Welcome to the Mclowd Community Newsletter

Nordea Bank, Scandinavia’s biggest lender, last month stunned investors in Denmark’s US$495 billion mortgage market when it amended its prospectus to make way for negative coupons on bonds with maturities up to 30 years.
And now 10-year mortgage bonds go negative, AFR August 8th


You can imagine the reaction had I suggested in the Mclowd Newsletter some years ago that the coupon rate on mortgage-backed securities would turn negative (and not just negative, but negative out to a term of 10 years).

The reaction would have been similar if I had predicted that:

  • The wholesale cost of electricity in the National Electricity Market would fall to zero at increasingly regular intervals, or
  • Rupert Murdoch would cut the price of Foxtel by 70%, or
  • All bank transactional data would become freely available, or
  • The price of SMSF accounting software would fall by 70-90%

In each case the statement would eventually turn out to be true, but the initial response would have been scepticism bordering on incredulity.

A World of Negative Interest Rates

Despite more than a decade of central bankers telling us that they will do ‘whatever it takes’ to reflate their respective economies, we now live in a world of negative interest rates.

From German Bunds to junk, bonds worth A$24 trillion now generate a negative yield (the entire Bund universe is now negative out to 2050).

If this was a cyclical phenomenon, it might carry less weight, but what you are witnessing is not a cyclical phenomenon.

Negative interest rates are a proxy for the deflation to which I have been referring for many years.

They are also the macroeconomic equivalent of that red warning light on the dashboard of your car. (While in the short term it may be possible to keep driving, there will always be that niggling doubt as to the severity of the underlying problem).

Accounting Software Update

Version 8.3.0 went live last week, including the all important upgrade to year end processing.

Specific benefits include:

  • All of the workflow can now be managed from a single screen
  • Users can more easily accept calculated values and default percentage for market revaluation and MWA where applicable
  • Users can enter the ECPI values and select the deductions apportionment method, with automatic income tax calculation

Like all current WIP, these improvements are targeted at Simple Funds being managed on incumbent platforms (and particularly those where licensing conditions have recently been amended to the detriment of practitioners and their clients).

The following additional improvements to the suspense allocations screen will go live over the next few weeks:

  • Bulk coding
  • Pension splitting
  • Contribution splitting
  • Allocation rules

Further details will be provided in the Practitioner and Trustee Updates next week.

Open Banking

The legislation governing the open banking regime has now been passed by Federal Parliament, with commencement scheduled for February 2020.

Diffusion of this data will unleash a wave of deflation across the fintech / regtech landscape, while underpinning the growth of the Community for many years to come.

All at Zero Marginal Cost.


Central banks around the world are now moving back to an easing bias, driving interest rates further south, while looking to print yet more trillions.

SMSF investors and their advisors should exercise extreme caution in engaging with this monetary policy narrative, for the simple reason that Phillip Lowe and his peers have no more understanding of our Zero Marginal Cost destination than our energy regulators.

(If they did, they would not have spent the last 20 years encouraging the accumulation of toxic levels of debt throughout the global economy).

Their ill-informed efforts are now turning the asset management industry into an extreme sport.

Extreme as to risk, not return.


Ashley Porter

Managing Director
Mclowd Pty Ltd