Kerr Neilson (Platinum) - thoughts about 2017

Platinum Quarterly Report Picture Dec 2015Some key points of likely issues in the year ahead from Platinum Asset Management's December quarterly report.


• We might expect significant coverage and speculation around the proposed changes to US company and personal tax regimes. This will be complicated by both legislative procedures and matters of international trade.


• The implications for the US dollar are far-reaching with the Eurozone, China and Japan already receiving measurable benefits (growing trade surpluses) since the bottoming of the trade-weighted Dollar at 80 in mid-2014 (currently 103).


• The challenge for the US to lift growth in the face of relatively high employment and a strong Dollar suggests the need for an investment surge to augment productivity, rather than the less probable contributors of migration or an extended working age.


• The likely unfolding of tensions between the US and some of its principal trading partners, notably China, and the consequential tit-for-tat requires a close watch. This will reveal winners and losers in stock markets, though risk premiums seem lopsided.

• China’s credit boom, which has accelerated production and retail sales, will continue to be closely watched and this will have important implications for real and perceived demand for metals and minerals.


• The global picture of continuing improvement in sentiment and rising producer prices will likely remove references to deflation with the consequence of bond yields being more attractive than they have been in 2016.


• The tensions between political issues (such as Brexit negotiations and elections on the European Continent), company earnings and valuations suggest selective opportunities rather than a uni-directional market.


• Emerging technologies continue apace, led by Artificial Intelligence, autonomous driving, improved battery storage capacity, robotic surgery, biotechnology, comprehensive IT security, the speed promise of 5G, and the list goes on as the full potential of computing power, sometimes hosted remotely and linked to sensors, unlocks the extraordinary potential of the Internet. The point here being that for all the wringing of hands about the dearth of conventional investment and weak productivity statistics, the technological revolution is as potent as ever and probably under-measured.