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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
nipper
post Posted: Yesterday, 10:10 AM
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another piece looking at the situation

Why the outlook for shares is positive
QUOTE
Investor sentiment has changed noticeably in recent weeks. The fear and panic that took hold in the early days of the COVID-19 pandemic, which caused average share prices to collapse by a third or more, has eased.

At the time of writing, US shares have regained two-thirds of what they lost in five weeks to March 23 and our market a bit over half.

Investors have been buying shares in companies able to grow earnings during the pandemic (Amazon, Microsoft and Netflix have moved to new heights) and, very recently, there's been a recovery of interest in selected companies paying good dividends and in many cyclical businesses with depressed share prices.

Is this global rally in shares sustainable or a false dawn?

Certainly, there's a lot of gloomy commentary. The sharp slump in economic activity brought on by the pandemic is still widely seen by many investors and commentators as the start of a deep and long-lasting recession in the global economy. And we are frequently told that, when recovery comes, it won't be V-shaped, but L-shaped or like a wide U.

My view is shares were oversold in the panic. Their recent rebound may have run a little too far. But there are quality shares worth buying — even more so in coming market sell-offs.

The huge sell-off of shares in February and March resulted from the early shock and fears as COVID-19 spread quickly.

The pandemic and the lockdowns introduced to contain it were, correctly, seen as extremely serious, and would impose huge human and economic costs, including causing the quickest and steepest decline in global GDP ever documented.

Early on, some medical research groups produced frightening estimates of the numbers of people who would be affected by the virus. The influential researchers at the Imperial College in London pointed to the prospect of 2.2 million deaths in the US, 500,000 in the UK and 50,000 in Australia. Last week, those forecasts were being questioned by many: the number of deaths in the three countries stood at 101,000, 37,460 and 103 respectively.

The scale of budgetary and monetary actions put in place by major economies since March is much larger than was allowed for.

The US and Japan have legislated for budget deficits in excess of 10 per cent of their GDP; and all central banks, including China's, are championing low interest rates and wide-ranging innovative support to liquidity and lending. A few forecasters have recently dampened their extremely pessimistic views on the depth or duration of the global slump, and that's helped to lift sentiment in investment markets.

Global GDP declined in the March quarter and in the June quarter will contract by the biggest percentage ever recorded. However, provided the pandemic continues to weaken its grip in the major countries, global growth should be positive in the second half of this year and again in 2021 — though uneven by industry and so modest that analysts will probably need to further reduce their forecasts for aggregate profits.

Around the world, investors will be keeping close watch on the number of people infected by the virus, particularly in the US and Europe. If those numbers keep trending down, attention will focus on the impact of the relaxation of lockdown rules and job creation. It's a two-sided coin: prospects for global growth and market sentiment would sour quickly if infections from the virus in the US and Europe moved higher; but continuing declines in those numbers would lift confidence in the global outlook, particularly if a vaccine is discovered.

Given the scale of the COVID-19 disruption, unemployment is likely to remain high for some time; and global growth could be dampened by the worsened tensions between China and Western countries.

Treasury's costly error

Australia has done well in containing the spread of COVID-19. We have taken big steps to support businesses and many people on low incomes. But the enormous error (of $60bn, or 3 per cent of GDP) by Treasury and the tax office in the costing of the JobKeeper program has dented the credibility of the policy package.

Investors need anticipate very weak numbers on the performance of the economy in the June quarter — at first in the high-frequency statistics on jobs and consumer spending, and later in GDP numbers released in September.

But economic conditions should rebound soon after mid-year, as the effects of the fiscal boost come through. Indeed, the "October cliff" could turn out to be less of a problem than is feared, given pressures on the government to extend its fiscal largesse in the October budget.

All this suggests the medium-term outlook for shares is broadly positive, even if the current rebound is challenged by statistics on the tough times of the June quarter. And recent expectations of average house prices in Australia falling 15-30 per cent also seem too pessimistic.

Don Stammer



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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

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early birds
post Posted: Jun 2 2020, 09:26 AM
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https://www.marketwatch.com/story/here-are-...1?mod=home-page


interesting
Domino pizza is in the "over bought" bunch from GS . i for one always disagree that Domino is a tech Co. but after covid-19. seems markets have it the right. the share price move at least!!



 
nipper
post Posted: Jun 1 2020, 01:45 PM
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One of the biggest shake-ups in the influential global indices ­operated by MSCI in years has triggered a flurry of share moves on the ASX as fund managers in Australia and offshore scramble to readjust their portfolio.

The index shake-up is being blamed for the massive volume of shares changing hands on Friday with nearly 10 per cent of companies including Boral and Incitec Pivot changing hands in the last few minutes of trade. The changes, which has seen buy now pay later company Afterpay and gold miners Evolution Mining and Northern Star emerge as the biggest winners, is expected to be felt over coming days.

The index changes, which occur twice a year, took effect from the close of trade on Friday.

The MSCI “is one of the most followed indexes in the world and billions of dollars follows what they do”, said Bell Potter director of institutional sales Richard Coppleson. He noted that with over $US1.6 trillion benchmarked on MSCI indexes by global fund managers, small changes could often have a significant effect.


Under the changes outlined by MSCI last month, three stocks were added to the key MSCI Australia index and eight were removed.

Afterpay, Evolution and Northern Star were added to the main country index. Key removals were Alumina, Bendigo and Adelaide Bank, Boral, Challenger, Flight Centre, Harvey Norman, Incitec Pivot and Worley



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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

Said 'Thanks' for this post: early birds  
 
nipper
post Posted: May 21 2020, 06:55 AM
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Peter Schiff had a similar argument recently in Kitco

https://www.kitco.com/news/video/show/Kitco...ow%3DKitco-NEWS



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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: May 20 2020, 09:51 PM
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One of my Fave commentator/bloggers, Chuck Butler, has come out with a startling and sober prediction.
from his daily Pfennig newsletter on Monday .....

QUOTE
Well…. This is going to be tough for me to spit out this morning, so please do not have a knee-jerk reaction, and fire me off an email. Please read what I’m saying and see where I’m going here… That’s all I ask…
Global debt is at levels that it should never have reached in a million years, but it’s there, and there’s no paying back, in the traditional sense of paying off a debt…. So, how are the countries around the world (except Russia, who’s debt IS manageable) going to deal with this ever-growing debt? I’ve thought long and hard about this folks, and in my heart of hearts, I know what the answer is, and I’ve fought saying it, for so long, because, well, I just didn’t want to believe it could happen….

And it’s not just because of the virus that this is the way it is… At the end of 2019, Global Debt stood at $255 Trillion… Once the dust settles on all the debt accumulated during the economic shutdowns, the Global debt will be greater than $300 Trillion… With no ability to pay it down….

A month or so, I talked about the IMF’s SDR’s (special Drawing Rights), and how they used by Central Banks, and not suitable for individual use…. I almost went down the rabbit hole then that I’m ready to go down now….

I truly feel that with all this debt, and Central Banks going nuts with one alphabet plan after another, that they’ve all backed themselves into a corner…

To me, it seems, the only way out of this debt mess is for countries, including the U.S. to take haircuts, in other words, default on some of their debt…. What this will do, is have every trader in the book, out to sell the currency of a country taking the haircut, and buy the currency of a country that hasn’t announced they would be taking a haircut. But soon, they will all have announced it, and at that point is when I believe currencies, as we know them today, will no longer be…

I thought I would be long gone by the time this all unfolded, for it’s been in the cards for years. I never would have thought that during my time on earth, that would see these kinds of debt levels… I always thought that somewhere, someone with their head screwed on right, would figure out that we kept accumulating debt, that a default had to come eventually… I always figured, Japan was first, then Greece, then the U.S. But instead, what I view happening is there would be a meeting of finance ministers where the coordinated announcement was made….

Things have gotten so bad overseas that they’re selling their Treasury bond reserves. Here was a news headline from late last week: “Foreign holdings of Treasuries slumped in March by the most this century, falling $256.6 billion to $6.81 trillion. This likely stemmed from nations liquidating US debt positions to defend their currencies amid huge capital outflows.”

That just means the Fed will have to up the ante on the amount of Treasuries they buy, since foreigners aren’t buying them like they used to. The Fed’s Balance Sheet will begin to show signs of stress, and the whole shootin’ match (the financial system) would feel the weight of the world on it, and that would be just another reason to call off the ballgame….

And the next downward move in stocks, which is coming, the Central Banks will run to the rescue, and those Countries that already don’t have negative rates, will be reaching in their quivers, and finding no arrows, and will then have to go negative with interest rates…. I laughed until I cried last week, when Jerome Powell, the Fed Chairman, denied that negative rates are being discussed…. Or that he thinks there will be a need for them…. To me, that’s akin to when the General Manager or Owner gives a vote a confidence to the manager…. We all know what comes next, right?

The going negative with interest rates is going to set off a chain of events that will change the world and the global financial systems…. Here’s the playbook on how I believe with will all play out…. The Fed goes negative with rates, and banks begin to charge account holders for holding their balances. Being the hotblooded Americans that we are, we won’t sit still while the bank charges us for holding our money, and soon there will be runs on banks for withdrawal of cash holdings…

Well, seeing this, the Gov’t won’t stand for the banks being run on for cash withdrawals, and a plan that’s probably already in the works. And that plan will be to pass a bill that prohibits cash in the hands of individuals…

And the next day, when you check your bank account, the dollars will have been replace with digits…. Or a Gov’t crypto-currency, but dollars will cease to exist…. And other Countries will follow suit…. Thus eliminating the currencies of the world that we know of…

The IMF will increase distribution of their SDR’s, and banks around the world will revert to using SDR’s to settle trade balances… SDR's that have a different mix, because the currencies that used to make up SDR's will be gone.... Probably to a very large component of Gold...

You see, I’ve through this through, and I see no other alternative…. The good news in all of this is that Gold will be soaring and probably gapping higher each day by $100 or so….

So, with no currencies in the world to talk about…. An end of the Pfennig is near… But…. At the request of the Aden Sisters, I will continue to write about economies, mainly the U.S., Gold, The Fed and other things that come to my mind, and the letter will be renamed…. And it might not be done ever day…. But that’s all secondary, folks…. The main thing is that your last civil right will have been taken from you in the blink of an eye, and now banks can charge you for everything under the sun and moon….

I know that for over 25 years, I’ve told people that the way to diversify their investment portfolios is with currencies and metals… But the situation has changed, and I will also have to change…. But Gold will still be viable, and like I said will most likely be gapping higher each and every day, and the price manipulators will have been sent home with HUGE losses, and never to be seen again!

What should you do if you own currencies? Well, nothing…. You could sell them and buy Gold/ Silver, but to do nothing would be like when you owned Spanish Pesetas, or German D-Marks, etc. They were all converted to a different form at a set conversion price… Your current euro balance will be converted to whatever replaces the dollar, and that’s that….

12 years ago, a fellow by the name of Aaron Stevenson, interviewed to work in St. Louis on the EverBank World Markets Desk, that I was the President of, He asked me the about the future of the currency business, and I told him, “ Eventually, Aaron, the currencies will all go away, but I hope that happens years from now when I’m retired”…. Well, I'm retired now.... I'm just saying...

And with all this debt accumulation how’s it going to get paid? More money printing all over the world, thus debasing each and every currency that has debt as its partner. Central Banks, like the Fed are going to keep printing currency to pay for Sovereign bonds (treasuries in the case of the Fed) and soon, with all this debt accumulation, no one will be willing to buy our debt, or Germany’s debt, or Japan’s debt, you see where I’m going with this? All that currency printing, and still the only entity to step forward to buy bonds will be the Central Bank…. And when each Central Bank’s balance sheet begins to overstay its welcome, that’s when things will change folks….

So, I’m just not in the mood to keep talking about diversification with currencies… There’s only one or two countries that makes sense any longer, rubles and Singapore dollars. And their markets are not big enough to weather this storm that all these other countries have stirred up… Gold & Silver will still be great diversification tools…. Silver has industrial uses (solar panels, wiring etc. ) and Gold has intrinsic values. Both are a store of wealth, and should be held as such….

Just keep in mind this quote from Winston Churchill... "When the facts change, I change my mind. What do you do?" Yes, the countries have done this to their currencies, and so I'm changing horses in the middle of the stream... I don't see a future for the currencies, including the dollar...


Scary stuff, but I guess its hard to argue with what he is suggesting has and is happening so far.
Not sure about the negative interest rates, Americans with guns are not going to tolerate the feds charging the rednecks to keep their money in the bank.
I presume the preppers will have long abandoned money and bought assets like guns and ammo.
Bit depressing really.
Mick




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mullokintyre
post Posted: May 20 2020, 09:45 PM
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In Reply To: nipper's post @ May 20 2020, 02:30 PM

The results are already in.
From St Louis Today

QUOTE
“Even as retailers begin reopening in much of the country, a dark cloud hangs over much of the industry.
Simply put, the U.S. already had far more stores than it needed, and the coronavirus pandemic accelerated a shift toward online shopping. Rather than don a facemask to go to the mall, many consumers will open a web browser instead.

Add in the heavy debt load carried by many national chains, often the result of buyouts by private equity firms, and you have a recipe for a retail apocalypse.

“When we come out of this you are going to have fewer players, fewer square feet of retail space, and the strong are going to gain market share from the weak players,” says Brian Yarbrough, a retail analyst at Edward Jones.

Three prominent retailers — J. Crew, Neiman Marcus and Stage Stores, owner of Gordman's — have filed for bankruptcy this month and the venerable J.C. Penney reportedly may join them soon.”


Back in the late 70's when I was working in the US, I was in awe of the massive department stores like JC Penny.
I was also amazed at the massive sears and Roeback catalogues that came out, a sort of forerunner to the internet. It seems that there was nothing, I mean nothing, that could not order from a sears and roebuck catalogue.
The catalogues have long gone, seems like the producers of those catalogues will follow suit.
Mick



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nipper
post Posted: May 20 2020, 02:30 PM
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gee whillikers, who'd have thought this would be the case?
QUOTE
Shoppers who spent March panic buying tinned food, toilet paper and pasta shut their wallets in April, sending retail sales plunging last month.

Key points:
  • - Preliminary figures show a 17.9 per cent plunge in retail turnover in April
  • - Sales of non-perishable groceries dropped by nearly a quarter, as coronavirus stockpiling subsided
  • - Transaction data shows an improvement in May, but Diana Mousina from AMP Capital says the recovery remains shallow for now
Preliminary figures from the Australian Bureau of Statistics (ABS) show a 17.9 per cent drop in retail turnover .... the steepest monthly fall on record.
https://www.abc.net.au/news/2020-05-20/reta...allets/12266788




--------------------
"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
 
nipper
post Posted: May 12 2020, 03:22 PM
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In Reply To: tombeet's post @ May 12 2020, 01:59 PM

Not a problem
I posted another good read, from Paul Tudor Jones, as well; I quite like it in terms of 'safe havens". Of course that is based on the Coming Inflation, though there are many that may not agree is a given (hasn't emerged in last 10-12 years)

https://www.docdroid.net/H1fuimX/the-great-...y-inflation-pdf



--------------------
"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
 
tombeet
post Posted: May 12 2020, 01:59 PM
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In Reply To: nipper's post @ May 11 2020, 03:49 PM

Thanks Nipper that article is a great read from the master class of Howard Marks on how to get you thinking about these troubled times.

https://www.oaktreecapital.com/insights/howard-marks-memos

Cheers

 
nipper
post Posted: May 11 2020, 03:49 PM
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QUOTE
What does the U.S. see today?



  • - one of the greatest pandemics to reach us since the Spanish Flu of 102 years ago,
  • - the greatest economic contraction since the Great Depression, which ended 80 years ago,
  • - the greatest oil-price decline in the OPEC era (and, probably, ever), and
  • - the greatest central bank/government intervention of all time.


The future for all these things is clearly unknowable. We have no reason to think we know how they’ll operate in the period ahead, how they’ll interact with each other, and what the consequences will be for everything else.

In short, it’s my view that if you’re experiencing something that has never been seen before, you simply can’t say you know how it’ll turn out.
https://www.oaktreecapital.com/insights/howard-marks-memos



--------------------
"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

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