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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
rog
post Posted: Jul 13 2019, 10:09 AM
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It’s my belief that judging today’s market performance, or any days performance, against historical “record highs” is meaningless unless inflation is factored in.

The much discussed pre gfc ASX200 high of 6,828 happened about 11.5 years ago. Allowing for inflation at 2.1% that value would be in excess of 8,500 - and that’s not including any effect from compounding.

So talk of a correlating correction is very premature.



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With money in your pocket you are wise, you are handsome, and you sing well too.

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plastic
post Posted: Jul 13 2019, 10:02 AM
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Every day there is a new record being set in US markets. How long can it go on for?




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What did Uncle Mel do to us?
 
nipper
post Posted: Jul 12 2019, 10:18 AM
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QUOTE
One of the most common measures of risk in financial markets is volatility. The more an asset price moves up and down over time, the greater the risks to your invested capital. Increased volatility can be a positive thing for investors, in that it can result in oversized gains as much as it can result in greater than expected losses. Regardless of your risk profile however, ignoring a rise in volatility as you pursue your investment objectives is rarely an advisable strategy.

One of the clear trends in equity markets recently has been that volatility is rising, with the monthly price swings seen across share markets today much greater than what is typically expected. By example, over the last five years, global share markets have risen or fallen by more than 5% in a month only eleven times - with five of these eleven occurrences happening since October of last year.

The month of June was no exception to this trend of increasing market volatility. After falling by 5.9% in May in US$ terms, global share markets rose by 6.5% during June. A weaker than expected US payroll report during June fuelled already building expectations that the US Fed may deliver a 0.50% ‘insurance’ rate cut at its July meeting. Share markets duly rallied on the prospect of substantially easier Fed policy in the months to come.

In local currency terms, the US share market rose 7.0% in June, while European and Japanese equity markets rose by 5.2% and 3.5% respectively. In Australia, the local equity market rose by 3.7%, while in Australian dollar terms the MSCI All Country World Index increased by 5.3%.

- at present, markets are such slaves to the Fed (until they aren't!). The Powell Put lives




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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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nipper
post Posted: Jul 11 2019, 09:44 AM
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[In New York overnight] the benchmark S&P 500 briefly crossed the 3000 points mark in early trading for the first time after dovish remarks from the Fed's Jerome Powell bolstered the case for a rate cut.

"Powell's testimony and the June FOMC minutes reiterated the message that rising crosscurrents had increased risks to the US economic outlook," TD Securities said in a morning note. "In light of this, Fed officials appear ready to adopt a more accommodative stance. On net, we find the message supports a 25bp cut at the July FOMC meeting, in line with our view. "We expect the Fed to continue easing in September and October as global uncertainty continues to weigh on business investment and inflation remains uncomfortably below-target in the near horizon."

The Dow also hit an intraday record while the Nasdaq closed at an all-time high following the release of prepared remarks for Powell's testimony before the US House of Representatives Financial Services Committee.

"On balance, investors live by the credo: 'Don't fight the Fed,' and if rates are being cut - whatever the reason - they have often stood by stocks so I'm not surprised we're making new highs," said Rick Meckler. "But it's a market that's come an awfully long way. And I think you're running out of investors willing to put too much new money in without some indication that earnings can stay strong."




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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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nipper
post Posted: Jul 10 2019, 06:59 PM
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In Reply To: mullokintyre's post @ Jul 10 2019, 06:51 PM

QUOTE
sharemarket is one such beast. , shares are (mostly) liquid. Property is quite illiquid
please ring the bell 10 minutes before the bell is due to be rung smile.gif

And I reckon most property 'gurus' make their returns in spite of the market, not because of it. I mean, trying to time exit and entry?? really !




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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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mullokintyre
post Posted: Jul 10 2019, 06:51 PM
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In Reply To: blacksheep's post @ Jul 9 2019, 11:47 AM

Well, while interest rates are at spectacular lows, those self funded retirees are pretty much forced out of cash and into something else, the sharemarket is one such beast.
Property is quite illiquid, shares are (mostly) not.
Mick




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blacksheep
post Posted: Jul 9 2019, 11:47 AM
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Share market correction may be imminent for ASX, stockbrokers warn
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Key points:
Australian shares are near record highs while interest rates are near record lows
Analysts say the disconnect between the two usually means that one market will be "spectacularly wrong"
However, analysts also the Australian share market is not heavily overvalued

https://www.abc.net.au/news/2019-07-09/brok...ection/11289728



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

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mullokintyre
post Posted: Jul 5 2019, 09:34 AM
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Not everything about the OZ economy is all bad.

Australia is still producing trade supluses ( orshould that be surpli).

AUSTRALIAN
According to the Australian Bureau of Statistics (ABS), it surged to $4.8 billion after seasonal adjustments, coming in well ahead of the $3.7 billion level expected by economists.

January’s surplus — previously reported at $4.55 billion — was revised down slightly to show a smaller surplus of $4.35 billion.
From early 2014 thru to late 2016 the trade balance was in deficit.
Since then, there has only been two months in which it went negative.


QUOTE
Surging commodity prices and a weaker Australian dollar helped to lift Australia’s trade surplus to a record $5.745 billion in May, bringing closer the country’s first current account surplus since the 1970s.

The May result compared with a surplus of $4.820 billion in April, and was driven by a 13 per cent rise in prices of commodities such as iron ore, the Australian Bureau of Statistics said. The value of exports rose by 4 per cent, while imports rose by 1 per cent.

Prices for Australia’s biggest exports have surged over recent months, with iron ore trading at its highest levels in 5 years as a result of global supply disruptions.


The Australian dollar has also declined this year as the Reserve Bank of Australia moved to cut official interest rates for the first time since 2016.


Exports fell, mainly due to the fall in gold exports, but Given that imports fell even more, JP Morgan describes the Australian economy as " Unequivocally weak"
As the exports are smaller, the trade surplus is not likely to increase GP for the June quarter.
Some people are so hard to please.

Mick




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sent from my Olivetti Typewriter.

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blacksheep
post Posted: Jul 3 2019, 09:28 PM
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Australia exposed to global recession, economists warn
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Economist Ross Garnaut warns that Australia will be hit far worse from a trade war than expected, with the $60 billion agricultural sector among the most exposed by the prospect of a global recession.


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"The US has returned to agricultural subsidies to compensate midwest farmers for the damage done by Chinese import restrictions ... that is a very damaging development for Australia," he said.

read more - https://www.afr.com/news/economy/australia-...20190703-p523np



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Jul 1 2019, 12:24 PM
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QUOTE
.. [it was] in mid to late 2007, when the yield curve starts steepening, that equity markets start selling off. Why?

Yield curves invert, turn negative, when the bond market thinks Fed monetary policy is too tight.

Once the Fed acknowledges this then the bond market anticipates lower short term rates, which in turn improve economic growth expectations in the future. However, once the Fed actually cuts rates, equity markets start thinking about why they are cutting.

Let’s put this a slightly different way.

In the fourth quarter of 2018 the U.S yield curve, as shown in the pink line above, flattened dramatically, meaning 10-year yields fell much more sharply than 3-month T bill yields. The bond market canary was singing loud and clear that The Fed needed to cut rates because they saw weaker growth ahead. Remember also that the equity market shared this view as we saw a 20% decline, from peak to trough, in the fourth quarter.

I am also strongly of the view that the most powerful message from the equity market crash in the fourth quarter was that the world simply has too much debt.

Both the equity and bond market had the view that a Fed on auto-pilot with the intention of raising rates even further in 2019 would lead to a financial catastrophe. It was only when Fed Chairman Jerome Powell reversed course that the equity markets also reversed course.

I believe that the fourth quarter represented a tipping point for financial markets. It was the moment that the capital markets came to the disturbing realisation that debt levels were simply too high. Once markets had convinced the Fed to discard the notion of taking rates any higher, they celebrated in typically Pavlovian fashion.

Markets love the excitement and the anticipation of an accommodative Fed, however, fear the moment that they turn up for the date!!
- Jonathan Pain



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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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