14 December 2019
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More exciting economic news but why are our billionaires selling out?

Peter Switzer
14 December 2017

Another good piece of news for the Oz economy with 61,600 jobs showing up in November, which makes it 14 months in a row of employment rises! Throw in the great revelation about consumer confidence hitting a four-year high and I have to say I’m even more excited than I was yesterday about the prospects for the economy in 2018.

“It certainly didn’t disappoint with 61,600 jobs created – the largest monthly increase in two years,” observed Ryan Felsman, senior economist at CommSec. “It has been an exceptional year for jobs growth – the second fastest annual increase on record - with around 383,300 jobs created over the past year.”

If you wanted all your economic ducks in a row for the economy and the stock market next year, you’d have to say that they’re pretty well in line. One thing, however, worries me, which has been revealed this week — the news our most famous billionaires are cashing up!  

So I have to ask: “What do they know that we don’t?”

Let’s recap on the billionaires’ sell off:

• James Packer has sold $800 million of assets. 

• Frank Lowy has let go of Westfield’s shopping centre empire to French interests for $32.7 billion.

• Rupert Murdoch gets a $68.3 billion deal to let go of 21st Century Fox!

That’s a lot of selling by local billionaires and I’m hoping they are getting out early (too early) because they simply were facing deals they couldn’t refuse! On the other side of each of these deals, there have been buyers so I’m hoping Disney, the buyer of Rupert’s baby and Unibail-Rodamco, the Westfield mega-shopper, are doing it because they don’t expect economic Armageddon around the corner.

On my calculations, any threat of a local recession without an overseas trigger is small. The creator of a hard-to-see black swan event would be China, which continues to report well, the USA, which also looks economically strong and Wall Street, which is in record territory.

I’ll watch US interest rate rises next year and if they’re too fast, they could sow the seeds of a recession. Rate rises, however, can take three years before they rattle an economy like the USA.

The economic ducks in Australia, the US and Europe look to be nicely in a row, while China and Japan’s ducks might be a little out-of-line, they still look pretty good.

So it’s economic news, which is very promising versus billionaires, possibly with inside info on a pending disaster around the corner.

I’m betting it’s a case of smart guys getting out too soon because their deals were just too hard to refuse. 

On my calculations, 2018 and 2019 should be OK to remain long on stocks but 2020 will be the year of living dangerously, however, as you can see, I’m not oblivious to any warning signs.

 

 

 

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