Shaw and Partners Executive Breakfast Wrap-Up

Jack Gregson recently joined fellow Perth executives, including Bellavista Resources Mick Wilson, for a market briefing with Shaw and Partners CIO Martin Crabb. Key takeaways:

1️⃣ Market at a Crossroads
2024 was about navigating inflation and recession risks. In 2025, investors must separate signal from noise, focusing on structural growth over short-term volatility. While global population growth slows, the US remains a bright spot, with its top 10 stocks projecting double-digit EPS growth.

2️⃣ Interest Rate Cuts
Central banks are shifting gears as inflation peaks. Expected rate cuts (but maybe don’t bet the house on it!):
📉 US Fed: 4.32% → 3.53% (mid-2026)
📉 RBA: 4.08% → 3.44% (mid-2026)
Financial conditions are easing (finally..), with banks loosening credit and looking to lend more at lower rates.
⚡ Takeaway: Rate cuts will support equities over cash.

3️⃣ US Growth Dominance
Tech leads the charge, with NVIDIA (+86.6% EPS growth), Microsoft (+31.9%), and Amazon (+40.3%) driving gains. Central banks aim to keep economies in the “Goldilocks Zone” with projected rate cuts.

4️⃣ Valuations Appear Stretched
Stock valuations remain elevated:
📈 S&P 500 PE Ratio: 27x (vs. 19.5 avg)
📈 ASX 200 PE Ratio: 21x (vs. 15.9 avg)
Some argue that markets have advanced too far ahead of earnings. The recent market pullback, driven by Trump-related political risks, may have eased this concern slightly, but investors should remain selective.
⚡ Takeaway: Focus on quality growth companies over speculative momentum.

5️⃣ NVIDIA vs ASX
NVIDIA’s market cap (~US$2.7T) now surpasses the entire ASX (~US$1.95T). A single AI-driven chipmaker is worth more than every listed Australian company combined.
⚡ Takeaway: US tech dominance underscores the need for global exposure.

6️⃣ Geopolitics
Volatility fuels political shifts – 9 of the last 10 US elections flipped power. With Trump’s return, expect higher China tariffs, deregulation, and manufacturing incentives.
⚡ Takeaway: US-China trade tensions could escalate, while domestic US industries may benefit from Trump’s policies (perhaps at the detriment of its neighbours and the rest of the world?)

💡 Final Thoughts
🔹 Rate cuts = equity upside
🔹 AI & US tech remain dominant
🔹 Valuations appear stretched, requiring careful stock selection
🔹 Geopolitical risks demand strategic allocation

Thanks to Dorab Postmaster & Robbie Gibbs for having us!