18 May 2024
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China is giving our exporters a fairer go

Peter Switzer
13 December 2023

Thanks to bats, snakes and wet markets in China, the arrival of the Coronavirus meant that we have gone through a myriad of economic challenges that not many economists or government policy makers expected. However, the news is brightening. It suggests that economies and stock markets will have a pretty good year in 2024.
In fact, overnight, a famous US economist Ed Yardeni has put out a big positive call for Wall Street, even for 2025. I hope he’s right because we really do need a number of good years for stocks, after share markets have gone sideways for few years now, thanks to the fallout of the Coronavirus.
This is how CNBC reported Yardeni’s call: “Widely-followed Wall Street strategist Ed Yardeni issued a head-turning bull call on the stock market, seeing the S&P 500 soaring all the way to 6000 in 2025.
“That’s because we are seeing more reasons to believe in our Roaring 2020s scenario — the theory that productivity growth, driven by technological solutions to the labor market’s supply/demand imbalance, will lead to strong economic growth throughout this decade,” Yardeni said in a note to clients on Sunday evening.
OK, that’s great. As I said, what could help is that a lot of the negatives since the Covid invasion, lockdowns, the explosion of inflation, near zero interest rates and then rapid interest rate rises followed by slowing economies is the fact a lot of this stuff is no longer a big problem.
Effectively I’ve argued previously that it sets us for a good 2024, with inflation falling and interest rates likely to be cut. But wait, there’s more, with China starting to give more of our exporters a break.
The news outlet, independent.co.uk, reported overnight the good news that “China has lifted import bans on three Australian meat suppliers in another sign of improving trade relations between the two countries, Australian officials said Tuesday.”
Bans are being lifted on “…imports of beef and mutton from Australian plants of JBS, a global foods company, and from the Australian Lamb Company, both in Victoria state. Also, from Teys Australia in South Australia state, a government statement said.”
These bans were hangovers of the Trump trade wars with China, where our exporters were used for payback for our support for the US President.
By the way, eight other meat exporters are still on the outer. Undoubtedly, they will get de-banned, provided the Albanese Government is able to capitalise on the improving relations between Beijing and Canberra.
Next year can not only be a good one for stock players but the year could even see an improvement in the attitude of voters to the popularity of Albo and the rating of his government.
Provided inflation keeps falling (which I expect it will), interest rates should be cut from mid-year or a little later. China could grow better than expected, which will help our economy avoid a recession. Meanwhile, it’s likely that the Budget in May will see Dr Jim Chalmers throw a whole pile of incentives to help boost the economy, which should mean tax cuts.
If you take rate cuts and add that to the fourth year of a US Presidency (which is the second-best year for stocks with a newly elected President) then 2024 should be good for share market and super returns.
I hope I’m right for money and employment reasons. Albo will be praying I’m right for political reasons.
The chart below shows how the stock market has gone hardly anywhere higher because of the big drop in early 2020, which marks the day when we learnt that the Coronavirus was going to mean a closing down of the world economy as we knew it!
At the peak of S&P/ASX 200, we were at 7139. Today we’re at 7235, which means after three and three quarter years the stock market is only up 1.3% in terms of capital gain.
It’s why I say that on the law of averages we’re overdue for a sustained rise of our stock market.
S&P/ASX 200

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