Macro Strategy Advisors Pty Ltd

About  us:

  • The business is a Proprietary Limited Australian company that is owned and fully operated by Shane Lee from a small office in Sydney’s CBD.
  • Shane worked for 17 years in Sydney-based senior research roles (economist, equity strategist and bond strategist) in global and regional investment banks and a domestic commercial bank prior to starting Macro Strategy Advisors. These roles straddled the asset classes making him uniquely positioned to advise multi-asset investors. He worked for the Reserve Bank of Australia (RBA) for 3 years as a housing, commercial property and equity market analyst and a liquidity forecasting specialist.  He worked as a structural engineer in Queensland for 10 years prior to his career at the RBA. 

Aim of our business:

  • To partner with our clients in their aim to maximise returns. We provide timely, independent and thought-provoking research on thematic macro issues that are impacting or could impact financial markets. We aim to produce research that prompts our clients to question their assumptions.

Services:

  • A fortnightly research note.
  • Regular presentations and data support delivered by understanding our clients interests and investment process.
  • We also in work in confidence to investigate, analyse and report on issues at our clients direction. This work is done on a project-by-project basis.
  • As an Australian based business, the main focus is analysing how domestic and global issues impact Australian investors. However, our global and domestic insights are also valued by our offshore clients.

Our Edge:

  • Our low cost base relative to our competitors allows us to provide a quality product at a reasonable cost.
  • We are fully independent and don’t support a banking function or any third party. We have no interests other than providing our clients with the best possible research.
  • Our focus is not point forecasting, but providing rigorous analysis and insight. We don’t routinely focus on the top or bottom 10% of likely outcomes to create a headline.
  • Shane’s background in engineering has provided clients with unique insights into global infrastructure and domestic housing issues.

 

Shane Lee
  • Shane Lee

Aussie Equities Month in Review - February 2020

Global equities fell by 0.6% after a strong start of the month was scuttled by the emergence of the Coronavirus. Healthcare (12%), IT (11%), Communication Services (9%) and Consumer Staples (8%) saw strong returns. The biggest hurdle for investors in Australia remains valuation. Analysts seem relatively comfortable with full-year EPS estimates after the downgrade cycle, with earnings certainty is back to around normal levels for the ASX200 universe. The Q4 19 inflation data was broadly in ...

Shane Lee
  • Shane Lee

Aussie Equities Month in Review (Dec 2019)

Global equities rallied by 3.0% after the US and China announced they were close to formalising a trade deal. Emerging markets rallied strongly, with the global EM index up by 7.5% supported by strong gains in Argentina (21%), China B (8.4%), Russia (7.7%), Brazil (6.8%) and China A (6.2%). Consumer Staples (-8.1%), Communication Services (-7.8%), Property (-4.8%) led the declines, while Materials (1.5%) and Utilities (0.8%) were the only sectors to gain ground. The biggest hurdle for invest...

Shane Lee
  • Shane Lee

2020 Asset Allocation and ASX Outlook

We expect the Australian equity market to deliver low-mid single digit returns next year. Our Dynamic Asset Allocation preference is a mild overweight to Growth assets, given the relative attractiveness of equities to both bonds and credit. In Fixed Income we prefer Global markets over Australia even though the RBA has probably more work to do. In the ASX, the Risk: Reward skew is tilted more positive for Resources than Banks, particularly in H1 as the global economy shows signs of recover...

Shane Lee
  • Shane Lee

Aussie Equities Month in Review (Nov 2019)

The ASX 200 gained 3.3% and outperformed global markets again. IT (11.0%), Communication Services (9.6%), Healthcare (8.9%) and Consumer Staples (8.2%) were the best-performing sectors. The biggest hurdle for investors in Australia is valuation. The combination of falling downgrades and upgrades more in line with long-term averages means that earnings certainty is back to around normal levels for the ASX200 universe. The RBA laid out its plans for providing additional monetary support sho...

Shane Lee
  • Shane Lee

Aussie Equities Month in Review (October 2019)

The ASX 200 fell by 0.4% and underperformed global markets after several strong months of outperformance and earnings downgrades. In net terms the market was upgraded, although this was mainly because there were less downgrades than normal and not because analysts were becoming more positive on the earnings outlook. IT (-3.9%), Financials (-2.8%), Consumer Staples (-2.2%) and Materials all underperformed. Australia remains expensive with the earnings bar now lowered to a level more achieva...

Shane Lee
  • Shane Lee

Skeletons in the Closet

Political instability has returned to Australia in recent months after several Members of Parliament (MPs) have revealed their dual citizenship status. The constitution doesn’t allow dual citizens to sit in parliament and so far, two Senators have resigned and another four have been referred to the High Court to determine their dual citizen status.  Importantly, the issue has also affected the House where the Coalition has formed Government by a margin of only one seat. Indeed, the High Cour...

Shane Lee
  • Shane Lee

Tiptoeing on the Edge of a Productivity Sinkhole

The current global economic upswing is occurring against a background of relatively poor productivity performance. We fear that if productivity growth doesn’t lift this could ultimately cut short the earnings cycle and equity market rally.  In Australia and the US, economy-wide labour productivity is linked to trends in services output. Earnings performance in service industries has been weaker after the great recession than in the period prior. Consequently, capex has been cut, particularly ...

Shane Lee
  • Shane Lee

Time to Look at the Laggards in Aussie Healthcare

Australian Growth stocks have under-performed in the past four years, but they generally perform well in a rising global interest rate environment. We think it’s now worth revisiting some of the healthcare names that have been left behind.   Buying CSL, COH and RMD has proved successful, with these stocks providing the best returns in the sector when global Growth stocks out-perform. REG has also performed well in these periods, but it trades on a much lower PE multiple.   SIG, MYX, RHC, API...

Shane Lee
  • Shane Lee

Australian Industrials - There's Still More Meat on the Carcass

Global optimism has added fuel to valuation premiums in a broad measure of Australian Industrial stocks over the past 5 months. But it has not boosted the revenue outlook which remains weak. EPS growth in these stocks still depends on continuing cost-out.  Many of them have a good track record in delivering cost-out, which has made them attractive momentum plays even on a modest EPS outlook. BSL, QAN, CSR, DOW, NUF, BKW and AMC have been the star performers.  Stocks with large and frequent i...

Shane Lee
  • Shane Lee

Australian Housing - The Timebomb is Ticking

Australia’s high level of household debt leaves it vulnerable to the next major global economic shock. It's been nearly 10-years since the Global Financial Crisis (GFC) and another significant shock is inevitable, even if it’s not of the same magnitude.  The immediate impact of the accumulation in debt has been weaker-than-normal consumer spending.  Wealth effects highlighted by withdrawal of housing equity have been absent. More specifically, the Sydney housing market is the key concern. In...

Shane Lee
  • Shane Lee

Market Repricing and Aussie Reporting Season

Last week’s equity market repricing should be viewed positively. The Bond Market and the Equity Market are Now Both on the Same Page. However, the cycle is not over just yet. Decomposing the Bond Yield Shows the Long End is now better Placed than the Short End. Reporting Season has kicked off.

Shane Lee
  • Shane Lee

Going into Survial Mode: The Rush to Innovate

Stay Underweight Consumer Discretionary and Consumer Staples.  In our 2018 Australian equity market outlook, we argued that the country is in grip of a technology-driven disruption cycle that is depressing pricing power and compressing margins.  In this note, we quantify and put into context the size and scope of the boom.  The consumer remains constrained and the disruption to “Bricks and Mortar” retail has been particularly savage.  It’s far too early to go back into this space, despite a few ...

Shane Lee
  • Shane Lee

The US Yield Curve Threat to Aussie Equities

Stay Overweight Global and Domestic Cyclicals. A key assumption underpinning our Aussie equity market outlook in 2018 is that global growth remains strong and synchronised, while domestic growth strengthens and longer-term interest rates rise further, but don’t overshoot.  Our model portfolio is detailed in our recently published 2018 Aussie market outlook (“Aussie Equities 2018: In a Sweet Spot” – December 2017).  The US yield curve is still steep enough to support our view, even if it contin...

Shane Lee
  • Shane Lee

A Lame-duck Christmas Retail Period in OZ

Stay underweight bricks and mortar retail. Our model portfolio is underweight retail, despite the sector having attractive valuations.  We argued that Value driven outperformance by this sector is unlikely, given the structural pressures preventing a sustainable earnings turnaround.  Last week’s MYR downgrade was a timely reminder that these structural pressures are not abating.  The company announced that sales in the first 2 weeks of December was 5% lower than the same 2-week period last yea...

Shane Lee
  • Shane Lee

Putting Aussie Earnings Under the Microscope

It's not too late to jump on board the Growth train. One of our key calls for 2018 is that Growth will again outperform Value (Aussie Equities 2018: In a Sweet Spot), despite Value reaching distressed levels that normally trigger out-performance.  We argue that sustainable stock rerating requires an earnings turnaround, but the PE de-rating is concentrated in areas under structural or cyclical pressures such as bricks and mortar retail, TLS and the interest rate sensitive sectors.  In absence ...

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