In Australia, like in most other countries where monetary and fiscal policy prevented a collapse in incomes over the pandemic, the excess savings (stock) accumulated is sizeable.
The time to get really worried on Aus macro is sometime after a drawdown below average here…
…however that doesn’t change anything overmuch at a sectoral level, for example consumer discretionary stocks are overloaded with inventory into a consumption pattern shift and have PEs that are high prior to normalisation of earnings.
It is the same with our vastly over-valued housing market, with all the downside risks that it brings. But, generally speaking, that balance sheet story should help temper one’s enthusiasm either way.
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