it’s an ill wind…

 

Our Daily Language has changed

Who would have predicted that some of the most used words of 2020 would be lockdown, quarantine, and social distancing?

Who hasn’t googled masks for sale, PPE (personal protective equipment) or P2/N95 respirators?

If you haven’t used one of Zoom, Slack, Microsoft teams or Google Meet you’re probably not WFH (working from home).  BTW, zoom is now a homonym, as in “zoom & enhance this photo” and “I’ll Zoom you”.

And, for the foreseeable future it looks like a cruise or a week in Bali might be replaced by staycation.

But the best change in our daily language has been the increased use of endearments and caring language. Remember when “take care” used to be just an automatic way to sign off an email or end a conversation? Now, there is real feeling behind those two words.

In that spirit, on behalf of the team at Wealthwise, I would like to sign off by wishing you and yours a prosperous and healthy 2020/21 financial year.

Take care and stay safe.

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