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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This is an edited version of a live discussion with Head of Investments At Walk The World Funds And Nucleus Wealth, Damien Klassen as we review the past volatile month and talk about what is ahead for the markets.
Original show here with chat: https://youtube.com/live/SSvtwrLRNEw
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https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.
This is an edited version of a live discussion with Head of Investments at Walk The World Funds and Nucleus Wealth, Damien Klassen as we dive into the current market chaos and explore what is really going on. Is this a replay of the DotCom bubble, or a minor glitch, and where will the markets pivot to next?
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Go to the Walk The World Universe at https://walktheworld.com.au/
This is our latest weekly market update, where we check in the markets across the USA, Europe Asia and Australia and also cover commodities and crypto.
This past week once again was full of swings, up earlier, then down, and then an upswing on Friday, though still to end lower once again across the week. It is worth recalling that to make money in stocks the idea is to buy low, and sell high. In recent times we saw investors piling into already over expensive tech stocks – essentially buying high and hoping for higher. Some of that is now reversing. And there is probably more to come.
The US markets did get a boost at the end of a wild week after key economic data bolstered speculation the Federal Reserve will set up the stage for a rate cut in September as the volatility index slide 11 per cent from recent highs. While every major group in the S&P 500 rose on bets that the start of the Fed easing cycle will keep fuelling the outlook for Corporate America, once again, smaller firms largely beat the cohort of tech megacaps — extending their July surge to about 10 per cent.
The S&P 500 CLOSED 1.11% higher, the DOW was up 1.64% and the NASDAQ rose 1.03 per. The Russell 2000 of small caps climbed 1.65 per cent, while the gauge of the “Magnificent Seven” megacaps added just 0.7 per cent. The S&P Financials were up 1.49%.
The Australian dollar fell in its longest stretch of losses in almost a year as concerns about China’s economic recovery continue to weigh on the currency and commodity prices. The Aussie – which had been rallying on the interest rate differentials between Australia and the US – has not been immune to the latest sell-off in metals prices. It was last at 65.49. But AMP’s chief economist Shane Oliver is also sticking by his forecast, projecting the Aussie to reach US70¢ by the end of the year.
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This is an edited version of a live discussion with Dr Cameron Murray, Independent Economist over at Fresh Economic Thinking.
Fresh Economic Thinking is Australia’s newest think-tank, with independent and insightful takes on major economic debates.
Cameron thinks economics could be much better than it is so he often writes very fine technical critiques of economic theory and comments on the nature of the profession. He specialises in property and housing markets, environmental economics, and corruption. I dabble in just about everything: macro, money, institutions, evolutionary economics, and more.
For the past four years, he was a Post-Doctoral Research Fellow in the Henry Halloran Trust at The University of Sydney.
https://www.fresheconomicthinking.com
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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.
In our latest weekly market update, we start in the US, move to Europe and Asia and end in Australia as well as covering commodities and crypto, as a way of digesting all that has happened this past few days.
This past week, was again packed full of contradictory signals, with World stock indexes falling on Friday as a global cyber outage rattled investors by disrupting operations across multiple industries, while the dollar climbed alongside Treasury yields. All three US indices fell, as the S&P 500 and Nasdaq registered their biggest weekly percentage declines since April. while Gold briefly traded below $US2400 an ounce, oil fell 3 per cent to trade below $US83 a barrel and iron ore slid 1 per cent, while the second quarter earnings season is off to a mixed start.
A growing number of analysts and strategists are telling clients there is fragility among the stock giants having touched highs recently. Now the dilemma for investors is after 10 months of a big rally, should investors stick with their big winners or change tack remembering that history says wealth is created by a tiny number of companies, and most stocks will make investors poorer.
The market is overbought but analysts are split on whether the strong breadth improvements will be bullish for stocks moving forward or a rotation away from technology where most of the growth has been means markets will fall.
As with global stocks, concentration in the Asia-Pacific region is at 35-year highs, and CBA (which has been the fourth-largest contributor to returns in the region in the past 20 years, on BofA’s numbers) has been a prime mover; it is one of just eight stocks that have delivered 80 per cent of the gains in the MSCI Asia Pacific (excluding Japan) index this year.
There will be more madness ahead!!
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This is an edited version of a live discussion with Investment Manager Tony Locantro, from Perth. Tony offers several financial services, such as investment management, financial planning, stock selection and fundraising. Tony has helped countless investors and organisations with strategic investment strategies over the last two decades.
His understanding of market psychology has ensured valued investment strategies in bull and bear markets. Because of his ability to understand the small cap market space, Tony has been featured in dozens of well known publications across Australia, such as Small Caps, Sky Business, Digital Finance Analytics, and many more.
If you are looking for an investment manager who has your best interests at heart, Tony is the man for you. https://tonylocantro.com/
Tony Locantro’s Carnivore Transformation! https://youtu.be/FV0TWDeOG8E
Original show recording here: DFA Live Q&A: Tony Locantro: The Everywhere And Everything Bubble, This Time It’s Different! https://youtube.com/live/Tt7vpkujekM
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This is our weekly market update, where we start in the US, cross to Europe and Asia, and end in Australia, while covering the main points in commodities and crypto along the way.
This past week has been a doozy, with US markets still clawing higher on increased rate cut expectations, as the latest employment data and adjustments posed some important questions alongside a weakening the dollar, while in the UK the incoming Labour Government won with a whopping seat majority despite voters really voting against the Tories rather than for Starmer.
In France, horse trading ahead of Sundays second pole could mean the Right do not get the prize they were expecting, while Oil was firmer across the week on fears of middle east conflicts and in Crypto, Bitcoin has dropped more than 20% from recent highs.
Wall Street stock indexes closed firmer on Friday, with the tech-heavy Nasdaq and benchmark S&P 500 hitting record highs.
All up, the Dow Jones Industrial Average rose 0.17%, to close at 39,375.87. The S&P 500 gained 0.54%, at 5,567.19 and the Nasdaq Composite advanced 0.90%, to 18,352.76. For the week, the S&P 500 gained 1.95%, the Nasdaq rose 3.5% pct, and the Dow climbed 0.66%. The Russell 2000 Small Cap index is down 0.95% for the week and the S&P500 equal weight was parallel to its 2022 high, showing the narrowness of the support for the all time highs on the S&P500.
French financial markets have come under selling pressure since President Emmanuel Macron called for a snap election last month, with concerns that a far-right win could add to worries over fiscal sustainability. But there is also nervousness about what will happen if there is no clear winner in Sunday’s second round of voting. Fresh polls showed the far-right National Rally (RN) party and its allies were still in the lead but looked to fall short of getting an outright majority.
The UK national election on Thursday propelled the Labour Party to a sweeping victory, and Labour leader Keir Starmer became the next Prime Minister. In the six-week election campaign,
The latest update indicates that Labour has won 411 seats, and the Conservatives have secured 121 seats. This gives Labour a massive majority in the House of Commons. One seat has not yet declared a winner.
Actually, though this was a vote against the Tories, while the share of the vote Labour got hardly moved, and was in fact lower than in recent elections, votes went to the right in the form of Reform, or to the Liberal Democrats, Greens and other parties – and Labour was unseated in a couple of spots as a result of this, and in the light of their stance on Gaza.
As Sky put it, A thumping majority without a thumping share of the vote’. Chief Pole analyst John Curtice said “Actually, but for the rise of the Labour Party in Scotland… we would be reporting that basically Labours vote has not changed from what it was in 2019”. Roughly one third of the votes and two thirds of seats shows the problem with the first past the post system, with turnout (which is not compulsory) below 60%. Labour is pretty centralist and conservative.
Starmer did not win because Britain was hankering for a social-democratic government. He did not win because his Albanese-style small-target strategy appealed to voters. He won merely because he wasn’t the government. Starmer won because Labour was not the Tories. Prime Minister Rishi Sunak’s government was stale, tired, divided, regicidal and largely directionless, sapped by eight years of post-Brexit chaos.
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 start the new financial year, how are the markets looking and what are they key trends ahead?
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Go to the Walk The World Universe at https://walktheworld.com.au/
This is our weekly market update, where we start in the US, cross to Europe and Asia, and end in Australia, and we also cover commodities and crypto, as I get my ideas straight for the next leg of the year. In essence, AI has driven markets hard, especially in the US, but market breadth is narrow, and risks remain elevated.
Shares in New York ended lower on Friday, reversing modest opening gains after the latest inflation data showed that the disinflation narrative was intact, widening ever so slightly the door to a pivot to rate cuts. So an early rally fizzled as investors digested in-line inflation data and weighed political uncertainty after the U.S. presidential debate where the shaky performance from U.S. President Joe against Donald Trump has just ratcheted November’s U.S. election uncertainty up substantially.
Data showed U.S. monthly inflation was unchanged in May, an encouraging development after strong price increases earlier this year raised doubts over the effectiveness of the Fed’s monetary policy. The Commerce Department report also showed consumer spending rose marginally last month, fueling optimism that the U.S. central bank could engineer a much-desired “soft landing” for the economy.
There was a late wave of selling the magnificent seven, with a 3 per cent tumble in Meta. Amazon, Alphabet, Apple and Microsoft each closed more than 1 per cent lower though Tesla edged 0.2 per cent higher.
Wells Fargo noted that upcoming events, such as the November elections and potential delays in disinflation, may cause episodes of market volatility in the months ahead. Worth reflecting again on the fact that thirty percent of the S&P’s returns this year have come from Nvidia alone. It was now the most expensive stock on the most expensive market in the world and the Magnificent 7 accounts for 71% of the S&P 500 Index’s year-to-date return. Tightrope time?
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