Is Cash Trash Now?

So, as we approach the halfway mark through the year, it’s important to note that U.S stocks are on track to mark their worst first half of the year in more than 50 years. The S&P 500 is down around 18% year-to-date, on track for its worst first half of any year since 1970, and the NASDAQ closer to 30% as the Fed tightens monetary policy in its fight against the highest inflation in decades. So relative to holding cash since the start of the year, stocks have been trashier.

Bonds, which investors typically count on to counterbalance stock declines in their portfolios, have fared little better: The U.S. bond market, as measured by the Vanguard Total Bond Market Index fund, is down 10.8% for the year to date, putting it on pace for its worst performance in modern history.

That said of course the value of cash is being deflated in real terms by high inflation, so its not perfect, but lessons from history suggest that sometimes it’s a reasonable holding place, until markets bottom. And with investor expectations fluctuating between continued high inflation and an economic downturn caused by a hawkish Fed, few believe the market’s volatility will dissipate anytime soon. Remember that on Thursday, Fed Chair Jerome Powell said the central bank’s focus on curbing inflation was “unconditional”, adding to fears about more interest rate hikes.

[CONTENTS]
0:00 Start
0:15 Introduction
1:15 Worst First Half
2:30 Inflation Control Unconditional
4:10 Leading Indicators
9:30 More FED comments
13:14 US Market
14:15 Oil
16:54 US Bank Stress Tests
19:30 European Markets
20:58 Asian Markets
23:10 Australian Markets
27:40 Crypto and Harmony
29:50 Conclusion and Close

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

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Stormy Weather Kills The Wealth Effect!

This week, The U.S. Federal Reserve announced an interest rate hike of 75 basis points, its largest increase since 1994, the Swiss National Bank unexpectedly lifted rates by 50 basis points on Thursday, while the Bank of England on the same day raised its interest rates by 25 basis points, hiking for its fifth consecutive meeting. The main outlier is the Bank of Japan, which stuck with its strategy of pinning 10-year yields near zero at its policy meeting earlier Friday. However, this has done little to ease worries that inflation and rate hikes are going to curb economic growth for years to come.

And It was one of the most dramatic weeks in the short history of the cryptocurrency market, bookended by the type of announcements investors fear the most from a counterparty: We’re sorry, but we just can’t return your money right now. It all started late Sunday, when a sort of crypto shadow bank called Celsius Network suspended withdrawals from depositors who had been enticed by sky-high interest rates that, in retrospect, were likely too good to be true. By the end of the week, on the other side of the world in Hong Kong, the digital-asset lender Babel Finance also froze withdrawals.

Just as Bear Stearns’s hedge funds were among the first to reveal problems from the subprime mortgage crisis, the “cockroach theory” springs to mind: If you see one of those nasty bugs scurrying across the floor, chances are there are plenty more hiding behind the fridge or under the sink. Wealth destruction is now a thing.

[Content]

0.00 Start
0.15 Introduction
2:10 Federal Reserve Inflation Battle
3:30 GDP Forecast Down
7:25 US Markets
10:00 European Markets
11:20 Asia Pacific Markets
11:40 Japan Bond Crisis
13:05 Australian Markets
18:00 Crypto Winter
23:30 Crypto Traders Turn On Each Other
29:05 Conclusion and Close

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The Bears Have It!

As expected, U.S. equities tumbled on Monday, with the S&P 500 confirming it is in a bear market, thanks to expected aggressive interest rate hikes by the Federal Reserve that would push the economy into a recession. Markets have been under pressure this year as climbing prices, including a jump in oil prices due in part to the war in Ukraine, have put the Fed on track to take strong actions to tighten its monetary policy, such as interest rate hikes. The Fed is scheduled to make its next policy announcement on Wednesday and investors will be highly focused on any clues for how aggressive the central bank intends to be in raising rates.

The latest pickups in consumer prices and inflation expectations will probably spur Federal Reserve officials to consider the biggest interest rate increase since 1994 when they meet this week, after chairman Jerome Powell previously signalled a smaller move was the likely outcome.

In fact The benchmark S&P index has fallen for four straight days, with the index now down more than 20% from its most recent record closing high to confirm a bear market began on Jan. 3, if you use the standard definition.

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Today’s post is brought to you by Ribbon Property Consultants.

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Buying property, is both challenging and adversarial. The vendor has a professional on their side.

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Expect More Shock And Awe From Central Banks…

My latest market update as inflation grinds higher forcing more Central Bank rate hikes. The collateral damage will be significant, but they are now set on this “shock and awe” strategy, designed to unwind many years of too lose policy. How long they stay that course is an open question, but we must expect markets to slide further, and correct into this new higher rate environment.

[Content]

0:00 Start
0:15 Introduction
1:15 US Inflation Higher Than Expected
5:35 Interest Rates Hiked Higher
6:50 Sentiment Drops
8:22 US Market Summary
10:35 Oil
12:45 Gold
14:10 Europe Summary
16:55 Asia Pacific Summary
18:23 Australian Summary
20:27 Crypto and Bitcoin
22:19 Summary and Close

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An Opera Of Canaries: Market Update for 4th June 2022

Yes, folks, the collective noun for a collection of Canaries is an Opera, and it seems fitting given recent events, and data. In this weeks market review we start with the US – I am often asked why I focus here, and it is because as the USD is so dominant and the US Markets so big, our markets follow like a playful puppy, we hardly think for ourselves, but ape what the US did. And we will also cover Europe and Asia, where several markets were closed on Friday before coming back to Australia.

US stocks resumed their trend of weekly losses after strong hiring data cleared the way for the Federal Reserve to remain aggressive in its fight against inflation. Treasuries fell and the dollar strengthened against peers.
The Dow Jones Industrial Average slipped 1.7%, or 349 points, the Nasdaq fell 2.5% and the S&P 500 fell 1.7%.

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No FED Put For You, Or You…!

Wall Street’s three major indexes closed lower on Tuesday, following a rally last week, as volatile oil markets kept soaring inflation in focus and investors reacted to hawkish comments from a Federal Reserve official.

The Dow Jones Industrial Average fell 0.67%, to 32,991, the S&P 500 lost 0.63%, to 4,132.15 and the Nasdaq Composite dropped 0.41%, to 12,081.39.
All three indexes had rallied last week to snap a decades-long losing streak. With Tuesday’s decline, the S&P and the Dow were essentially unchanged for May. The Nasdaq showed a monthly decline of 2%.

And Inflation in the Eurozone surged to a new record high in May, piling more pressure on the European Central Bank to end its money-printing and bring its key interest rates back above zero. Preliminary figures from Eurostat showed consumer price inflation rose to 8.1% in the 12 months through May, up from 7.4% in April.

So, markets should not look for a quick change of direction from Central Banks.

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

The Consumers’ Last Hurrah?

Our latest weekly market review we look at the momentum in the market, which has turned positive (unless you hold Crypo) starting with the US, Europe, Asia and Australia.

The big economic news on Friday from the US was that real consumer spending rose in April by the most in three months. This helped to push the S&P 500 Index to its biggest weekly gain since March.

At first glance, this may be seen as a sign of resilience on the part of US consumers despite the highest inflation rates since the early 1980s. However, look more closely and it’s not encouraging that consumers are having to dig deeper into their pockets to finance that spending with the personal saving rate dropping below 5% for the first time since 2009.

Annual inflation remains three times higher than the Fed’s 2% target and helps explain why policy makers are seen pressing on with half-point hikes in interest rates in coming meetings.

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Warnings That Shook The Markets!

The S&P 500 and the Nasdaq finished in the red on Tuesday as worries that aggressive moves to curb decades-high inflation might tip the U.S. economy into recession dampened investors’ risk appetite.

All three major U.S. stock indexes pared their losses in afternoon trading, with the blue-chip Dow turning positive. Even so, the S&P 500 ended just 2.2 percentage points above confirming it has been in a bear market since reaching its all-time high on Jan. 3.

The Dow Jones Industrial Average rose 0.15%, to 31,928.62; the S&P 500 lost 0.81%, to 3,941.48; and the Nasdaq Composite dropped 2.35%, to 11,264.45. The volatility index rose 3.41% to 29.45.

Six of the 11 major sectors of the S&P 500 ended the session in negative territory, with communication services and consumer discretionary suffering the biggest percentage losses.

“As we step back and acknowledge the primary market catalysts, it’s really been about the Fed pivot and the change in interest rates, which have influenced prices across the capital markets,” said Bill Northey, senior investment director at U.S. Bank Wealth Management in Helena, Montana.
“In the last two weeks, we’ve seen some degree of macroeconomic deterioration starting to be manifested in corporate earnings and economic releases.”

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Banking On A Relief Rally!

U.S. stocks ended higher on Monday as gains from banks and a rebound in market-leading tech shares supported a broad-based rally following Wall Street’s longest streak of weekly declines since the dotcom bust more than 20 years ago.

Interest rate-sensitive banks jumped 5.1% after the largest U.S. lender, JPMorgan Chase & Co raised its current year interest income outlook. JPMorgan Chase’s stock surged 6.2%.

“It feels like a relief rally more than a fundamental change in investor sentiments,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “Investors as a whole feel like there’s another shoe to drop and they’re probably right in the short term.”

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Planned Wealth Destruction Continues…

In this week’s market review, we see the negative moves now compounding as the bears remain in charge, emboldened by fresh statements for Central Banks about the need to tackle rampant inflation, and even confirming that falling markets ARE PART OF THE PLAN.

As usual we start with the US markets, as it really sets the tone for global trends, cover Europe, Asia and Australia as well as crypto and commodities.

In fact on Friday US stocks pulled back from session lows after the S&P 500 dipped 20 per cent below its January 3 closing record. 20% of course is defined as bear territory. Treasuries and the dollar gained as havens caught bids. The NASDAQ is however already over that line by some margin, and we can expect more falls ahead.

Afterall, the US consumer is deeply negative. “While many cross-currents are causing the current sell-off, the proximate cause of the recent acceleration in the stock declines revolves around fears about the U.S. consumer,” Glenview Trust CIO Bill Stone wrote. “For the first time in the post-Covid period, retailers have been stuck with some excess inventories. Costs due to inflation are also taking their toll on their earnings.” “Lastly, there is evidence that the lower-end consumer is feeling the pinch from the increase in prices,” Stone said.

The sell-off has led to increasing warnings of stagflation and to Wall Street strategists cutting their S&P 500 targets. It has also led to investors scrambling to find places to hide during the downturn.

And At the end of another volatile week, price swings were likely to be exacerbated by the monthly expiration of options tied to equities and exchange-traded funds.

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