Saturday, September 19, 2026
Wages falling further behind inflation – government and RBA stoking, not attacking, inflation
So far this century, wages in Australia have grown comfortably AHEAD of inflation, with public sector wage growth leading private sector wage growth. However, since the start of 2020 in the post-Covid era of higher inflation, wages have LAGGED well behind inflation, with both private and public sectors suffering NEGATIVE real wage growth. The gap between inflation and wages has accelerated once again over the past year as inflation remains high. Here I look at the causes and solutions for the problems of declining real wages and living standards.
Australian gov debt hits A$1trillion, US gov debt hits US $40trillion, but how do we rate in the DEBT OLYMPICS?
Sensational headlines this week - Australian government debt hitting A$1 trillion and the US hitting $40 trillion! But how serious are they really? Here is an update on my ‘Debt Olympics’ chart of all levels of debt (government, corporate, household) since 2000. Australia has one of the LOWEST overall debt burdens in the world. Our Government and Corporate debt levels are relatively low, but our Household debt is the highest. The problem is not Debt per se, but how it is spent: paying for current spending, handouts & political pet projects, or building long-term productive capacity to generate future revenues, growth and prosperity?
Reason #2 for ASX’s 17-year Lag behind global share markets = chronically LOW RETURNS ON EQUITY
The right chart shows current aggregate ROEs for ASX companies versus major world share markets. The US has highest ROEs (even better than its historical average ROE) despite massive ‘ai’ capex spending. Australia has near lowest ROEs. The right chart shows the longer-term picture: aggregate ROEs in Australia versus the US since 1960. ASX aggregate ROEs have averaged nearly 4% LOWER than the US, which is a very large difference. American company ROEs are HIGHER than their cost of equity capital, so shareholders let them RETAIN most of their earnings to invest in future GROWTH. Australian company ROEs are LOWER than the cost of capital, so shareholders demand high dividend payouts rather than let management squander it. I look at reasons, implications, and whether this problem is temporary or more entrenched.
Reason 1 for the ASX’s 17-year lag behind global share market: SECTOR MIX
In a recent article I pointed out that the ASX has lagged the rest of the world for the past 17 YEARS, with the lag ACCELERATING over the past three years in the ‘ai’ boom. It has not always been this way. The Australian and US share markets have been the best performing markets in the world for more than a century. There are several reasons for the recent lag. The first is SECTOR MIX. It is the most obvious, but NOT most important difference. More than half of our market is big Banks & Miners – but more than half the US market is the global tech giants. We also have a large Real Estate sector, but a tiny and troubled Tech sector, likewise Health Ca
Australian share market has LAGGED the rest of the world for the past 17 YEARS! Our ‘Home Bias’ is costing investors dearly
The ASX has lagged global share markets for the past 17 YEARS since mid-2009, and the lag has ACCELERATED over the past three years in the ‘ai’ boom. This is the second longest period of ASX lagging global markets in history, and it is costing investors dearly. Since mid-2009, the ASX has generated total returns of 8.9% pa compared to 12.1% pa for the overall international share market, which has compounded into a 65% difference in returns. Is it time to reduce allocations to the ASX and allocate more to international shares to chase the current global boom? If you do, it will probably turn out to be a classic case of ‘Buy High – Sell Low’ - the exact opposite of serious long-term investors who focus more on company fundamentals than price charts. However, th
My webinar with Michael Yardney: INFLATION – who’s hit hardest, what’s driving inflation, implications for investors
Here’s a link to my latest webinar interview with Michael Yardney’s Property Insights. It’s a deep dive into inflation – including How everyone’s inflation rate is different, Who's hit hardest, What’s really driving the current bout of inflation, How inflation works in cycles, Where we are in the cycle, Why inflation in the next decade is going to be higher than the past three decades, Why inflation is critical for investment returns and asset allocation, and much more.
July 2026 snapshot: US/Iran quagmire continues; Inflation fears & bond yields rise; Cracks in Tech bubble?
Global share markets were flat in July, ending the rebound since March after the start of the US/Iran war. Three reasons for the pause: 1: US/Iran war stalemate leaving fuel prices high, flowing through to broad inflation numbers, consumer confidence, spending. 2: US Fed’s new Chair Kevin Warsh sounding too soft on inflation. 3: Widening fears about the ai boom deflating. Four key developments in July. Why I’m still relatively positive for share markets in the short term. Plus the latest news (and a dozen charts) on Australian & global share markets, inflation, interest rates, currencies, commodities, Bitcoin. (+ 'I told you so' on SpaceX - sorry!)
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Graham Hand - Editorial Director of Morningstar Australia, including Founder/Managing Editor of FirstLinks, Australia’s leading newsletter and publishing service on wealth management, superannuation, and personal finance.
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Toby Potter - Chair, Institute of Managed Account Professionals (‘IMAP’), the peak industry body for the discretionary managed accounts industry in Australia, representing investment managers, advisers, Managed Account providers, and technology companies. It is the primary thought-leader for the industry in Australia, and provides training and industry events and conferences.
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Dr Don Stammer - Australia’s most respected economic writer, commentator, and speaker for the past 40 years, with a distinguished career including the Reserve Bank of Australia, Chief Economist at Deutsche Bank Australia for 21 years, chair of nine ASX companies, plus numerous non-listed and not-for-profit boards.
“Ashley’s unique fact-based analyses and insights into Australian and global markets are always worth reading. He has an incredibly deep and comprehensive store of financial markets data.”
Chris Cuffe, AO – One of Australia’s best known and most experienced investment managers – former CEO of industry giants Colonial First State, then Challenger Financial; founder and Chair of Australian Philanthropic Services, and Third Link Growth Fund; current/former chair, director and/or investment committee member of numerous funds including UniSuper, Argo Investments, Hearts and Minds Investments, Paul Ramsay Foundation, and many others.
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Hugh Dive, CFA. Chief Investment Officer, Atlas Funds Management, and frequent expert commentator quoted in the AFR.
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Ian Macfarlane AC - Former Governor, Reserve Bank of Australia (Australia's central bank), 1996-2006. Former Director, Woolworths, Leighton Holdings, and ANZ Bank. Also on the International Advisory Boards of Goldman Sachs (2007-2016), the China Banking Regulatory Commission (2011-2014), and director of the Lowy Institute for International Policy (2004-2017).