INVESTMENT UPDATES

2020 Social Distancing

April 20, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Many countries, including Australia, are planning on a relaxation of social-distancing measures as signs are emerging of flattening the curve. This is driving the positive sentiment and momentum in markets.

  • Equity markets continued their rebound last week and seemed to ignore the dismal economic data and warnings.

  • The International Monetary Fund (IMF) updated its growth forecasts last week. As expected, the estimates show a bleak 2020, followed by a rebound in 2021, although a return to peak 2019 levels would be after 2021.

  • The Oil price was back below $20, despite the planned production cuts (OPEC), fuelling record low bowser prices for a bit longer.

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2020 Govt Stimulus

April 14, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • The oil price rose last week after OPEC agreed to cut production by nearly 12%, which should support oil and energy sector equities from their recent lows.

  • Despite the short week, equity markets added 5% heading into the long weekend, markets indicate that they are still pricing a wholly unrealistic V-shaped recovery.

  • Stimulus continues to arrive, with NSW announcing $440m of property tax relief (residential and commercial).

  • Equity markets rallied before the Federal Reserve announced an additional $2.3tr package to support the flow of credit. Credit and Gold are far more likely to be supported than equities, which appear increasingly stretched as corporate earnings downgrades accelerate.

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April 6, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  •  Last week's equity market recovery was halted by the more sombre tone of the US Administration as cases there surpass all other countries.

  •  The Australian government's JobKeeper package along with similar policy from other countries will help to aid a faster recovery. 

  •  Equity markets seem far too optimistic and, with the threat of dividends being stopped, we anticipate further pain for some share prices, including banks.

  •  Property is likely to suffer more than originally anticipated, as landlords and tenants grapple with working out the new arrangements themselves.

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March 30, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Policymakers continue to put in place measures to offset at least some of the downturn. Britain, Canada, and Denmark put in place a wage guarantee, with Canberra considering the same.

  • Westpac and NAB Economists forecast unemployment in Australia will rise to 11% – 12%.

  • The share market reflects an anticipated one-off hit to earnings of around 20%. 

  • Comparing the current economic shock to the 2008 financial crisis, there are some positives that can be drawn. 

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March 23, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Last week saw the biggest falls in listed Property and Infrastructure as the market tore up earnings expectations for some. 

  • Bargain hunters moved in on markets and some were punished quickly as things went south again.

  • Unprecedented times call for unprecedented measures: The first major restrictions on movement and social interaction are now being implemented...

  • Capital markets remain volatile and dislocated, despite widespread central bank intervention. 

  • The Australian approach so far centres on providing some financial support for businesses and helping to “bridge the gap”...

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March 16, 2020

WEEKLY INVESTMENT UPDATE

Key points:

  • Our outlook has changed: It is no longer possible to contain the COVID-19 pandemic and European and US national strategies have evolved into mitigating the consequences. Australia is likely to be next.

  • This implies that a “V-shaped” recovery is no longer the most likely scenario. It is more likely that the global economy will experience a “sudden stop”...

  • Avoiding a protracted depression even greater than the GFC will likely require extreme monetary support, and fiscal spending on a massive scale.

  • In Australia, the inflated housing market leaves the economy particularly vulnerable. 

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