Category: Wealth Management

Markets: Are You Confused Yet? You Should Be!

This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto along the way. MSCI’s global equity gauge fell on Friday while bond yields climbed as investors waited for clues about the future path for interest rates and Europe’s STOXX 600 index closed down 0.53% earlier, breaking a three-week winning streak, as investors sought clarity on Europe’s rate policy amid concerns about economic growth and a potential trade war.

As we run down to the end of the year, a flurry of Central Bank rate announcements signalled a confusing picture, with the RBA holding, the ECB cutting as expected, alongside Denmark at 25 basis points, and Swiss Bank cutting unexpectedly as it sought to head off gains in its currency along with Canada both doing a bigger 50 basis point cut. Next week, we have more Central Bank action, with the Federal Reserve, Bank of England and Japan all joining the party. While investors are betting on a quarter point rate cut at next week’s Federal Reserve policy meeting, expectations are rising that the pace of rate cuts is poised to slow, with an 80% probability of a hold in January, while cuts in the UK and Japan are not expected. So, you can see monetary policy is all over the shop.

The shadow of president-elect Trump’s pledge to impose hefty tariffs on imports from around the globe, especially China, as well as his promise for massive corporate tax cuts haunts the markets. These policies are seen as fueling inflation, which has been proving sticky even before Trump’s plans are enacted.

Finally, Bitcoin was once again touching $100,000 US, as Bitcoin proponent Michael Saylor tweeted: “We are all competing for $45m in #Bitcoin mined daily.”

Curiously, earlier this week, another big Bitcoin supporter and maximalist, the chief executive at JAN3, Samson Mow, shared that he expects miners to stop selling the BTC they mint in the near future. He urged the market to be prepared for that and plan their Bitcoin accumulation accordingly. Earlier this week, Saylor commented on a Bitcoin warning tweet published by Binance founder CZ. Changpeng Zhao issued a major reminder that more than 19 million Bitcoin from 21 million have been mined already. Saylor tweeted that the crypto space is running out of Bitcoin. It was last at 101,300, and will likely wobble around this level for some time.

Given significant uncertainty ahead, markets are generally overvalued, and prone to volatility and potential falls, so cash returning 4 or 5 percent relatively risk free might look a good option for now!!!

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Santa Rally In Full Swing; For Now!

This is our weekly market update, starting in the US, crossing to Europe and Asia, and ending in Australia. Markets continue to drive higher, though with significant volatility as Geo-political issues in places like France, Korea, the middle east and Ukraine collide with questions of interest rate trajectory, the AI boom and Trump’s ongoing announcements of more names into his team.

Investors can savor the current market momentum but should prepare for a potential shift after January’s inauguration of Donald Trump, Tom McClellan said in a new Market Report. This shift in sentiment, is tied to uncertainty surrounding a new administration’s policies and the inevitable political battles with Congress. “Wall Street hates unknowns,” he emphasized.

The MSCI Global index of stocks was up 1.3% across the week, and up 20.18% year to date. The STOXX 600 was up 2% across the week logging its seventh consecutive day in advances and its strongest weekly performance in ten, and is up 8.65% year to date, while the S&P 500 advanced modestly early and mostly held those gains into the closing bell in New York, for its 57th record closing high this year up 0.96% across the week and 27.68% year to date. The VIX was trading below 13, while Bitcoin briefly edged back below 100,000.

Markets are expecting the FED to cut rates again at its December meeting, after the US economy added 227,000 jobs last month, mostly in line with expectations, and the three-month average came in at 173,000, confirming expectations that the labour market is cooling, at a moderate pace.

The Australian sharemarket dropped on Friday in a broad sell-off as investors turned cautious ahead of a key job report in the US that may shed light on whether the Federal Reserve will continue easing interest rates this month.

The big banks had a weak session with Westpac down 1.4 per cent to $32.76, while Commonwealth Bank fell 0.6 per cent to $157.06. That’s despite traders ramping up bets of an earlier rate cut by the Reserve Bank. Money markets imply an around 50-50 chance of an easing in February 2025, up from 25 per cent on Tuesday. The central bank is widely expected to keep the cash rate at 4.35 per cent when it meets next week.

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Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

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

This is an edited version of a live discussion with Head of Investments for Walk The World Funds and Nucleus Wealth, Damien Klassen. As we roll into the end of the year, how are marketing shaping up, and what strategies are most appropriate given the Trump effect?

We look at longer term return trends, discuss the Australian economic breadth, and the China connection, among other things.

Original live stream here: https://youtube.com/live/zYDnJ1yOOhU

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Forget Seeking Certainty: Suddenly, The Fed’s Urge to Cut Rates Evaporates!

This is our weekly market update, where we start in the US, cross to Europe, and Asia, and end in Australia covering crypto and commodities on the way.

My earlier call of enhanced market volatility proved correct, as a gauge of global stocks took its biggest weekly drop in two months driven by market euphoria after the Trump win now turning, as the implications in terms of tariffs and staff appointments sink in and as trading profits are made. MSCI’s gauge of stocks across the globe lost 1.11%, to 842.61 for its fourth straight decline, following five straight advances. In Europe, the STOXX 600 index closed down 0.77% on the day and down 0.69% across the week. The 10-year U.S. Treasury yield hit its highest level in 5-1/2 months on Friday as economic data and comments from Federal Reserve officials indicated a slower pace of interest rate cuts ahead.

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

This is an edited version of a live discussion with Head of Investments at Nucleus Wealth and Walk The World Funds, Damien Klassen. As the US election closes out, and the RBA releases the latest decision, how are markets shaping up, which segments are risk exposed, and what strategies need to be considered given the international cross currents and economic uncertainties.

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

https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.

More Records Broken, As Markets Swing Positive, For Now…

This is our weekly market update, a data-packed show where we start in the US, cross to Europe and Asia and end in Australia, covering crypto and commodities along the way.

The wild ride on the markets continued this week, with the S&P 500 and the Dow scoring record closing highs on Friday, thanks to big boosts from financial stocks after banks reported strong quarterly results despite the fact the latest inflation data fueled expectations for a smaller U.S. Federal Reserve rate cut in November. Traders kept bets steady for a roughly 88% probability the Fed would cut rates by 25 basis points at its November meeting, and a 12% chance it will leave rates unchanged. A slower pace of interest rate cuts potentially presents pressure on Wall Street, given that U.S. stock valuations scaled record highs on expectations of a sharp reduction in rates.

Major financial companies kicked off earnings season with upbeat comments from their top executives that should further ease investor worries that elevated borrowing costs were weighing on consumers and pushing the economy to the cusp of a downturn.

The US reporting season will gather momentum over the next three weeks amid general optimism. Still, concerns persist that stock prices have risen too fast, that the labour market is weakening fast and investors are on alert for geopolitical and US presidential election shocks.

European stock markets traded marginally higher on Friday, as investors digested lackluster British growth data.

China’s highly anticipated announcement of financial stimulus plans on Saturday was big on intent but low on the measurable details that investors need to ratify their recent return to the world’s second-biggest stock market. Saturday’s news conference by Finance Minister Lan Foan reiterated Beijing’s broad plans to revive the ailing economy, with promises made on significant increases to government debt and support for consumers and the property sector.

The Australian share market edged lower on Friday as traders awaited further signs of direction in the global economy after evidence of weakness once again reared its head in the US.

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Walking The Uncertainty Tightrope Towards Who Knows What Next!

This is our weekly market update where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto on the way. To remind our loyal viewer, this is a data rich show, as I get the weeks developments into perspective.

Market trends are rarely linear for long, they naturally ebb and flow. Despite the flaring conflict in the middle east, and the US election just a month away now, MSCI’s global equities index rose on Friday, though for the week, it showed a roughly 0.7% decline, while the Dow closed at fresh record highs and the US dollar climbed to its highest level since mid-August as investors heaved a sigh of relief after a surprisingly strong U.S. labor market report.

Oil prices rose and settled with their biggest weekly gains in over a year on the mounting threat of a region-wide war in the Middle East, but gains were limited as U.S. President Joe Biden discouraged Israel from targeting Iranian oil facilities. Investors remained anxious about how Israel would respond after Iran fired missiles at it on Tuesday. Supreme Leader Ayatollah Ali Khamenei said earlier that Iran and its regional allies will not back down.

The Australian sharemarket snapped a three-week winning streak on Friday, as the escalating conflict in the Middle East sent traders fleeing equities and pulled shares down from record highs touched a week earlier. The S&P/ASX 200 ended Friday’s 0.7 per cent lower at 8150 points, dragging the score to a weekly loss of 0.8 per cent, its first since early September. Of the ASX’s 11 sectors, nine ended the session lower.

The IMF this week gave a mixed assessment of recent government budgets and whether Treasurer Jim Chalmers and his state counterparts were helping the RBA to tame Australia’s worst inflation outbreak in decades.

Finally, in crypto, Bitcoin (BTC) dropped over 5% this week as the escalating conflict in Gaza and Lebanon fuelled flows into safe-haven assets.

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

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

This is an edited version of a live discussion with Damien Klassen, Head of Investments at Nucleus Wealth and Walk The World Funds. Given the strength of the markets in recent days, and the China stimulus programme, what’s ahead, and how should you position given the level of volatility and uncertainty out there?

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

Stars Align To Create A Bubble Dream; But Is A Nightmare Around The Corner?

This is our weekly market update where we review the market action starting in the US, then Europe, Asia, and Australia and also cover commodities and crypto along the way. This is a data packed segment, so be warned!

This week markets drove higher, pretty much across the board, thanks to the fall out from the Federal Reserve is slashing interest rates, more benign US economic data and China finally moving more determinedly to bolster growth as China’s central bank lowered interest rates and injected liquidity into the banking system, and with more fiscal measures expected to be announced before a week-long Chinese holiday starting on Oct. 1. Listed shares of Chinese companies jumped on the latest series of stimulus measures from Beijing to boost the domestic economy, including those on international markets.

As a result, we saw upswings in markets across the globe, and this despite weaker oil prices and rising conflict in the middle east. MSCI’s gauge of stocks across the globe rose 0.25%, to an intraday record high. Europe’s benchmark STOXX 600 index closed at a record high, ending up 0.5% at 528.08. China’s blue chips jumped 4.5%, bringing their weekly rise to 15.7%, the most since November 2008. Hong Kong’s Hang Seng index also gained 3.6% and was up 13% for the week, its best performance since 1998.

The Dow Jones Industrial Average rose 0.33%, to 42,313.00, the S&P 500 fell 0.13%, to 5,738.17 and the Nasdaq Composite fell 0.39%, to 18,119.59. All three major U.S. stock indexes posted a third straight week of gains. Nvidia’s 2.2 per cent decline was the reason for the S&P 500 and Nasdaq slipping on Friday, pointing to a report that China is urging local companies to stay away from its chips. The NASDAQ Golden Dragon shot to 7.236.16 while the Russell 2000 was at 220.33.

The best performer of the session on the Dow Jones Industrial Average was Chevron Corp (NYSE:CVX), which rose 2.47% while the worst performers of the session was Amazon.com Inc (NASDAQ:AMZN), which fell 1.67 and International Business Machines (NYSE:IBM) was down 1.16% to 220.84.

“It’s a bubble dream,” according to Bank of America equity strategist Michael Hartnett. His data had another $US10.9 billion flowing into US equities in the week ended September 25.

“Fed cutting into recession is negative for risk assets, but Fed cutting with no recession is positive and investors firmly of the view Fed and China is sufficient policy easing to short-circuit recession risk,” Hartnett wrote.

So in the context of overvalued stocks, markets are still betting on higher ahead, which is quite possible but before the surface there are significant cross currents and risks. So volatility will remain the watch word, and the bubble dream might yet turn to nightmare. We will see.

Markets Caught Saying Hello To A Hard Landing!

This is our weekly market update where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto on the way, and a reminder, this show is data rich, not shouty stupidity like so much on socials these days, and the purpose is to help me understand what is really going on at the moment. If it helps you too, that’s great!

As often in September, market uncertainty rippled through markets this week, adding fuel to an already-volatile period which points to more of the same ahead.

The flows of data remained mixed, and U.S. stocks tumbled on Friday after closely watched jobs numbers showed labor market momentum slowing more than expected, suggesting a narrower path for the U.S. to achieve a soft landing, defined as the Fed being able to cool inflation without badly damaging economic growth. Beyond that, investors are still grappling with a shift in Federal Reserve policy, a tight U.S. election and worries over stretched valuations, plus numerous geopolitical tensions, and a resetting of AI tech related expectations to boot.

So, we saw an ebbing risk appetite across markets. The S&P 500 dropped 1.7% on Friday and has lost nearly 4.3% in the past week, its worst weekly decline since March 2023.

Nonfarm payrolls expanded by 142,000 last month, compared with expectations for a 165,000 advance. The prior two months of gains were lowered, another sign that the US labour market is weakening.

Positioning remains extreme, and investors are complacent about the risks that a soft landing could turn into something nastier. September often brings volatility on markets, but don’t ignore the direction of travel.

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