| Welcome to the November issue of the Dashboard Newsletter. So much has happened over the past month. For starters, New Zealand has voted overwhelmingly in favour of Jacinda Ardern and her Labour Party to govern for the next 3 years. In fact, it is the first time in MMP history that a Party has won the right to govern alone, with 65 of 120 seats in the house. (The previous record was 60 seats for John Key's National Party in 2014). Governing alone creates a great opportunity for the Labour Party. This allows them the power to act without requiring support from any other party. In theory, this means that they will be able to progress any ideas, vision or policy without the hand break of coalition partners or opposition. It's a position of real power and responsibility, and it will be fascinating to watch if there is any significant development or change over the next 3 years.
On the other side of the world, American's were less unified in their vote. After a slow start, Joe Biden came home strong and managed to get 51% of the votes versus Donald Trump's 48% - a narrow margin. So comes to an end the Trump experiment. America has a new President Elect in Joe Biden - an outcome that 51% of Americans seem ecstatic about, but 48% seem furious about. It really is incredible just how divided the country is and how passionate each end of the spectrum is. On reflection of these 2 results, I can't help but feel that we should be entering some calmer political waters in the foreseeable future. The past term in both NZ and America has been turbulent to say the least. Tensions between Labour and New Zealand First were obvious at times, and Trump was, well, Trump. Throw in a global pandemic, and things were never going to be easy. In contrast, the next 3 years give Jacinda Ardern and her Labour Party a clear runway to push ahead uninterrupted, and America has a steady old hand in Joe Biden to try quell the fires that burn in the streets and get American's re-calibrating their direction and priorities. As someone who has no political leanings and doesn't vote, I feel surprisingly optimistic and feel that these results are good at this point in time. What excites me more than election outcomes at the moment is developments with Covid vaccines. 2020 has been such a difficult year, and good news has been scarce. So I'm super excited and encouraged by the fact that several drug companies are now reporting that they are making great progress with vaccines. The most publicised one has been the Pfizer and BioNTech drug that has completed phase 3 trials and proved 90% efficacy in preventing people for catching Covid. It is now widely anticipated that this drug could be approved by the Federal Regulator as soon as mid-December. Pfizer have already started mass producing it and plan to have 50 million dosses (enough to vaccinate 25 million people) by the end of 2020 - that's only 7 weeks away! They expect to have 1.3 billion doses available by the end of 2021. Aside from Pfizer, there are 10 other drug companies with vaccines in the final phase (phase 3) of testing. Statistically, at least 3 of these should be approved meaning that we could have 3 or 4 vaccines early next year. Whilst this doesn't immediately solve the problem (they still have to produce the vaccines en masse and distribute it around the world), it is very encouraging news and something that we should celebrate. Your next overseas trip may not be as far away as you thought... Unsurprisingly, global share markets have reacted positively to all of this. In particular, Asian markets (Hong Kong, Japan and Australia) have enjoyed very strong performance, as has London. Furthermore, the Reserve Bank of New Zealand recently met and confirmed (as was expected) that they will be providing a "Funding for Lending" facility to New Zealand banks, meaning that the banks now have access to extremely cheap capital to lend on to households and businesses. The effect is that mortgage rates remain low (and will probably go lower), and term deposit rates also fell. Incredibly, a 2 year term deposit rate is now a paltry 0.90% before tax. Unsurprisingly, house prices have remained very firm as a result of this. All said and done, here are the numbers: |
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In terms of your Select Wealth Management portfolio, performance has been robust over the past month (in line with the broader markets). There seems to be a lot of support for investments at the moment as people struggle with the reality of extremely low term deposit rates and look for suitable alternatives. Yields on listed property securities for example are closer to 4 and 5%, and this is attracting interest from people with maturing term deposits. The challenge of course is to balance this potential higher return against the risk involved. This is the tightrope that we continue to walk when we manage your money, and now more than ever we are making every effort to ensure that we don't lose sight of the "risk" side of that equation. Finally, a quick update on our Giving Back program. Thanks to the referral of your friends, family and colleagues, we are on track to reaching our goal of donating $2,500 to Birthright Kapiti by the end of the year. Thank you for your continued support and the referrals - they are greatly appreciated. We will be starting a new campaign in January 2021, so if you know of a worthy person, family or organisation that needs helps, please feel free to make contact and we can see if this is something that we can help with. Examples of previous campaigns and the progress of this campaign can be seen at https://mifinancialplanning.co.nz/giving-back.html Until next time, keep safe. Warm regards Dave and the team at Isaacs Financial Planning dave@mifinancialplanning.co.nz |
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This newsletter is intended for general distribution and does not constitute personal financial advice. Copy of my primary disclosure statement and secondary disclosure statement.