One analyst has a bleak prediction of what will happen to Australian retailers in the coming months and years.
An Australian analyst predicts that retailers are only in the early stages of a fall for years.
Aryan Norozi, an analyst at financial firm Barrenjoey, has analyzed the performance of major US companies, such as Best Buy and Macys, during the global financial crisis to predict what will happen in Australia in the coming years.
He established that there were three stages before recovery and while no two economic cycles are alike, Australia is “well ahead of stage 1 of the GFC playbook”.
Sharing your findings with The Australianthe final stage (below) was defined as that which occurred when the consensus reductions in earnings per share (EPS) became less severe.
“While Australia is well advanced in the‘ Stage 1 ’cycle, we believe it is too early to change our prudent sectoral view, as we are still in the early stages of the EPS downgrade cycle,” he said. Norozi in the post.
“We believe U.S. retail stock prices bottomed out once the second stemming from analysts’ EPS rebates turned positive (i.e., less deep cuts). However, the U.S. market it took about two years to find funds.
“With ASX retailers performing at around 26 per cent lower since the December 2021 peak, we believe Australia is now well ahead of‘ stage 1 ’.
“However, we believe we are still in the early stages of EPS sales with the ‘bad news’ likely to materialize over the next three to six months.”
The recession of the dark signs is “definitely” approaching.
Last month, senior investment adviser Adam Dawes said Australians “will really start to feel the bite” of the economic turmoil that will take over the world.
Talking to Sunrise he said the signs for the global economy were not good from previous rate hikes in the US, saying he believes “there will definitely be a recession in the US”.
“Since 1950, the U.S. has had 15 rate cycle hikes,” he said. “Of those, 11 have ended up in recession. They don’t have a great track record.”
However, he said Australia’s raw materials such as iron ore and gas, as well as its low unemployment, could isolate us from the pain felt in other nations.
“We have 400,000 vacancies here. That will provide a safety net, “he said.” But is wage price inflation or wage growth the key to keeping inflation under control.
“People have to look for a new job. The employer has to pay more. That is also more difficult. “