Trump's tariff turmoil continues + Australia's most dangerous suburb revealed

Hi everyone,

What a week. Where to start? It was just full of craziness.

I can’t believe the leader of the free world can talk such crap. Most of it is either just plain wrong or illogical.

Trump’s sledging of our beef industry is a classic case:

• He says we export $29 billion of beef to the US - the facts are that it’s a little over $2 billion.

• He says we won’t allow any imports of US beef - the facts are that we do, but only from cows born in the US and not from Canada and Mexico which are susceptible to Mad Cow disease. This rule also applies to our exports to the US - the cows have to be born in Australia.

But that’s just one instance of him blatantly lying or being too stupid to understand.

Such stupidity on a range of issues has seen global financial markets crash on fears the US is headed for economic recession and the rest of the world could follow. But then yesterday, markets whipsawed back up over 10 per cent as Trump changed his mind again on tariffs.

Because the European Union decided to retaliate, Trump has changed his mind yet again and will only impose a 10 per cent tariff for the next 90 days on all trading partners except China, which will pay over 80 per cent.

Remember, a 10 per cent change in sharemarkets is the technical description of a market correction down or up. But yesterday saw that 10 per cent change in a single day ... not over weeks or months. Then it dropped back another 5 per cent this morning. Wild.

No one really knows what’s going to happen. It’s one of those times where average investors just sit on the sidelines and wait for things to settle down. I wrote about the world’s best investor Warren Buffett (he’s 94 years of age and seen everything when it comes to investing) a couple of weeks ago about how he had been selling into the sharemarket boom over the last year and is sitting on record amounts of cash, waiting for a correction. He has been a good investment mentor to follow.

Reserve Bank Governor Michele Bullock says the currency is an important cushion to offset the impact of the tariffs.

And, she’s right.

The Australian dollar has dropped below US59 cents during the week and is down almost 10 per cent in value over the last year. That means our exports are 10 per cent cheaper to US buyers and are basically offsetting the new 10 per cent tariff imposed.

If the economy takes a hit, and we do slow into an economic recession, the RBA can stimulate the economy by cutting interest rates.

In fact, financial markets are pricing in a cut in rates from the current 4.1 per cent to 2.8 per cent by the end of this calendar year. As I said, the economic jury is still out on whether we slide into recession, with markets being very cautious because Trump is so unpredictable.

Economists at NAB want the RBA to agree to a mega 0.5 per cent rate cut in May.

Share investors have certainly been shaken by this week’s market rollercoaster but remember, the market has been on a record-breaking run for the last couple of years. This latest pullback basically wipes out the last 12 months of gains in a 4-year cycle of gains.

And in terms of historic market crashes, it is significant but, so far, is less than the financial shocks from COVID, the dot com bubble, the GFC and inflation crisis.

Aussies shell-shocked by the financial chaos

According to Westpac / Melbourne Institute consumer sentiment, we’re all getting spooked by the financial chaos. The consumer sentiment index fell by 6 per cent in April to 90.1 points, which is well below the 100-point index level that separates pessimists from optimists.

Consumer sentiment had been recovering since mid-2024, boosted by income tax cuts and expected RBA rate cuts. The index is now back down towards levels from October 2024.

The survey was in the field between 31 March to 4 April and captured the on-hold rate decision by the RBA as well as the US tariff announcement on 3 April. Sentiment deteriorated during the week, with those surveyed before the tariff announcement recording an index read of 93.9 compared to 86.6 for those surveyed after the announcement.

A sharp fall in global share markets likely weighed on the index. There was a large fall in family finances versus a year ago ... down by 8.5 per cent. Those over the age of 45 saw sentiment fall the most compared to older age groups. Generally, this age bracket would be more exposed to equities.

The survey also suggests that consumers were less confident on the outlook for interest rates. Consumers were evenly split on whether interest rates would rise or fall, compared to a 60 per cent fall and 40 per cent lift at the last survey. The RBA’s relatively hawkish messaging at its April meeting likely played a role here.

Why investment mentors can be a huge help

I often wonder why more Australians don’t adopt an investment mentor. Many are lucky enough to have business, sporting or life skills mentors but most don’t even think of an investment mentor.

Someone who you admire and value their guidance and advice … not necessarily personally, but by observing or researching their behaviour. Understanding what makes them tick.

Any serious investor devours the writings of legendary US investor Warren Buffet and some even make the annual trek to the Berkshire Hathaway annual meeting in the US to hear the great man speak.

The world’s second-richest man, behind Microsoft’s Bill Gates, espouses many powerful but simple messages which have helped a legion of investors.

There are very few popular Australian investment gurus who we are able to follow as ordinary investors.

Years ago, I read a terrific book called Masters of the Market (by Anthony Hughes, Geoff Wilson and Matthew Kidman) which interviewed 13 of Australia’s best sharemarket investors. Those gurus who have built a reputation for consistent performance and the ability to sniff out the sharemarket winners of the future.

I think the book is now out of print, but there were a number of common themes which make a successful investor:

• Set a strategy: Understand what you want your portfolio to achieve and then develop a strategy to meet the criteria … whether it be income, growth, small companies, big caps, whatever.

• Discipline: Have the discipline to stick with the strategy no matter what the conditions. This doesn’t mean there isn’t room to refine a portfolio, but wholesale, knee-jerk reactions to a change in conditions are definitely out.

• Research, research and research: These professional investors work like Trojans to find out everything there is to know about a company, its management, market, competitors and future before they make an investment. It’s no surprise that the most successful investors work the hardest on understanding the stocks they’re buying.

• Passion for the business: Successful investors understand they are not investing in a stock, they are investing in a real company. They understand a company so well that once they invest, they are passionate about it.

• Take a considered approach: While they may be passionate about a stock, they aren’t blinkered or wearing rose-coloured glasses. Successful investors will admit mistakes, try to limit the financial damage and move on.

• Take profits: A professional investor will be happy to sell down some of their stake in a company to bank a profit. They never regret the decision if the share price keeps going up. They are happy with their profit and don’t begrudge the next investor making money.

• Buy straw hats in winter: Because they put the work into researching a company, the professional investor will be happy to buy into a stock which is out of favour with the rest of the market.

Spooked share investors appreciate the steadiness of property

The sharemarket certainly has not been for the faint-hearted over the last few weeks with almost daily wild gyrations based on the latest Trump comments. It has been unsettling.

Ray White’s chief economist, Nerida Conisbee, has used this current situation as a time to point out the very different behaviours of shares and property.

According to Nerida, housing presents several advantages over the sharemarket in the current environment:

• Greater price stability: Unlike shares which can lose significant value in a single trading session, property values tend to adjust more gradually over time, providing investors with a less volatile asset class and time to make considered decisions rather than panic-selling.

• Tangible asset security: Property is a real, physical asset that always has practical value, no matter what's happening in the economy. You can see and touch your investment, which provides security during uncertain economic times.

• Fundamental demand drivers: People always need somewhere to live, creating a baseline of demand that persists even during economic downturns. This essential human requirement underpins property value in ways that many sharemarket investments simply cannot match.

• Direct benefits from interest rate cuts: The anticipated RBA rate reductions will immediately benefit property investors through lower mortgage repayments, potentially improving cash flow and rental yields while freeing up capital for further investment.

• Supply constraints driving value: While tariffs may increase building material costs and potentially slow new construction, this supply constraint can actually support existing property values by limiting new housing stock entering the market. This dynamic can partially shield established properties from economic downturns, particularly in areas with strong population growth.

• Geographical diversification opportunities: Property investors can strategically select locations or property types with favourable local economic conditions, targeting areas less impacted by economic downturn.

• Inflation hedging capabilities: As a hard asset, property has historically performed well during inflationary periods. If tariffs drive price increases across consumer goods, property's inflation-hedging characteristics become increasingly valuable.

• Potential for both income and capital growth: Property offers dual return potential through both rental income and capital appreciation, providing multiple pathways to financial benefit even when economic conditions impact one aspect of returns.

The recent property boom in perspective

With the wild ride on global sharemarkets at the moment, it’s comforting to know property prices are still rising.

According to CoreLogic, national property values have skyrocketed 39.1 per cent over the past five years, adding the equivalent of around $230,000 to the national median value.

While this is impressive, would you believe this is far from the strongest five-year growth on record, with national values rising 75.5 per cent over the five years to March 1989 and a massive 79.7 per cent over the five years to December 2003 ... the series peak in the rolling five-year trend varies among the capitals.

In Sydney, and Melbourne, the peaks were recorded in the late ‘80s, with growth driven by falling interest rates and financial deregulation. By contrast, growth trends across the smaller capitals peaked in the mid 2000s, amid robust economic conditions following the Asian financial crisis and strong interstate migration.

The property boom in Australia’s most dangerous suburb

This caught my eye this week from real estate giant Ray White ... It's a bit of fun, because we do need to keep smiling throughout this financial turmoil.

Australia is the 19th most peaceful country in the world according to the 2024 Global Peace Index. Yet amid this national tranquility, we’ve discovered one suburb that nearly ranks among the world's top 10 most dangerous places to live, and it's not where you might expect.

This sleepy beachside town is riddled with so much crime, infidelity and "accidents" that even Tony Soprano would hesitate to live there.

The stats don’t lie:

• 133 'potentially avoidable deaths' were recorded over the last 37 years in a community of just 1,652 residents which translates to 218 deaths per 100,000 people, more than double Australia's 97 per 100,000.

• Homicides are the most common cause of death with 54 victims for every 100,000 persons, making residents 25 times more likely to be murdered here than elsewhere in Australia.

• It’s not enough to be on good terms with the folk; getting around is eight times more dangerous, with vehicular accidents claiming 37 lives per 100,000 compared to Australia's five per 100,000.

The numbers are in, the maths is done, and the shock put aside. Summer Bay, the coastal set for TV soap opera Home and Away, is Australia's most dangerous suburb. But could things be taking a turn?

In contrast to the late 90s to early 2000s, which was particularly deadly for the beachside community as deaths spiked to between 7-9 in a single year, the last decade has appeared more muted with just 2-3 deaths per year.

The local real estate market adds to the enigma. Property values in Summer Bay were slow moving in the early 2000s and even experienced a decline from 2007 to 2009, coinciding with this period of increased fatalities. Following this dip, prices stagnated until breaking the $1.5m threshold in 2015, after which they have more than doubled.

While this growth pattern largely mirrors Sydney's broader market trends, it's worth considering whether the rising property values correlate with the recent decrease in deaths.

The ‘convenience catch’ that’s creeping up on Australians

Australian drivers could be spending hundreds more on car insurance than they need to, according to new research by Compare the Market, in what experts have labelled a ‘convenience catch’.

Insurance quotes for a hypothetical Ford Ranger ute owner could reduce around $184 (10.21 per cent) on average, by simply commencing their cover in three weeks’ time compared to the same day.

Even purchasing a policy to start on the next day resulted in a $78 (4.33 per cent) reduction in quoted premiums on average, while commencing one week later saw an average quoted premium reduction of $130 (7.19 per cent) compared to starting the same day.

As for a Tesla Model Y driver, starting a new car insurance policy three weeks later could shave a sizeable $336 (9.73 per cent) off on the average quoted premium – helping offset the generally higher cost to insure an electric vehicle.

Similarly, an example Toyota Corolla Hybrid owner could claw back $75.83 (4.49 per cent) by planning ahead and commencing three weeks later from the quoting day.

Average car insurance quoted premiums by commencement date

The research is a wake-up call for Australian motorists who don’t plan ahead and purchase car insurance to start immediately; they are then often slugged with higher premiums.

This is because of ‘loadings’ put in place by some insurers to compensate for higher claims volumes.

For example, new car owners could be initially unfamiliar with driving their new vehicle and insurers may take this into account when pricing for a policy to commence immediately. Additionally, insurers may consider there is a greater chance that a vehicle is already damaged, if the policy is commencing immediately.

It pays to prepare but unfortunately lots of people are caught by these pricing policies unawares. Never wait until the last minute. The expert team at Compare the Market found substantial reductions in the tens – and in some cases, hundreds of dollars – on average by simply commencing a new car insurance policy the next day, a week or three weeks later.

This saving adds up to potentially cover – or at least offset – the cost of a full tank of fuel or battery recharge.

Shop around as soon as you are looking for a new or used vehicle to see whether you can afford the ownership costs, and once you know when you’re getting the keys, it pays to purchase in advance.

But don’t just pick the first insurer that appeals to you with their branding. Compare your options, consider whether a higher excess is appropriate for you, and if your circumstances permit, consider setting driver minimum age limits if the option is available.

These are all levers to ensure the power is in consumers’ hands, not the insurers’.

The world loves Bluey

I love Bluey as well. When the show first started, we interviewed the creators on Sunrise and they were such nice people. You can see where the series gets its charm, values and humanity from.

As a result, I’ve loved seeing my grandkids gravitate to the series and how they’ve been influenced in such a positive way by the different episode themes.

It restores your faith in human nature that good people can succeed, and audiences do gravitate to a show with such a strong set of values.

So look at this. Bluey is now the most streamed show in the world. This little Aussie show is taking the world by storm.