July 6, 2025 • 12 mins
It’s a new financial year, but investors aren’t exactly getting a clean slate. Despite some strong recent performances, like the S&P 500 hitting record highs and the Australian market notching its best 12-month run since COVID, global uncertainty is back in the spotlight.
In the words of global fund manager VanEck, the risks and “narrative for the next quarter is as clear as mud.”
Cameron McCormack, Senior Portfolio Manager at VanEck, talks to Adam Lang about VanEck’s latest ViewPoint report, that suggests we’re entering a period where traditional safe bets, like US equities and bonds, no longer offer the same rewards, whereas opportunities are emerging in places that have long been overlooked.
This is general information only, and you should seek financial advice before making investment decisions.
Find out more: https://fearandgreed.com.au
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to the Fear and Greet Business Interview. I'm Adam Lang.
It's a new financial year, but investors aren't exactly getting
a clean slate. Despite some strong recent performances like the
S and P five hundred hitting a record high and
the Australian market notching it's best twelve month run since COVID,
global uncertainty is certainly in the spotlight. In the words
(00:26):
of global fund manager Van k, the risks and narrative
for the next quarter is as clear as mud. That's
a great quote. Van X's latest Viewpoint report suggests we're
entering a period where traditional safe bets like US equities
and bonds no longer offer the same rewards, whereas opportunities
are emerging in places that have long been overlooked. Remember
(00:47):
that this is general information only, and you should seek
financial advice before and making any investment decisions for yourself.
Cameron McCormack is senior portfolio manager at van Nek and
I'm delighted to say he joins me this morning. Cameron,
welcome back to Fear and Greed.
Speaker 2 (01:01):
Thanks for having me.
Speaker 1 (01:02):
The very next statement saying that the market and the
outlook is as clear as mud why.
Speaker 2 (01:08):
It's a bit of an oxymoron, and I think if
you reflect on where we are in terms of the
global economy, we've got obviously the trade discussions on going
with the deadline coming up, obviously there's heightened g or
political risks, and if you think about the market rally
we're seen across the board in Australia, in the US,
you know, a lot of the indices are near or
(01:29):
at their all time highs. And if you look at valuations,
particularly in those segments, particularly the growth segments, they're looking
quite strapped, so they're from a you know, really balancing
up those injunctures leaves us in I guess, a tricky place.
Speaker 1 (01:43):
But yeah, those independent stay tariffs and high valuations. As
you say, amongst that, what do you think is the
biggest risk that investors might be underestimating right now?
Speaker 2 (01:53):
Yeah, I think there's a lot of market exuberance at
the moment particularly and that's reflected through obviously the rally
we're seen of late and valuate. I guess the key
risk to really consider it is certainly the ongoing tariff discussions,
and we know that obviously the goal of economy has
really got a baseline ten percent. Now there are obviously
trade deals of ben and ounces with the UK. It
(02:14):
looks like Europe's in a good place clearly, I guess
from what we're hearing so far, which is positive. But
having said that, those will have an impact, particularly on
the US in terms of obviously inflation, and we're starting
to see that when you look at some of the
underlying I manufacturing data, imports in particular crisis paid that
(02:34):
has picked up. So if you take that unfaced value,
I think that the back end of the year could
be a bit more turbulent than what the market seems
to suggest.
Speaker 1 (02:43):
The US is still the most powerful economy in the world.
A US equity is still worth the weight that they
carry in global portfolios.
Speaker 2 (02:51):
There's certainly an important part of a global diversified portfolio.
You know, they're roughly seventy percent of the misky world.
And if you look at obviously the last fifteen years
have been a cellar performer relative to Europe, even Australia,
and you know that really does come down to the
Magnificent seven. They're clearly, you know, pioneers in driving technology,
(03:14):
particularly across AI and cloud computing. Having said that, you know,
certainly China's catching up as well. But the key headline
risk when we think that the US economy is certainly
their their fiscal outlook. We know that the Beautiful Bill
has just been passed, which is quite promising, but having
said that, it's going to further extend their fiscal debt
(03:34):
relative to GDP, it's sitting at about one hundred percent and
it's projected to I guess increase further. Now we've started
to see if you look at the long end of
the curve, say quite fixated at the four percent range.
It did tick up about ten basis points last week,
so from that backdrop, you know, the market is trying
to weigh up. You know, while the US is in
quite a strong position at the moment, that fiscal backdrop
(03:57):
and certainly the medium term implications of that as well
in terms of servicing that debt.
Speaker 1 (04:01):
Cameron, do you think, amongst all those factors, is it
too early to say that US exceptionalism is heading towards
an end?
Speaker 2 (04:08):
Yeah? I think it is. It's an important, I guess
reflection point. You know, certainly we look at US equities
have been such a strong performer, you know of late
if you look at year to date performance on a
local currency basis, Europe, Australia and the US are almost
neck and neck. And if you think about, I guess
where we are in terms of you know, conjunctions, there's
a lot to weigh up when you think about I
(04:29):
guess positioning portfolios, particularly when we think about the forthcoming
twenty six fine entry year.
Speaker 1 (04:36):
Cameron Vanik is favoring emerging markets in fiscal twenty six.
Why A you're looking at that way? And what makes
some emerging economies more resilient than others right now?
Speaker 2 (04:47):
Yeah, So if you think about particularly when you look
at the US dollar year today, it has a weekend
quite a bit. We haven't seen those type of moves
for quite quite a period now. As the classes that
typically do uperform when USD weakness is emerging markets their
net credit exporters of the US dollar, and they're also
commodity exporters. So from a fiscal standpoint, if you look
(05:08):
at the US, which is running a government debt relative
to GDPAT of around one hundred percent, emerging markets are
quite considerably lower. So from a fiscal standpoint, they do
look better on a relative basis, and certainly when you
look at valuations for investors looking for I guess better
relative value. You know, emerging markets are trading at a
(05:29):
circular you know, thirty five percent to four percent discount
across a range of metrics compared to competitive developed markets.
So if we do start to see a potential rotation
into value again like we saw at the start of
the year, and you know, e merging markets have fared
quite well given the uncertainties around tariff's and.
Speaker 1 (05:48):
Like, stay with me, Cameron, we'll be back in a moment.
I'm speaking to Cameron McCormack from Van Neck. Cameron, the
Gold Rally. Do you think, I mean, it's come a
long way already in the last five years. Do you
think it's just getting started or do you think it'll
taper off?
Speaker 2 (06:09):
Yeah, it's an interesting point to reflect on. If you
look at the where the goal price is at the moment, Yeah,
it's three and three three hundred dollars. You know, it's
rarely quite substantially even year to date as well. Having
said that, there's a lot of structural tailwinds when you
think about the goal price. There's been quite a considerable
amount of central bank buying by particularly from emerging markets
(06:29):
again looking to diversify away. They've alliance on the US dollar,
and certainly with I guess Trump's presidency, he's looking to
well as a response in terms of the emerging markets,
they really trying to diversify it again their alliance on
the US dollar, and naturally gold is a way to
fill that vot. There's also the fiscal backdrop that we've
talked about in terms of the US economy. If that
(06:52):
does become more of a I guess a near term challenge,
that could certainly be a further tailwind for the goal price.
And certainly with ongoing tariff discussions as well and policy
uncertain around that, that's certainly a period where where the
goal price typically does outperform if we do start to
see inflation expectations pick up. We would have seen even
(07:15):
last week as well, the markets really dialed down its
expectations through another rate cut in the US that's really
effectively ruled out a rate cut in July. It very
different story obviously in Australia. But all these components are
quite positive for the goal price, even despite the rally
scene of late wow.
Speaker 1 (07:34):
So amongst the asset classes, do you see one that
you think is being totally overlooked.
Speaker 2 (07:39):
Yes, that's I guess probably another step down in terms
of the goal complex. There's certainly goal miners. Now they've
been another A guess Stella performer. They've actually out or
more than I guess doubled in terms of year to
date performance relative to goals. But if you look at
their valuations, they look quite attractive in terms of where
the current goal price is relative to the fair value
(08:00):
sitting circle around twenty percent discount. Now the other component
has a goal mineers as well, is that if you
look at they're really evolution over the last ten to
fifteen years, their balance sheets have improved quite substantially, so
they're really de leveraged, which is.
Speaker 1 (08:15):
Quite positive over that period of time correct.
Speaker 2 (08:18):
And their profit margins. So what I mean by this
is despite the goal price, you know, I guess, increasing
quite substantially, they're all in sustaining costs have leveled off
and that's created I guess, quite an increase in the
profit margins. And we haven't necessarily seen that reflected in
the performance of goal mine as a relative to the
(08:39):
goal price over seven the last few years. So there
could be further upside you if I guess more of
a value rotation does come back into play.
Speaker 1 (08:47):
So let's look at the Australian market in general. It's
had some good runs and compared to other markets it's
maybe seen to over outperform them. How long do you
think that good run can continue?
Speaker 2 (08:59):
Yeah, it's been an interesting sort of I guess complex
when you think about this Strai market. Obviously, the standout's
been CBA. It's been quite a remarkable run over the
last even twarld months and if you look at as
A as a weighting relative to the A six two hundred,
it's gone from around nine percent to around twelve percent. Now,
(09:19):
I think it's broadly considered to be true that I
guess CBA relative to the other banks is considered a
more of a I guess quality name. But having said that,
if you look at where valuations are of CVA in particular,
you know it's twenty nine times and that's almost double
its historical average. That's the same multiple as a Magnificence
Magnificent seven. Despite you know, the divergence obviously in earnings growth,
(09:43):
Magnificence seven have been coming out quite considerable strong, you know,
free cash flow margins tax CBA or while it has
I guess grown not certainly not to the same degree
as some of the you know, technology games in the US.
So taking that complex, it's quite an interesting gues juncture
were out the moment, and I think when you think
(10:03):
about the Australian market, obviously it's very concentrated across financials
and resource companies now because particularly on Orlin, on miners,
bitchp and Rio Tinto, they've been quite structurally out of
favor for the last few years. And what you typically
see is that when Australians bangs outperform, typically Australia's resources underperform.
(10:26):
So if it do you start to potentially see a
rotation back to resources that could be a potential headwind
for CBA particular. So certainly considering how concentrated you are
when you're investing in the AUS trail markets quite quite important.
Speaker 1 (10:41):
Got it. So on the other side, what sectors are
looking risky and investors might really question in the near term.
Speaker 2 (10:49):
Yeah, I think there's a lot of I guess headline
you risk consider obviously the medium term muplications of tariffs
being implemented and how that has a flow and effect
for the US economy, but also the Australian economy as well. Now,
generally speaking, the Australian COMTMI is considered to be more
insulated from the tick to tack in terms of how
(11:10):
that's unfolding. But having said that, it does have flow
and effects for the Eastrand market. Now, if you look
at hockets evaluations particularly, we know I've talked about CBA
in particular, it's looking quite stretched, particularly on a historical basis,
as that's certainly an area to watch quite closely. We
have started to see a bit of a rotation to
resources recently. Hasn't obviously been quite structural, but it's something
(11:33):
to watch quite closely. Another area is certainly consumer discussery
names in Australia, retail sales have started to weaken a
little bit, but it's important Having said that to be
I guess diverse fight as well across sectors as.
Speaker 1 (11:47):
Well makes sense. Cameron, thank you very much for talking
to Fear and Greed.
Speaker 2 (11:52):
Thank you.
Speaker 1 (11:52):
That was Kemeron McCormack, senior portfolio manager at van Eck.
This is the Fear and Greed Business Interview. Remember this
is general information only and you really should seek professional
advice before you make investments. Join us every morning for
the full episode of The and Greed. It's business news
you can use. I'm Adam lame. Enjoy your day here
Welcome to the Fear and Greet Business Interview. I'm Adam Lang.
It's a new financial year, but investors aren't exactly getting
a clean slate. Despite some strong recent performances like the
S and P five hundred hitting a record high and
the Australian market notching it's best twelve month run since COVID,
global uncertainty is certainly in the spotlight. In the words
(00:26):
of global fund manager Van k, the risks and narrative
for the next quarter is as clear as mud. That's
a great quote. Van X's latest Viewpoint report suggests we're
entering a period where traditional safe bets like US equities
and bonds no longer offer the same rewards, whereas opportunities
are emerging in places that have long been overlooked. Remember
(00:47):
that this is general information only, and you should seek
financial advice before and making any investment decisions for yourself.
Cameron McCormack is senior portfolio manager at van Nek and
I'm delighted to say he joins me this morning. Cameron,
welcome back to Fear and Greed.
Speaker 2 (01:01):
Thanks for having me.
Speaker 1 (01:02):
The very next statement saying that the market and the
outlook is as clear as mud why.
Speaker 2 (01:08):
It's a bit of an oxymoron, and I think if
you reflect on where we are in terms of the
global economy, we've got obviously the trade discussions on going
with the deadline coming up, obviously there's heightened g or
political risks, and if you think about the market rally
we're seen across the board in Australia, in the US,
you know, a lot of the indices are near or
(01:29):
at their all time highs. And if you look at valuations,
particularly in those segments, particularly the growth segments, they're looking
quite strapped, so they're from a you know, really balancing
up those injunctures leaves us in I guess, a tricky place.
Speaker 1 (01:43):
But yeah, those independent stay tariffs and high valuations. As
you say, amongst that, what do you think is the
biggest risk that investors might be underestimating right now?
Speaker 2 (01:53):
Yeah, I think there's a lot of market exuberance at
the moment particularly and that's reflected through obviously the rally
we're seen of late and valuate. I guess the key
risk to really consider it is certainly the ongoing tariff discussions,
and we know that obviously the goal of economy has
really got a baseline ten percent. Now there are obviously
trade deals of ben and ounces with the UK. It
(02:14):
looks like Europe's in a good place clearly, I guess
from what we're hearing so far, which is positive. But
having said that, those will have an impact, particularly on
the US in terms of obviously inflation, and we're starting
to see that when you look at some of the
underlying I manufacturing data, imports in particular crisis paid that
(02:34):
has picked up. So if you take that unfaced value,
I think that the back end of the year could
be a bit more turbulent than what the market seems
to suggest.
Speaker 1 (02:43):
The US is still the most powerful economy in the world.
A US equity is still worth the weight that they
carry in global portfolios.
Speaker 2 (02:51):
There's certainly an important part of a global diversified portfolio.
You know, they're roughly seventy percent of the misky world.
And if you look at obviously the last fifteen years
have been a cellar performer relative to Europe, even Australia,
and you know that really does come down to the
Magnificent seven. They're clearly, you know, pioneers in driving technology,
(03:14):
particularly across AI and cloud computing. Having said that, you know,
certainly China's catching up as well. But the key headline
risk when we think that the US economy is certainly
their their fiscal outlook. We know that the Beautiful Bill
has just been passed, which is quite promising, but having
said that, it's going to further extend their fiscal debt
(03:34):
relative to GDP, it's sitting at about one hundred percent and
it's projected to I guess increase further. Now we've started
to see if you look at the long end of
the curve, say quite fixated at the four percent range.
It did tick up about ten basis points last week,
so from that backdrop, you know, the market is trying
to weigh up. You know, while the US is in
quite a strong position at the moment, that fiscal backdrop
(03:57):
and certainly the medium term implications of that as well
in terms of servicing that debt.
Speaker 1 (04:01):
Cameron, do you think, amongst all those factors, is it
too early to say that US exceptionalism is heading towards
an end?
Speaker 2 (04:08):
Yeah? I think it is. It's an important, I guess
reflection point. You know, certainly we look at US equities
have been such a strong performer, you know of late
if you look at year to date performance on a
local currency basis, Europe, Australia and the US are almost
neck and neck. And if you think about, I guess
where we are in terms of you know, conjunctions, there's
a lot to weigh up when you think about I
(04:29):
guess positioning portfolios, particularly when we think about the forthcoming
twenty six fine entry year.
Speaker 1 (04:36):
Cameron Vanik is favoring emerging markets in fiscal twenty six.
Why A you're looking at that way? And what makes
some emerging economies more resilient than others right now?
Speaker 2 (04:47):
Yeah, So if you think about particularly when you look
at the US dollar year today, it has a weekend
quite a bit. We haven't seen those type of moves
for quite quite a period now. As the classes that
typically do uperform when USD weakness is emerging markets their
net credit exporters of the US dollar, and they're also
commodity exporters. So from a fiscal standpoint, if you look
(05:08):
at the US, which is running a government debt relative
to GDPAT of around one hundred percent, emerging markets are
quite considerably lower. So from a fiscal standpoint, they do
look better on a relative basis, and certainly when you
look at valuations for investors looking for I guess better
relative value. You know, emerging markets are trading at a
(05:29):
circular you know, thirty five percent to four percent discount
across a range of metrics compared to competitive developed markets.
So if we do start to see a potential rotation
into value again like we saw at the start of
the year, and you know, e merging markets have fared
quite well given the uncertainties around tariff's and.
Speaker 1 (05:48):
Like, stay with me, Cameron, we'll be back in a moment.
I'm speaking to Cameron McCormack from Van Neck. Cameron, the
Gold Rally. Do you think, I mean, it's come a
long way already in the last five years. Do you
think it's just getting started or do you think it'll
taper off?
Speaker 2 (06:09):
Yeah, it's an interesting point to reflect on. If you
look at the where the goal price is at the moment, Yeah,
it's three and three three hundred dollars. You know, it's
rarely quite substantially even year to date as well. Having
said that, there's a lot of structural tailwinds when you
think about the goal price. There's been quite a considerable
amount of central bank buying by particularly from emerging markets
(06:29):
again looking to diversify away. They've alliance on the US dollar,
and certainly with I guess Trump's presidency, he's looking to
well as a response in terms of the emerging markets,
they really trying to diversify it again their alliance on
the US dollar, and naturally gold is a way to
fill that vot. There's also the fiscal backdrop that we've
talked about in terms of the US economy. If that
(06:52):
does become more of a I guess a near term challenge,
that could certainly be a further tailwind for the goal price.
And certainly with ongoing tariff discussions as well and policy
uncertain around that, that's certainly a period where where the
goal price typically does outperform if we do start to
see inflation expectations pick up. We would have seen even
(07:15):
last week as well, the markets really dialed down its
expectations through another rate cut in the US that's really
effectively ruled out a rate cut in July. It very
different story obviously in Australia. But all these components are
quite positive for the goal price, even despite the rally
scene of late wow.
Speaker 1 (07:34):
So amongst the asset classes, do you see one that
you think is being totally overlooked.
Speaker 2 (07:39):
Yes, that's I guess probably another step down in terms
of the goal complex. There's certainly goal miners. Now they've
been another A guess Stella performer. They've actually out or
more than I guess doubled in terms of year to
date performance relative to goals. But if you look at
their valuations, they look quite attractive in terms of where
the current goal price is relative to the fair value
(08:00):
sitting circle around twenty percent discount. Now the other component
has a goal mineers as well, is that if you
look at they're really evolution over the last ten to
fifteen years, their balance sheets have improved quite substantially, so
they're really de leveraged, which is.
Speaker 1 (08:15):
Quite positive over that period of time correct.
Speaker 2 (08:18):
And their profit margins. So what I mean by this
is despite the goal price, you know, I guess, increasing
quite substantially, they're all in sustaining costs have leveled off
and that's created I guess, quite an increase in the
profit margins. And we haven't necessarily seen that reflected in
the performance of goal mine as a relative to the
(08:39):
goal price over seven the last few years. So there
could be further upside you if I guess more of
a value rotation does come back into play.
Speaker 1 (08:47):
So let's look at the Australian market in general. It's
had some good runs and compared to other markets it's
maybe seen to over outperform them. How long do you
think that good run can continue?
Speaker 2 (08:59):
Yeah, it's been an interesting sort of I guess complex
when you think about this Strai market. Obviously, the standout's
been CBA. It's been quite a remarkable run over the
last even twarld months and if you look at as
A as a weighting relative to the A six two hundred,
it's gone from around nine percent to around twelve percent. Now,
(09:19):
I think it's broadly considered to be true that I
guess CBA relative to the other banks is considered a
more of a I guess quality name. But having said that,
if you look at where valuations are of CVA in particular,
you know it's twenty nine times and that's almost double
its historical average. That's the same multiple as a Magnificence
Magnificent seven. Despite you know, the divergence obviously in earnings growth,
(09:43):
Magnificence seven have been coming out quite considerable strong, you know,
free cash flow margins tax CBA or while it has
I guess grown not certainly not to the same degree
as some of the you know, technology games in the US.
So taking that complex, it's quite an interesting gues juncture
were out the moment, and I think when you think
(10:03):
about the Australian market, obviously it's very concentrated across financials
and resource companies now because particularly on Orlin, on miners,
bitchp and Rio Tinto, they've been quite structurally out of
favor for the last few years. And what you typically
see is that when Australians bangs outperform, typically Australia's resources underperform.
(10:26):
So if it do you start to potentially see a
rotation back to resources that could be a potential headwind
for CBA particular. So certainly considering how concentrated you are
when you're investing in the AUS trail markets quite quite important.
Speaker 1 (10:41):
Got it. So on the other side, what sectors are
looking risky and investors might really question in the near term.
Speaker 2 (10:49):
Yeah, I think there's a lot of I guess headline
you risk consider obviously the medium term muplications of tariffs
being implemented and how that has a flow and effect
for the US economy, but also the Australian economy as well. Now,
generally speaking, the Australian COMTMI is considered to be more
insulated from the tick to tack in terms of how
(11:10):
that's unfolding. But having said that, it does have flow
and effects for the Eastrand market. Now, if you look
at hockets evaluations particularly, we know I've talked about CBA
in particular, it's looking quite stretched, particularly on a historical basis,
as that's certainly an area to watch quite closely. We
have started to see a bit of a rotation to
resources recently. Hasn't obviously been quite structural, but it's something
(11:33):
to watch quite closely. Another area is certainly consumer discussery
names in Australia, retail sales have started to weaken a
little bit, but it's important Having said that to be
I guess diverse fight as well across sectors as.
Speaker 1 (11:47):
Well makes sense. Cameron, thank you very much for talking
to Fear and Greed.
Speaker 2 (11:52):
Thank you.
Speaker 1 (11:52):
That was Kemeron McCormack, senior portfolio manager at van Eck.
This is the Fear and Greed Business Interview. Remember this
is general information only and you really should seek professional
advice before you make investments. Join us every morning for
the full episode of The and Greed. It's business news
you can use. I'm Adam lame. Enjoy your day here
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