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After a disappointing start to life on the ASX boards on Tuesday, things are looking a lot more positive for the Felix Group Holdings Limited (ASX: FLX) share price today.

At one stage the construction-focused cloud-based enterprise software-as-a-service marketplace platform provider’s shares were up as much as 24% to 43.5 cents.

This compares to a decline of almost 3% for the Felix share price after completing its initial public offering (IPO) yesterday.

What is Felix?

Felix provides a cloud-based enterprise software-as-a-service marketplace platform for the commercial construction and related industries.

It connects contractors and their third-party vendors, automating and streamlining a range of critical procurement-related business processes.

According to its prospectus, the company launched its online Vendor Marketplace in 2013. Since then it has grown to become a leading marketplace for the Australian commercial construction sector, used by contractors to source vendors and vendors to source new business leads.

Felix’s enterprise customers include tier one Australian contractors and multinational commercial construction companies. Management also notes that the Felix platform is gaining traction in other sectors, with cornerstone customers secured in the government, utilities, mining and resources, and facilities management sectors.

As of the end of September, Felix’s enterprise customer base had grown to 39,398 vendors. Over 800 of these vendors are located in 42 countries outside Australia, Management advised that this has occurred organically as a result of contractors using Felix on international projects.

Due to the stickiness of the product, the company enjoys high retention rates for its recurring revenues.

Felix’s Chairman, Michael Bushby, explained: “Once adopted by Contractors, the Felix platform typically becomes a core part of and deeply embedded within a Contractor’s operations, making it difficult to replace. This has led to an approximate 99% retention rate for contracted ARR.”

In FY 2020 the company reported sales revenue of $3.7 million and a net loss of $7.2 million. This is still only a very small slice of a global total addressable market estimated to be worth $7.2 billion in 2020.

The Felix IPO.

On Tuesday the company’s shares landed on the ASX boards after raising $12 million at 36 cents per new share.

The proceeds from the IPO are going to be used to accelerate sector and geographic expansion, platform development, and the release of new modules.

With 131.6 million shares on issue, Felix’s market capitalisation now stands at approximately $57.2 million.

More reading

• With retail sales numbers rising, how are these 3 ASX shares performing?
• These small cap ASX shares have huge growth opportunities
• Why the Splitit (ASX:SPT) share price is climbing higher again
• Tyro (ASX:TYR) could face legal action for catastrophic outage
• Leading broker downgrades a2 Milk (ASX:A2M) shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Retail sales are a good indicator for how the economy is moving along. If people are spending money, that means that they must be making money. Retail sales also offer a tangible indication of consumer spending as a whole, which is an important part of any country’s gross domestic product (GDP).

November retail sales soared 7.1% month-to-month according to Monday’s retail trade report released by the Australian Bureau of Statistics (ABS). Year-over-year, retail sales posted a massive 13.3% gain.

Let’s take a look at some ASX retail players and see how they’ve been faring. 

Wesfarmers Ltd (ASX: WES)

With a market cap of $58.3 billion, Wesfarmers is the biggest player in the retail space on the ASX. The Wesfarmers share price has jumped higher than 17% over the past 12-month period. In fact, just last week the Wesfarmers share price hit a record all-time high. This is quite the contrast to the March price following the coronavirus lock downs. At its lowest point, the Wesfarmers share price sank to around $30. 

At the time of writing this, the company’s share price is $51.05.

Harvey Norman Holdings Limited (ASX: HVN)

Harvey Norman also tore into 2021 touching a multi-year high earlier this month. Back in November, the company announced that its aggregated sales revenue for the 1 July 2020 to 21 November 2020 period was up 28.2%. This nice spike includes gains experienced across stores operating in New Zealand, Slovenia, Croatia, Ireland, Northern Ireland, Singapore and Malaysia.

Notably, Australian franchise sales jumped 29.7% during this time period regardless of operating disruptions caused by COVID. Over the past month, the Harvey Norman share price has zoomed 9.43% higher. This is a testament to the numbers revealed in the ABS retail report, with the sale of electrical goods rocketing up 23.4%.

The Harvey Norman share price is presently trading around $5.17.

Kathmandu Holdings (ASX: KMD)

Unfortunately, not all retail shares have been able to make a flashy comeback following COVID’s initial thrashing last year. The Kathmandu share price has taken a 12-month beating of over 47%. After reaching a high of around $2.47 in February 2020, the company tumbled down to trade at 48 cents by the end of March 2020 and is still slowly clawing its way back up. 

The Kathmandu share price is $1.20 at the moment. According to the retail report, November clothing sales experienced a 27.4% gain month-to-month. Kathmandu shares bumped up 7.4% over the same timeframe.

More reading

• The Accent Group (ASX:AX1) share price just got hit by a broker downgrade
• Retail sales rose 7% in November to boost ASX retail shares
• 2 star ASX shares to buy for a retirement portfolio
• Capital returns galore from cashed-up ASX retail stocks
• 3 ASX dividend shares with yields above 4%

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At the small end of the Australian share market, there are a number of companies with the potential to grow materially in the future.

Two that investors might want to get better acquainted with are listed below. Here’s what you need to know about these small caps:

Pointerra Ltd (ASX: 3DP)

The first small cap share to look closer at is Pointerra. It is a growing technology company with a focus on the commercialisation of 3D geospatial data.

Pointerra’s technology solves the entrenched problems that are associated with digital asset management workflows and allows very large 3D datasets to be managed and analysed without the need for expensive and time-consuming high-performance computing.

The 3D data is processed and stored in the cloud by Pointerra for instant, on demand user access, anytime, anywhere, on any device. The company notes that this provides actionable 3D information to power digital asset management solutions across a range of sectors.

Demand has been growing for its services, leading to Pointerra reporting an 18% month on month increase in its annual contract value (ACV) to US$5.82 million in November. This is scratching at the surface of a market opportunity that management estimates is worth a staggering $500 billion.

Whispir Ltd (ASX: WSP)

Another small cap to watch is Whispir. It is a growing software-as-a-service communications workflow platform provider which automates communications between businesses and their workers and customers.

This allows users to improve their communications through automated workflows that ensure stakeholders receive accurate, timely, useful, and actionable insights.

Whispir was a very strong performer in FY 2020. For the 12 months ended 30 June 2020, it recorded a 25.5% increase in revenue to $39.1 million and ARR growth of 34% to $42.2 million. This strong form has continued in the first quarter of FY 2021, with its ARR lifting to $43.7 million.

As with Pointerra, this is still only a very small slice of its market opportunity. Management estimates that the Workflow Communications platform as a Service market could reach US$8 billion per year by 2024.

More reading

• The Pointerra (ASX:3DP) share price has skyrocketed 900% since July
• How to invest in ASX shares in a post-COVID world 
• This is the latest speculative ASX tech buy from Citigroup
• 2 exciting small cap ASX shares growing fast
• 2 more small cap ASX shares to watch in 2021

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointerra Limited. The Motley Fool Australia has recommended Pointerra Limited and Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Splitit Ltd (ASX: SPT) share price is pushing higher again on Wednesday.

In afternoon trade, the buy now pay later provider’s shares are up 1.5% to $1.40.

Why is the Splitit share price pushing higher?

Investors have been buying the company’s shares on Wednesday after it provided a bit more colour on its deal with Google in Japan.

In case you missed it, on Monday Splitit revealed that Google customers will be able to use instalment plans to make purchases from the Google Store in Japan. This is the first time this payment method has been an option to its customers.

In the coming weeks, customers purchasing Google’s new 5G phone, the Pixel 5, or Nest devices from the Google Store, will be able to split their payments into equal monthly instalments.

Splitit’s CEO, Brad Paterson, commented: “This is one of the strongest case studies yet of our unique offering. We are working with Google in its effort to provide the best possible experience for its customers, and the seamless integration of Splitit into Google Store Japan means they never have to leave the platform.”

What did Splitit announce today?

This morning the company clarified a few details, advising that its agreement with Google Japan is for an initial 12 month term.

This will then be automatically renewed unless either party gives notice to terminate at least 180 days before the expiry of the then-current term, or the agreement is otherwise terminated for cause or insolvency.

It also spoke about the impact the deal could have on the company and its brand image in the country.

Management explained: “As noted in the Announcement, at this point in time, the economic materiality of the Agreement with Google is unknown due to the variable nature of revenues which are dependent on customer uptake of specific products. Splitit, however, expects that partnering with Google in Japan may have a material impact on Splitit’s brand and business development prospects.”

The latter appears to have gone down well with investors today. They may be hoping that this leads to other deals in a country where an estimated 68% of adults have a credit card.

More reading

• Why PointsBet, Santos, Sayona, & Splitit shares are charging higher today
• Here’s why the Splitit (ASX:SPT) share price is surging 7% higher today
• ASX sector of the year: BNPL goes from strength to strength
• Here are 6 of the top performing ASX fintech shares of 2020
• Here’s how ASX buy now, pay later (BNPL) shares have performed in 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A law firm is investigating the potential of suing Tyro Payments Ltd (ASX: TYR) on behalf of its customers and shareholders.

The fintech is currently dealing with a technical outage that’s seen many of its small business customers unable to process credit and debit card payments.

The disruption is now into its 9th day, with some desperate clients defecting to alternative payment terminal suppliers like Commonwealth Bank of Australia (ASX: CBA) or Square Inc (NYSE: SQ). 

Legal firm Bannister Law on Wednesday announced it has started an investigation into potential claims that businesses can make for any losses suffered.

“Some businesses have been left with the woefully inadequate situation of accepting cash payments only, losing essential revenue. In this difficult time, they require every cent to survive and pay their overheads,” the firm stated.

Bannister Law urged any impacted Tyro clients to contact it with information.

Small business owners left with “bricked” Tyro terminals have expressed their anger on social media.

“We are going bankrupt yet all you can say [is] sorry for the inconvenience! I would like to know how you plan your business?” one customer said.

“We need compensation for all the losses!”

Tyro shareholders could also join legal action

Not only are its customers suffering, the existential crisis has sent the Tyro share price tumbling almost 13% since the saga started on Tuesday 5 January.

Bannister Law is thus also calling for any aggrieved shareholders to contact it to explore potential claims.

Late Wednesday morning, Tyro revealed that the fault lay within the software of some of its terminals supplied by a company named Worldline.

“This issue caused a subset of those terminals to lose connectivity with our network, meaning they could neither transact nor be updated remotely,” Tyro told its customers.

About 30% of Tyro customers have been left with dead terminals, which equates to 10,000 businesses.

With the fault unable to be fixed remotely, the fintech has started the labour-intensive process of physically collecting all the dud devices then returning them after repair.

“We are collecting approximately 2,000 terminals a day for repair and return via the fastest possible delivery method,” the company stated.

“Based on the quantity of terminals being collected daily, and the time to return fixed terminals, we expect to have the majority of impacted customers back to normal operations by the end of this week, with the remainder operational over the course of the following week.”

Not good times for the once high-flying fintech

The Motley Fool reported earlier this week some Tyro clients were having to deal with theft due to the payment terminal outage.

“My wife has just had her first refusal to pay from a customer ($190 cut/colour service) with [the] customer saying that it is the salon’s fault that she is unable to make payment,” said one person on Facebook.

“Fortunately we have CCTV footage, a name, a phone number and a possible place of work for this person. Recovery of this amount will further add to the time wasted by your service not working.”

Tyro was granted a banking licence back as a private company back in 2015, and had since built up to be the largest provider of payment terminals outside the major four banks. The company listed on the ASX in 2019.

Tyro also landed in hot water last month after it was found to have sent 150,000 illegal spam messages during the last 2 years.

More reading

• Loan deferrals down, big four ASX banks up?
• Here are the US shares ASX investors are buying in 2021 so far
• Why Altium, Clover, PolyNovo, & Tyro shares are dropping lower
• Angry Tyro (ASX:TYR) customers jump ship
• 3 top ASX share picks for 2021

Tony Yoo owns shares of Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The A2 Milk Company Ltd (ASX: A2M) share price has come under pressure again on Wednesday and is dropping lower.

In afternoon trade, the infant formula and fresh milk company’s shares are down 1.5% to $10.42.

This latest decline means the a2 Milk share price is now down 48% from its 52-week high.

Why is the a2 Milk share price under pressure?

The a2 Milk share price has fallen heavily since the release of a disappointing update last month.

That update revealed that the company has experienced a significant decline in sales in the important daigou channel. So much so, it was forced to downgrade both its first half and full year guidance.

In respect to the latter, a2 Milk now expects revenue to be in the range of NZ$1.4 billion to NZ$1.55 billion in FY 2021. The mid point of this guidance range is down 18% to 22.3% from its previous guidance range and down 15% from FY 2020’s revenue of NZ$1.73 billion

And with the company’s margins suffering because of this, the company was forced to downgrade its earnings guidance.

It now expects an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 26% to 29% for FY 2021. This is down from 31% previously.

Based on the mid point of both guidance ranges, this represents EBITDA of NZ$405.6 million in FY 2021. This would be down a sizeable 26.2% from FY 2020’s EBITDA of $549.7 million.

That’s old news, why are its shares down today?

Given that this guidance downgrade happened last month, investors may be wondering why its shares are underperforming today.

Well, today’s decline appears to be attributable to a bullish broker changing its mind on the stock.

According to a note out of Goldman Sachs, its analysts have downgraded a2 Milk’s shares to a neutral rating and cut the price target on them to $12.09.

The broker has downgraded its estimates to reflect the update and suspects that its shares could underperform until its earnings momentum begins to recover.

More reading

• Why the a2 Milk (ASX:A2M) share price is sinking lower again
• These are the 10 most shorted shares on the ASX
• Why a2 Milk, AVZ Minerals, Nanosonics, & Premier Investments are dropping lower
• Here’s why the A2 Milk (ASX:A2M) share price was hammered in 2020
• These are the 10 most shorted shares on the ASX

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Praemium Ltd (ASX: PPS) share price jumped up over 11% following this morning’s release of the company’s December 2020 quarterly update. 

Praemium offers a managed accounts platform that supports financial advisers, investment managers, institutions, accountants and product providers to administer their investments across more than 500,000 accounts.

Let’s take a closer look at today’s results.

Record breaking inflows boost the Praemium share price

The Praemium share price took off after the company announced $1.1 billion of inflows for the quarter ended December 2020. Compared to the December 2019 quarter, this is a whopping gain of 128%.

Praemium’s funds under administration (FUA) increased 10% during the quarter to reach $34.3 billion. FUA in Australia hit $16.4 billion, a 10% rise, while international FUA shot up 13% hitting $3.9 billion.

For the third year in a row, the International Adviser Awards in London awarded Praemium the winner of Best International Platform.

Strategic enhancements and company expansions

During the quarter, Praemium progressed a number of initiatives to enhance its Australian and International platforms as well as the company’s recently acquired Powerwrap platform. 

These enhancements include launching Qualis Capital, expanding API functionality, launching margin lending for international SMAs (separately managed accounts) and growing the company’s reporting capabilities. 

Some insights from the CEO

Commenting on Praemium’s impressive quarterly performance, CEO Michael Ohanessian had this to say:

We have ended 2020 on a high. Record inflows across the business have lifted us to over $34 billion in FUA, helped along by buoyant market conditions. A 69% year-on-year increase in global FUA is a fantastic result in a year of tremendous disruption.

The outstanding performance of the business in the December quarter is a testament to the efforts of the Praemium team through a very difficult year. The effort to strengthen our resilience, improve our efficiencies and enhance client support have placed us in a very strong position going into the new year.

Although it’s been a rocky road along the way, the Praemium share price has risen roughly 38% over the past six months. The company’s market capitalisation presently rings in at $343 million.

At the time of writing, the Praemium share price is up 11.48% to 68 cents.

More reading

• Why Oil Search, Praemium, Premier Investments, & Universal Store are storming higher

Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Praemium Limited. The Motley Fool Australia has recommended Praemium Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Optiscan Imaging Limited (ASX: OIL) share price is climbing higher today after a positive announcement on a product order.

At the time of writing, the Optiscan share price is up 4.3% higher to 12 cents. In comparison, the All Ordinaries Index (ASX: XAO) is currently down 0.1% at 6,932 points.

Quick take on OptiScan

Based in Australia, OptiScan develops endomicroscopic imaging technologies for medical markets.

Its confocal imaging technology can be used for both cancer screening and tumour margin detection in cancer surgery. The company’s technology enables real-time, in vivo imaging at the cellular level, providing a digital biopsy. This benefits patients by allowing medical professionals to monitor the early-stage of disease, and reduce waiting times for pathology results.

OptiScan is used by leading research institutions and hospitals in North America, Europe, Asia and Australia.

What did OptiScan announce?

OptiScan advised that it received orders worth $350,000 from its partner, Carl Zeiss Meditec AG (CZM), to support its Convivo system.

CZM is a European medical technology company that employs cutting edge solutions in diagnosing and treating patients. The Convivo system allows real-time feedback on tissue microstructure through digital pathology consultation, powered by OptiScan’s miniaturised point scanning confocal technology.

While OptiScan did not release further details on the contract, it noted that the latest order would expand its current revenue streams.

What did management say?

OptiScan CEO and chair Darren Lurie welcomed the progress, adding:

We are also very pleased that OptiScan continues to diversify its revenue streams and cash flows.

Receipts in the December 2020 quarter included $570k from the final payments for the 2 (two) FIVE2 (ViewnVivo) systems sold to China based customers, the BioMedTech Horizons Program grant to support the University of Melbourne’s Melbourne Dental School trial and payments from CZM.

OptiScan share price snapshot

The OptiScan share price has been tracking higher over the past 12 months, reaching as high as 16.5 cents in December.

After the company’s shares hit a low of 1.3 cents last March, this is a gain of 823% on the current price.

More reading

• What’s with the Legend Mining (ASX:LEG) share price today?
• The Neuren (ASX:NEU) share price is falling today despite positive news
• Why the Cann Group (ASX:CAN) share price is moving today
• Why the IMEXHS (ASX:IME) share price soared 6% higher today
• Why the DroneShield (ASX:DRO) share price is surging higher

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Altium Limited (ASX: ALU)

According to a note out of Credit Suisse, its analysts have retained their outperform rating but cut the price target on this electronic design software company’s shares to $35.00. This follows the release of Altium’s guidance for the first half of FY 2021. While the broker appears disappointed with its weaker than expected update, it remains positive on its long term growth trajectory. In addition to this, the broker notes that management is positive on its second half prospects and spoke about its significant deal pipeline. The Altium share price is trading at $28.51 on Wednesday.

Bapcor Ltd (ASX: BAP)

Analysts at Citi have retained their buy rating and $8.85 price target on this auto parts retailer’s shares. According to the note, the broker believes that Bapcor could benefit from a semiconductor shortage which is forcing car manufacturers to cut their production. It expects this to lead to stronger demand for used cars, which should support demand for auto parts. Citi is also a fan of the company due to its defensive qualities. The Bapcor share price is fetching $7.85 this afternoon.

CSL Limited (ASX: CSL)

A note out of UBS reveals that its analysts have retained their buy rating and $346.00 price target on this biotherapeutics giant’s shares. According to the note, the broker’s research shows that CSL has opened 21 new plasma collection centres since the start of the financial year. It believes this will help mitigate some of the plasma collection headwinds it is facing because of the pandemic. And while UBS still expects plasma collections to fall meaningfully, it remains positive on the company and appears to expect other areas of the business to pick up the slack. The CSL share price is trading at $271.51 today.

More reading

• ASX 200 down 0.3%: Altium sinks, Premier Investments rockets, energy shares rise
• Why Afterpay, Altium, Mesoblast, & PolyNovo shares are dropping lower
• Is the Altium (ASX: ALU) share price in the buy zone after its update?
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 drops lower

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Will the S&P/ASX 200 Index (ASX: XJO) see a share market bubble in 2021?

2020 was certainly a year of surprises. Many investors believed that the onset of the coronavirus pandemic would result in (at least) a year of severe haemorrhaging for ASX shares. That, of course, did take place back in March and April. But ASX shares quickly rebounded and ended up finishing the year essentially flat. That’s a deal I’m sure most investors would have taken with both hands back in March.

Over in the United States, the reaction was even more positive. The S&P 500 Index (INDEXSP: .INX) was up more than 16% for 2020 despite America being arguably one of the hardest-hit countries around the world. In the latter half of 2020, things turned exuberant across these 2 markets. We had a number of ‘winners’ from the pandemic booking massive share price moves.

Take buy now, pay later (BNPL) pioneer Afterpay Ltd (ASX: APT). Afterpay appreciated more than 300% in 2020, driven by the shunning of cash that the pandemic brought forward, as well as several other tailwinds. These include its partnership with Chinese e-commerce giant Tencent Holdings, as well as a series of stellar earnings reports.

Over in the US we saw similar, if not more potent, trends. Growth stocks like Tesla Inc (NASDAQ: TSLA) and Square Inc (NASDAQ: SQ) exploded in value, driven by a cocktail of both sentiment and results. We also saw frenzied speculation in both ‘vaccine stocks’ like Moderna Inc (NASDAQ: MRNA), and ‘pandemic losers’ like Hertz Global Holdings Inc and Carnival Corp (NYSE: CCL) in almost equal measure. IPOs like AirBnb Inc (NASDAQ: ABNB) saw stock prices double on initial trading.

2021: bubble or boom?

Such behaviour is often described as the early signs of a stock market bubble. So is that what 2021 might eventually bring us?

According to reporting in the Australian Financial Review (AFR), one investor is warning that we are in a bubble “that will eventually burst”. That investor is Roger Bootle, chair of Capital Economics. Mr Bootle quotes another legendary investor, Jeremy Grantham, who has recently warned investors of “bubble-like conditions”, calling the current state of the US markets “more overvalued that the eve of the great crash of 1929”.

Bootle agrees with Grantham that “while the economy has floundered, the share market has continued moving upwards so that it is now far higher than it was before the pandemic hit.”

Pop?

So when will this bubble burst? Well, that’s the $64 trillion question. Like many commentators, Bootle says that the emergence of inflation, which will result in interest rates finally rising above zero, is likely to be the catalyst. But Bootle points out that Grantham stated that “investors are playing chicken with interest rates”.

Even so, Bootle has hypothesised that central banks around the world might wait for inflation to pick up substantially before raising said rates:

I suppose that governments and central banks would initially try to take other measures to restrain inflation in the hope that they could avoid raising interest rates. But in the end this would not succeed. At some point in the future there lies not only an upsurge in inflation but also an increase in real interest rates, feeding through into bond yields. As and when this happens, it would undermine equity valuations.

He says that this initial stage will give asset prices (like ASX shares) an even bigger boost before the inevitable rise in rates brings things back to earth. That might or might not happen in 2021, but Bootle is pretty confident it’s a ‘when’, not an ‘if’.

Not such a Happy New Year from this commentator!

More reading

• The Accent Group (ASX:AX1) share price just got hit by a broker downgrade
• 5 reasons inflation might bite ASX investors in 2021
• Goldman Sachs says sell Premier Investments (ASX:PMV) shares into today’s big rally
• ASX 200 down 0.3%: Altium sinks, Premier Investments rockets, energy shares rise
• Big brokers still love the Afterpay (ASX:APT) share price

Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Square and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Carnival. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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