INVESTMENT UPDATES

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May 03, 2021

WEEKLY INVESTMENT UPDATE

Key points:

  • The US will be the likely driver of global growth this year, with strong spending from both the government and the consumer. The Federal Reserve remains very supportive and more attuned to the risks of high levels of bond issuance than it has previously revealed. This week we expect to see another drop in unemployment.

  • The RBA will meet on Tuesday. No change to policy is expected after last week’s softer CPI figures relieved some of the upward pressure on rate expectations.

  • Investors are also likely to keep an eye on the worsening coronavirus crisis in India, where shocking numbers could yet prompt some risk aversion in global markets.

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April 26, 2021

WEEKLY INVESTMENT UPDATE

Key points:

  • Last week the European (soccer) Super League came and went, the ECB and PBOC left policy unchanged, and iron ore hit a ten-year high.

  • The steady current of positive activity and earnings results goes on. But the prospect of higher US taxes hit equity markets last week. Rising virus cases also depressed investor sentiment.

  • The FOMC (US Federal Open Market Committee) and Bank of Japan will meet this week, with no change to policy expected.

  • US and European Q1 GDP (1st Quarter Gross Domestic Product) and Australian CPI figures will also be published as the global earnings reporting season continues.

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April 19, 2021

WEEKLY INVESTMENT UPDATE

Key Points:

  • Strong data and earnings lifted equity markets again last week.

  • The S&P/ASX200 is trading above 7,000 for the first time since February last year. The S&P500 also closed at another record high on Friday after a solid start to the earnings season.

  • The puzzle for analysts is to understand why bond funds are attracting higher inflows than stocks. Perhaps it’s due to rising geopolitical tensions, perhaps to delays in vaccinations, or just taking risk off the table as earnings season gets underway? Either way, the consolidation in yields doesn’t seem likely to last.

  • With money laundering rumours, Bitcoin fell almost 20% from it’s high during last week just shy of $65,000 on Wednesday following the Coinbase IPO.

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April 12, 2021

WEEKLY INVESTMENT UPDATE

Key points:

  • Capital markets are still reflecting relatively optimistic virus and growth scenarios despite rising cases in several countries. Both the US and Australian vaccine programs met with setbacks last week, which could push parts of the recovery further into the future, especially in Australia.

  • The RBA left monetary policy (and interest rates) unchanged but opened a door to macro-prudential intervention in the housing market.

  • The US has launched credible plans to undo some of the 2017 corporate tax cuts by calling for a global minimum tax on corporations. The initiative seems to have a reasonable chance of success which, together with higher interest rates, may require a re-pricing of US stocks. In the meantime, quarterly earnings kick off this week, including the major American banks.

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April 6, 2021

WEEKLY INVESTMENT UPDATE

Key points:

  • The economic recovery is accelerating in the US, and Joe Biden has just announced more plans to spend trillions of dollars on infrastructure upgrades.

  • As the strength of the recovery is leading to more risk-taking, the unintended consequences of stimulative policy are beginning to attract more attention.

  • Riskier assets had another good week leading up to Easter, despite new lockdowns in Brisbane, France, Italy, and Ontario. The Suez Canal was unblocked, and China saw a sharp rise in the official non-manufacturing data. But surging US data and new spending plans were the main focus. The S&P500 closed at a record high, above 4,000 for the first time, while rising yields meant that bonds capped their worst quarter since 1980.

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March 29, 2021

WEEKLY INVESTMENT UPDATE

Key points:

  • All asset classes advanced last week as a combination of quarterly portfolio re-balancing, tame inflation data and European lock downs eased pressure on bond yields.  However, it seems very likely that the upward pressure will resume before long.

  • NSW was hit by floods that led to thousands being evacuated and insurance claims piling up.

  • The Suez Canal remains blocked by a ship wedged in place.

  • The Turkish Lira fell more than 12% after last weekend’s sudden removal of the central bank head.

  • Doubts were once again cast over the reliability of Astra Zeneca’s vaccine trial results, just as the TGA approved the vaccine for use in Australia.

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