INVESTMENT UPDATES

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July 6, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • The S&P/ASX300 finished the financial year down nearly 8%, including dividends. Clear challenges ahead, as Coronavirus continues to threaten.
  • Second-quarter GDP figures are expected to be dire, with the impact on company profits very difficult to estimate.
  • Geopolitics: US presidential election scheduled for November. UK PM Boris Johnson is warned of the “hugely damaging” consequences of ending the EU separation in December without trade deals in place. In contrast, China passed security laws tightening control over Hong Kong with the first arrests under the new law already taking place. Finally, Putin extended his reign.
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June 29, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • The end of June heralds the end of the financial year in Australia and quarter-end rebalancing for the rest of the world, before the next earnings season begins later in July.
  • After the recent rally in stocks, signs of movement from stocks into bonds are visible. Whilst, Credit defaults are emerging as a serious risk.
  • Rising cases of Coronavirus continue to plague markets, with a noticeable uptick in volatility.
  • This week, we update our outlook based on last week’s news and data, including the latest IMF forecasts.
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June 22, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Tomorrow marks 3 months since the share market’s low. The market has had 30% gains, with only gold returns offering a clue that things might be amiss.
  • The Fed and BOE both added more stimulus last week, which supported equity markets. Multiples are now very stretched by historical standards.
  • Retail sales have been surprisingly strong recently, likely due to direct stimulus to households. Production misses suggest that there is significant downside risk to earnings.
  • The reacceleration of coronavirus cases in the US, removal of fiscal stimulus, high valuations, the presidential election and earnings risk all pose challenges ahead.

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June 15, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • The Fed Chair Jerome Powell’s warning shot on Wednesday painted a grim picture of a lengthy recovery rather than a bounce-back. The market responded negatively.
  • In Australia, a disconnect exists between relatively strong consumer confidence and weaker business surveys.
  • The market is now positioned (technically) in such a way that global shares could go either direction.
  • We remain very cautious in our outlook and conservative with our portfolios and asset allocation for this reason.
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June 8, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • The market rebound broadened last week, with bond yields now rising alongside equities.
  • The Nasdaq made a new all-time on Friday, credit spreads and volatility indices are trending down, typically being indicators of some normality returning.
  • Australia is now experiencing it’s first recession in 29 years. As part of broader stimulus the government announced the $25k HomeBuilder package, aimed at supporting the construction industry.
  • OPEC agreed to extend production cuts to allow for the storage surplus to be gradually exhausted. Oil prices are now back to nearly $40 per barrel.
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June 1, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Stock markets continue to move higher on massive monetary easing.
  • Geopolitical tensions are rising and the total number of coronavirus cases is reaccelerating.
  • Given the need for ongoing fiscal stimulus, the build-up in debt and solvency risks, sooner or later, the equity market must reflect lower levels of earnings.
  • The stock market has shrugged off poor data for several weeks, despite every indication that earnings will fall dramatically.
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