Category: Wealth Management

Are We There Yet?

A remarkable division has emerged between those calling we have passed the bottom in the current stock market cycle, and those who say we are right in the middle of a bear market rally which will peter out before a further, and significantly deeper fall ahead.

Why? Because on one hand recent results from many stocks have been pretty good, (though future performance is not guaranteed) while inflation some are thinking has peaked. Yet on the other hand, Central Banks are still lifting rates, and consumer confidence is tanking while home prices are easing. And inflation is still way over target.

So, who will be proved more right? In this week’s market review we will start in the US, go across to Europe and Asia and end in Australia, as well as touching on metals, oil and crypto.

But before I start, a quick request. If you value the content we produce, please do like the post, and consider subscribing to receive future updates. This really makes a difference to us getting our messages out, as views, likes and subscriptions drive the YouTube algo. And a word of thanks to all those who support what we do.

US stocks finished the week on solid footing, with traders assessing whether an inflation slowdown could soon make the Federal Reserve reduce the pace of its most-aggressive tightening campaign in decades and prevent a hard landing. Defying the crowd of sceptics who dubbed the rebound a bear-market rally, short-covering or unwinding of hedges, the S&P 500 notched its fourth straight week of gains — the longest winning run since November — with big tech leading gains on Friday.

The gauge has recouped half of its losses from January through June, topping the so-called 50 per cent Fibonacci retracement level. It’s now sitting about 1.5 per cent below its 200-day average — a threshold crossed by the Russell 2000 gauge of small caps.

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Eight Quick Things You Need To Know About The New Superannuation Rules

I was joined by Sam Kerr from Nucleus Wealth as we discuss the important changes to Superannuation. You can see Sam’s article on this here:

https://nucleuswealth.com/articles/8-quick-things-you-need-to-know-about-the-new-superannuation-rules/

The latest edition of our finance and property news digest with a distinctively Australian flavour.

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DFA Live Q&A HD Replay Damien Klassen: Investing Now

This is an edited version of our latest live discussion about the current state of the financial markets with Damien Klassen Head of Investments at Walk The World Funds and Nucleus Wealth. Included live questions from the audience.

Go to the Walk The World Universe at https://walktheworld.com.au/

FINAL REMINDER DFA Live 8pm Sydney: Investing Now With Damien Klassen

Join us for a live discussion about the current state of the financial markets with Damien Klassen Head of Investments at Walk The World Funds and Nucleus Wealth. You can ask a question live.

Go to the Walk The World Universe at https://walktheworld.com.au/

Crunch Time Approaches…

We are coming to the pointy end of the action now, with the Nasdaq closing lower on Monday after a choppy session for U.S. equities ahead of a big week of technology earnings reports while oil prices rose and treasury yields edged higher as investors braced for a Federal Reserve interest rate hike.

The S&P 500 see-sawed on Monday and ended close to unchanged.

Meanwhile in Australia the head of APRA, the entity responsible for banking supervision is going, while the local bond market is in pieces.

In currencies, the dollar index, which touched a 20-year high this month, was down slightly and gold also slipped, as did bitcoin.

Concern that rising interest rates will drive the economy into a recession has been escalating as the Fed tightens monetary policy aggressively to bring down the steepest inflation in four decades. Fed Chair Jerome Powell has said that failing to restore price stability would be a “bigger mistake” than pushing the US into a recession, which he has continued to maintain the nation can avoid.

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The Bear Market Is Not Over – Yet!

One characteristic of a Bear market are relief rallies, which start strong, but which also eventually run out of steam. We have seen this during the week, as a gauge of global stocks fell on Friday to end the trading week on a down note after five straight sessions of gains.

In addition, the dollar dipped against a basket of major currencies after soft data on U.S. business activity was released.

Friday was wobbly on Wall Street which posted modest losses in early trading but declines on the S&P 500 accelerated as Big Tech names such as Meta and Alphabet lost ground in the wake of earnings from Snap Inc which plunged 39.08%.

Defensive sectors such as utilities and consumer staples were among the few advancers

“Every rally we have had during this bear market, there have been a number of sharp rallies and then they fade and we set new lows and that has been a pretty consistent pattern here,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “Everybody is looking for the turn, everybody is trying to guess at when we get a sustained rally, and everybody is hoping for one, but to me there is still a lot of unknown ahead of us.”

[CONTENTS]

0:00 Start

0:15 Introduction

0:12 Bear Market Bounces

3:30 Fed and Economic Data

5:40 US Markets 8:20 US Dollar

09:40 Oil

11:10 European Markets

14:00 Wheat Agreement

18:20 Gold

19:30 Asian Markets

20:20 Australian Markets

23:20 NAB Rate Outlook Up

24:30 Outlook

27:25 Crypto

28:00 Summary and Close

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After The Monetary Binge: What?

The latest edition of our finance and property news digest with a distinctively Australian flavour.

In this week’s market review, consider the hangover coming as the punch bowel of cheap funds is taken away. We start as always with the US, go across Europe and Asia, and end in Australia. Why, because like it our not our fate will be largely determined by what happens in the US – which drives the price of money via the US dollar, and China, our main export partner.

The US FOMC raised interest rates in June by 75 basis points in June. And last month, the U.S. central bank also started reducing the size of its enormous balance sheet. Until September, the Fed will be cutting $45 billion a month from its massive holdings, and it will increase to $95 billion, almost twice as much as it did in the previous episode of quantitative tightening. So the value of the Fed’s assets has already peaked, reaching $8.95 trillion in mid-May 2022.

But, although the Fed is tightening its monetary policy, its stance remains accommodative. According to the Taylor rule, the federal funds rate shouldn’t be just between 1.50% and 1.75%, but at least above 5% .

So the U.S. central bank remains behind the inflation curve and would have to raise interest rates much further to combat high inflation. But in the previous Fed’s tightening cycle of 2017-2019 which led to the repo crisis, forced the U.S. central bank to reverse its stance and cut interest rates.

Given how fragile the financial system is and how much indebted the American economy is, it’s almost certain that the current monetary policy tightening will lead to a sovereign-debt crisis or another kind of financial crisis.

[CONTENT]

0:00 Start
0:15 Introduction
00:46 Removing The Punch Bowel
2:45 US Dollar
4:00 Economic Indicators
5:45 US Markets
08:00 Bonds
8:50 European Markets
10:25 Oil and Gold
12:40 Asian Markets
14:00 China Economics
15:30 China Property Bust
19:25 Australian Market
22:00 Crypto Crash
23:00 Conclusion

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FINAL REMINDER: DFA Live Q&A The Approaching Storm With Tony Locantro 8pm Sydney Tonight!

Join us for a live discussion about the current state of the markets with Investment Manager Tony Locantro from Alto Capital, in Perth. You can ask a question live.

https://www.altocapital.com.au/

Go to the Walk The World Universe at https://walktheworld.com.au/

This Crypto Winter May Not Turn To Spring!

Well, those following my channel over recent years will know that I have been quite skeptical of Crypto wave, and while Crypto has gone through several major drops in its history, this time could be different. I was not impressed with so called celebrities starting spruiking them, including Kim Kardashian, but when financial mainstream started getting involved, my concerned grew. In the US, Fidelity’s plans to offer Bitcoin in 401(k)s – their equivalent of superannuation – could impact an entire generation.

Its worth recalling the sector spiked to around $3 trillion in total assets last November, before plunging to less than $1 trillion, with Bitcoin and a range of altcoins plunging from record highs.

What started this year in crypto markets as a “risk-off” bout of selling fueled by a Federal Reserve suddenly determined to rein in excesses has exposed a web of interconnectedness that looks a little like the tangle of derivatives that brought down the global financial system in 2008. The collapse of the Terra ecosystem — a much-hyped experiment in decentralized finance — began with its algorithmic stablecoin losing its peg to the US dollar, and ended with a bank run that made $40 billion of tokens virtually worthless. Crypto collateral that seemed valuable enough to support loans one day became deeply discounted or illiquid, putting the fates of a previously invincible hedge fund and several high-profile lenders in doubt.

The recent crypto plunge, with Bitcoin down about 70% from its peak, is fueling widespread financial troubles for companies involved in the space. Lenders like Celsius Network, Babel Finance and Vauld have suspended withdrawals, while firms such as Coinbase Global Inc. are cutting jobs. This is what is now being called a crypto winter – but will spring ever come?

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No Escape! Recession Will Destroy Wealth. Period.

In today’s show, we review the weeks market action, starting in the US – by far the most influential market, followed by Europe, Asia and Australia. There is no place to hide. Wealth is being destroyed. And there is no end in sight. Data is flagging recession, as central banks continue to raise rates and given the astronomical debt burden out there this is a big deal.

Even conservative investment strategies are being hit. “This is a train wreck,” says Alex Dunnin, executive director of research house Rainmaker Group. “When a traditionally conservative strategy is getting the worst returns then all bets are off. It doesn’t matter where you go, almost everyone will be in pain.”

The S&P 500 notched its worst start since 1970, plunging 20.6% between January and June. The Dow had its largest first-half drop since 1962, and the Nasdaq Composite had its largest percentage decline ever. And US Stocks slipped over the five days, with the S&P 500 erasing part of its rally in the previous week. Down more than 2%, the index just endured its 11th drop in 13 weeks.

All three indexes posted losses for the week. Despite this Wall Street rallied to close higher on Friday in light trading, with investors heading into the long holiday weekend and embarking on the second half of year looking for the next market-moving catalyst. All major groups in the S&P 500 rose, while the tech-heavy Nasdaq 100 underperformed. Treasuries surged after an ugly first half as weak economic data added to recession fears.

The US economic data was frankly horrid this week. An influx of data showing softer consumer spending, sagging sentiment and subdued manufacturing suggest a US economy with a more fragile foundation, prompting several forecasters to lower their estimates for growth.

Strategists at Goldman Sachs told clients on Thursday that stocks could keep falling later this year since “equities are pricing only a mild recession” and more companies will likely begin reducing their earnings expectations. In the event of a recession, Goldman’s team sees the S&P 500 dropping to 3,600, or 4.9% below Thursday’s close.

[CONTENT]

0:00 Start
0:15 Introduction
2:23 US Weak Economic Data
8:22 GDP Forecast: Down
9:00 Bond Yields
11:00 Buying The Dip
13:50 US Markets
16:00 Oil, Gold and Silver
17:00 Euro-zone Inflation Up
19:18 European Markets
20:00 Asian Markets And China Bonds
22:25 Australian Markets
24:40 Crypto Down
25:47 Tough Times Ahead

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