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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
early birds
post Posted: Aug 7 2020, 04:12 AM
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It’s been a soggy two-months for the ASX200. After what was a sharp-recovery out of bear-market territory between March and June, the index has broadly traded sideways, as market participants tackle a soft macroeconomic backdrop, and growing concerns about the COVID-19 pandemic.

After initial success in suppressing the coronavirus, recent outbreaks in Victoria, and fears of potential outbreaks in other states, has cast doubt over Australia’s economic recovery, and the earnings outlook for ASX-listed companies.

The dynamic has set-up a high-impact, and highly uncertain reporting period for the ASX. A dive in earnings growth is tipped, with current estimates suggesting a contraction in EPS for the financial year in the realms of 15-20 per cent, which will be coupled with a marked reduction in dividends

On top of that, the future isn’t necessarily looking particularly clear, either. Corporates have provided little guidance up to this point about future earnings, with the lack of clarity feeding into what remains an underwhelming outlook for corporate profits.

Such low expectations for this reporting period, along with heightening uncertainty about the future, is keeping the buyers to the sidelines, as market participants await stronger and more definitive signals about market fundamentals.

As a result, technically speaking, the ASX200 looks to be in consolidation mode. The RSI is neutral with a reading only just above 50. The MACD is revealing momentum is neither skewed to the upside nor downside. And the 20, 50 and 200-day EMA’s are converging, with price only marginally above all three averages.

Given this backdrop, the logic of trading the ASX200 in this earnings season is simple: better earnings and sharper forward guidance ought to stoke upside in the index, while the opposite ought to weigh the risks to the downside.

The top and the bottom of the ASX200’s recent range become the most-significant levels to watch this reporting period. The top of the range and price-resistance sits at around 6220 currently, while the bottom of the range sits at around 5630.

A break above or below would send a clear signal about the market’s directional bias. A topside break would open-up potentially significant upside, with the next level of resistance to be found around 6530. A downside break would open-up a sell-off towards the 5500-level.

Overall, with price consolidating, and the index remaining in a broader uptrend, the risks for the ASX200 look to be skewed slightly to the upside. However, downside risks ought to be carefully considered and managed, given the particular uncertainty surrounding this earnings season.

===============================

DYOR as always.



 
mullokintyre
post Posted: Jul 22 2020, 08:18 AM
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In Reply To: nipper's post @ Jul 22 2020, 06:53 AM

Think I would prefer the oldsmobile.
Or maybe a 70 Chevelle.
Mick



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sent from my Olivetti Typewriter.
 
nipper
post Posted: Jul 22 2020, 06:53 AM
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In Reply To: mullokintyre's post @ Jul 21 2020, 07:18 PM

Spare parts?


Like Oldsmobiles, they last forever. And if you need something, just 3D print it?



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: Jul 21 2020, 07:18 PM
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The largest maker of small ICE motors, Briggs and Stratton has filed for Chapter 11 bankruptcy.
From Market Watch

QUOTE
To facilitate the sale process and address its debt obligations, the Company has filed petitions for a court-supervised voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company has also obtained $677.5 million in DIP financing, with $265 million committed by KPS and the remaining $412.5 from the Company's existing group of ABL lenders. Following court approval, the DIP facility will ensure that the Company has sufficient liquidity to continue normal operations and to meet its financial obligations during the Chapter 11 process, including the timely payment of employee wages and health benefits, continued servicing of customer orders and shipments, and other obligations.

This process will allow the Company to ensure the viability of its business while providing sufficient liquidity to fully support operations through the closing of the transaction. Briggs & Stratton believes this process will benefit its employees, customers, channel partners, and suppliers, and best positions the Company for long-term success. This filing does not include any of Briggs & Stratton's international subsidiaries. - Briggs & Stratton's press release states


Yikes, just after I broke the throttle linkage on the ride on mower.
Hope the spare parts are still available.

Mick



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sent from my Olivetti Typewriter.
 
nipper
post Posted: Jul 19 2020, 02:18 PM
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In Reply To: mullokintyre's post @ Jul 19 2020, 01:43 PM

"In preparing for battle I have always found that plans are useless, but planning is indispensable".

Dwight D. Eisenhower



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: Jul 19 2020, 01:43 PM
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In Reply To: nipper's post @ Jul 19 2020, 12:44 PM

The world is littered with people, organisations and governments making predictions about the future.
The vast majority oae wrong by massive margins.
Have a look at the number of entities and individuals who predicted it would blow over quickly. Wrong.
Have a look at all the entities who suggested that 500,000 would die in the UK. Wrong.
Have a look at the US CDC worst case scenario, 1.7 million deaths. wrong
Have a look at the Treasury forecasts for Australia's economy any time over the last 10 years. Hopelessly wrong.
Have a look at the ATO foreceasts for how many individuals would need Job Keeper/Seeker? Hopelessly overstated.
Have a look at the BOMS forecast for the autumn winter period that they put out in December last year that there would be no rain in Vic till late April? So far off the mark it was laughable.
I could go on, but ya get the gist.
If you make a prediction and it comes true, its is most likely luck.
Mick






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sent from my Olivetti Typewriter.

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nipper
post Posted: Jul 19 2020, 12:44 PM
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In Reply To: alonso's post @ Jul 19 2020, 12:31 PM

I ask everyone I can what their take is, just to get a wide range of views. And of course someone's position can be heavily influenced by their circumstances. Age, socio economic, debt levels, whether there is a secure job backing up.. ...

And of course we have to break things down to key components, being Health/Medical, Economic and Markets. They are related, intertwined but also disparate.

And of course, for me, I play in the markets and feel there is always opportunity. Somewhere. Especially as the rate of change, the transition, is throwing up myriad opportunities as well as causing disruption and destruction.

And the mood? Bewilderment, seat of the pants responses, battening down the hatches mainly. That has got to be bad for the (micro and macro) economy with lasting impacts that will take a long time to surmount



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: rlane  
 
alonso
post Posted: Jul 19 2020, 12:31 PM
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In Reply To: nipper's post @ Jul 19 2020, 10:14 AM

I'm assuming, without any evidence of course and in the face of dire warnings from the doomsayer scientists, that this will all go away in the near
future, given active efforts at containment in most places, and in the confident hope of a lasting vaccine.
Then we will see economies return with ever increasing momentum to more normal levels.
Ever the optimist.



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"The optimist proclaims that we live in the best of all possible worlds. The pessimist fears this is true"

"What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom." Adam Smith

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nipper
post Posted: Jul 19 2020, 10:14 AM
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From Lacy Hunt and Van Hoisington’s latest quarterly letter:

Four economic considerations suggest that years will pass before the economy returns to its prior cyclical 2019 peak performance. These four influences on future economic growth will mean that an extended period of low inflation or deflation will be concurrent with high unemployment rates and sub-par economic performance.

First, with over 90% of the world’s economies contracting, the present global recession has no precedent in terms of synchronization. Therefore, no region or country is available to support or offset contracting economies, nor lead a powerful sustained expansion.

Second, a major slump in world trade volume is taking place. This means that one of the historical contributions to advancing global economic performance will be in the highly atypical position of detracting from economic advance as continued disagreements arise over trade barriers and competitive advantages.

Third, additional debt incurred by all countries, and many private entities, to mitigate the worst consequences of the pandemic, while humane, politically popular and in many cases essential, has moved debt to GDP ratios to uncharted territory. This insures that a persistent misallocation of resources will be reinforced, constraining growth as productive resources needed for sustained growth will be unavailable.

Fourth, 2020 global per capita GDP is in the process of registering one of the largest yearly declines in the last century and a half and the largest decline since 1945. The lasting destruction of wealth and income will take time to repair



..... so, how are we getting out of this mess?



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
rlane
post Posted: Jul 16 2020, 02:16 PM
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QUOTE
Billionaires look to exit equities after turning quick profit


https://www.reuters.com/article/us-ubs-grou...m_medium=Social

 
 


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