Risks build as central banks push on a string

Original article by David Rogers
The Australian – Page: 27 : 26-Jun-19

There is a growing view that further monetary policy easing will do little to stimulate economic growth. Expectations of further interest rate cuts have seen Australia’s All Ordinaries Index gain 18 per cent so far in 2019. Matthew Brooks of Macquarie Group notes that the Australian sharemarket rose by an average of 12 per cent after the first interest rate cut in eight of the 11 easing cycles since 1971, while the S&P 500 was up at least 10 per cent a year. The other three easing cycles coincided with recessions.

CORPORATES
STANDARD AND POOR’S ASX ALL ORDINARIES INDEX, STANDARD AND POOR’S 500 INDEX, MACQUARIE GROUP LIMITED – ASX MQG, BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, UNITED STATES. FEDERAL RESERVE BOARD, MORGAN STANLEY AUSTRALIA LIMITED

After all the carnage, it may soon be time to buy

Original article by David Rogers
The Australian – Page: 18 : 8-Jan-19

The S&P/ASX 200’s recent rally has seen its 12-month forward price-to-earnings ratio return to its long-term average following a sharp sell-down in the December quarter. Meanwhile, the S&P 500 is trading at around eight per cent below its long-term average. The near-term outlook for equities may depend on a range of factors, including trade negotiations between the US and China.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, UNITED STATES. FEDERAL RESERVE BOARD, NIKKEI 225 INDEX, BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, MSCI ALL COUNTRY WORLD INDEX

No New Year’s cheer for iron ore: analysts

Original article by Timothy Moore
The Australian Financial Review – Page: 22 : 3-Dec-18

Data from Fastmarkets MB shows that the spot price for iron ore with 62 per cent iron content was trading at $US65.95 a tonne at the end of November, having peaked at a month-high of $US77.2/tonne on 9 November. Analysts from Liberum Capital are bearish about the outlook for iron ore, forecasting that falling Chinese steel mill profits will reduce demand for higher-grade ore. Liberum has also changed its recommendation on shares in Rio Tinto, BHP Group and Anglo American to "sell".

CORPORATES
FASTMARKETS MB, LIBERUM CAPITAL LIMITED, RIO TINTO LIMITED – ASX RIO, BHP GROUP LIMITED – ASX BHP, ANGLO AMERICAN PLC, CAPITAL ECONOMICS LIMITED, FORTESCUE METALS GROUP LIMITED – ASX FMG, VALE SA, MACQUARIE CAPITAL PTY LTD, WEALTH WITHIN PTY LTD

‘We’re in the eighth inning’: Oaktree chief wary of bull run

Original article by David Rogers
The Australian – Page: 17 & 28 : 23-Oct-18

Oaktree Capital Management’s co-founder Howard Marks says current financial market conditions favour a defensive investment style. Marks warns that although the bull market may continue for some time yet, the chances of a bear market are increasing. He describes quantitative easing in the wake of the global financial crisis as a "massive experiment" that succeeded, but he says the impact of quantitative tightening is uncertain.

CORPORATES
OAKTREE CAPITAL MANAGEMENT LLC, CITICORP, STANDARD AND POOR’S 500 INDEX, SHANGHAI COMPOSITE INDEX, MSCI EMERGING MARKETS INDEX

We’re at euphoric stage of cycle: Eley Griffiths

Original article by Joyce Moullakis
The Australian Financial Review – Page: 27 : 2-Oct-18

Eley Griffiths Group’s co-founder Ben Griffiths is upbeat about the outlook for equities. He believes that global sharemarkets are at what Sir John Templeton dubbed the "euphoric" stage of the current bull market. Eley Griffiths boasts around $1.8bn worth of funds under management, and both its small companies fund and its emerging companies fund outperformed the S&P/ASX Small Ordinaries Accumulation Index in 2017-18.

CORPORATES
ELEY GRIFFITHS GROUP PTY LTD, ELEY GRIFFITHS GROUP SMALL COMPANIES FUND, ELEY GRIFFITHS GROUP EMERGING COMPANIES FUND, STANDARD AND POOR’S ASX SMALL ORDINARIES ACCUMULATION INDEX, AFTERPAY TOUCH GROUP LIMITED – ASX APT, PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED – ASX PNI, SIMS METAL MANAGEMENT LIMITED – ASX SGM, AUSTRALIS OIL AND GAS LIMITED – ASX ATS, BLUE SKY ALTERNATIVE INVESTMENTS LIMITED – ASX BLA, NETWEALTH GROUP LIMITED – ASX NWL

Surging bond yields to test stock bulls’ mettle

Original article by David Rogers
The Australian – Page: 30 : 18-May-18

The yield on US 10-year government bonds peaked at a new seven-year high of 3.12 per cent in Asian trading on 17 May. Given the low level of sharemarket volatility at present, there is the potential for a correction, as was the case in February when the bond yield rose to 2.9 per cent. A growing number of market watchers are advising investors to retain overweight positions with regard to equities in the current environment, while Ric Deverell of Macquarie Group expects the 10-year bond yield to rise toward four per cent in the medium-term.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, STANDARD AND POOR’S 500 INDEX, UNITED STATES. FEDERAL RESERVE BOARD, MORGAN STANLEY AND COMPANY INCORPORATED, STANDARD AND POOR’S ASX 200 INDEX, TELSTRA CORPORATION LIMITED – ASX TLS, TREASURY WINE ESTATES LIMITED – ASX TWE, BRAMBLES LIMITED – ASX BXB, CSL LIMITED – ASX CSL, BLOOMBERG LP, EUROPEAN CENTRAL BANK

Cracks emerging in the case for being bullish

Original article by David Rogers
The Australian – Page: 27 : 22-Mar-18

The potential for a trade war has been identified as the biggest risk to the global bull market in a survey of fund managers by Bank of America Merrill Lynch. The prospect of a trade war has topped the list of "tail risks" for the first time since January 2017, in the wake of the tariff policies of US President Donald Trump. A sharp rise in inflation and a slowdown in global economic growth were the other key risks identified by the survey of 176 fund managers. However, 58 per cent of respondents expect growth of at least 10 per cent in global earnings per share over the next 12 months.

CORPORATES
BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, FEDERAL RESERVE BANK OF ATLANTA, FACEBOOK INCORPORATED, APPLE INCORPORATED, AMAZON.COM INCORPORATED, NETFLIX INCORPORATED, BAIDU.COM INCORPORATED, ALIBABA GROUP HOLDING LIMITED, TENCENT HOLDINGS LIMITED

Bear market might be just around corner

Original article by Patrick Commins
The Australian Financial Review – Page: 33 : 13-Mar-18

Australia’s S&P/ASX 200 has gained 90 per cent since reaching a low in March 2009. US markets have been the driving force behind the nine-year global bull market. However, Morgan Stanley has identified a number of factors that could be an indicator of a looming bear market. These include strong gains in the last 12 months of a bull market, outperformance by emerging market equities and a widening of credit spreads. Meanwhile, John Higgins of Capital Economics expects the S&P 500 to fall to 2,300 points by the end of 2019.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, MORGAN STANLEY AND COMPANY INCORPORATED, CAPITAL ECONOMICS LIMITED, UNITED STATES. FEDERAL RESERVE BOARD, HANG SENG INDEX, MARTIN CURRIE INVESTMENT MANAGEMENT LIMITED

Cohn exit triggers shockwaves

Original article by David Rogers
The Australian – Page: 17 & 27 : 8-Mar-18

Sharemarkets in the Asia-Pacific region fell on 7 March in response to the resignation of President Donald Trump’s chief economic adviser, Gary Cohn, and futures pricing suggests further bearishness on Wall Street. Cohn was an advocate of free trade, and analysts say his resignation will heighten concerns about the potential for a trade war. Reserve Bank of Australia governor Philip Lowe says there could be major ramifications for the global economy if Trump were to broaden his tariff policy beyond steel and aluminium.

CORPORATES
UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, RESERVE BANK OF AUSTRALIA, IG MARKETS LIMITED, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. DEPT OF COMMERCE, SAXO BANK A/S, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, VISY INDUSTRIES AUSTRALIA PTY LTD, QANTAS AIRWAYS LIMITED – ASX QAN, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, DOW JONES INDUSTRIAL AVERAGE INDEX, STANDARD AND POOR’S ASX 200 INDEX, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, BLUESCOPE STEEL LIMITED – ASX BSL, NIKKEI 225 INDEX, SHANGHAI COMPOSITE INDEX, HANG SENG INDEX, KOSPI INDEX, LONDON METAL EXCHANGE LIMITED

Share indexes tipped to test recent lows

Original article by David Rogers
The Australian – Page: 27 : 15-Feb-18

Bank of America Merrill Lynch’s Bull & Bear Indicator suggests that global equities face a further pullback and could fall to around the level seen during the recent sharemarket rout. Meanwhile, BAML’s latest survey of fund managers shows that respondents’ average cash balance has risen by 0.3 per cent to 4.7 per cent, while equity allocation has fallen by 12 per cent and bond allocation has fallen to the lowest level in two decades.

CORPORATES
BANK OF AMERICA NA, MERRILL LYNCH AND COMPANY INCORPORATED, MSCI ALL COUNTRY WORLD INDEX, UNITED STATES. FEDERAL RESERVE BOARD, WESTPAC BANKING CORPORATION – ASX WBC