Aspirations Insights: November 2023

Welcome to the November edition of the Aspirations Wealth (AW) Insights. AW constantly monitors the investment markets and aims to keep our valued clients regularly informed and updated.

In this AW Insights edition we cover:

  • Interest rate increase 
  • Investment market returns 
  • GLP-1 weight loss drugs

RBA increases cash rate from 4.10% to 4.35% 

The pause in interest rates over the last four months came to an end on Melbourne Cup Day with the RBA raising rates by 0.25% (the 13th increase in 18 months). 

Inflation remains stubbornly high at around 5.5% and is still well above what the RBA targets (which is an inflation rate of between 2-3%).

Following comments from the RBA Governor about the risk of inflation staying higher for longer, the markets are now pricing in the possibility of a further rate hike in February 2024. Any expected cuts to interest rates have now been pushed back to late 2024.

So why is high inflation so much of a concern? These comments from the Governor sums up the situation well…“High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality.”

Investment market returns 

In stark contrast to the past three months, where shares were negative, November started with its’ best week of the year for shares (up 5%). November and December have historically been two of the better months for shares.

The US central bank held their interest rates steady earlier this month and didn’t raise rates. The markets saw this as a signal that the interest rate raising cycle in the US was near the peak which is positive for shares.

GLP-1 weight loss drug

Glucagon Like Peptide 1 (or more commonly called GLP-1) drugs were initially approved to treat diabetes. A side effect of the drug was it made people feel full and not want to eat. These drugs are now being hailed as a miracle treatment for weight loss. Hollywood celebrities promoted it and now countries are running out of it.

Popular GLP-1 drugs include Eli Lilly’s Mounjaro and Novo Nordisk’s Ozempic and Wegovy, the latter of which has been approved by the Food and Drug Administration for weight loss management.

The potential growth in this drug segment is phenomenal.

Currently only 40 million people in the U.S. have access to these medicines through their insurance plans (reimbursements) however there is an estimated 110 million people in the US living with obesity. According to the World Health Organization estimates, more than 750 million people in the world are living with obesity, which causes 5% of deaths globally.

Analysts estimate sales of these medicines will exceed $56 billion in 2030.

FYI: Eli Lilly is a share holding in your portfolio.

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Any advice contained in this insight/update is general advice only and does not take into consideration the reader’s personal circumstances. To avoid making a decision not appropriate to you, the content should not be relied upon or act as a substitute for receiving financial advice suitable to your circumstances. When considering a financial product please consider the Product Disclosure Statement. Aspirations Wealth Group is a Corporate Authorised Representative of Aspirations Private Wealth Pty Limited. ABN 57 622 182 076 – AFSL 503889.