Monthly Macro with Jonathan Tolub and Hunt Economics: A deeper dive into the three scenarios the market is cycling through: Goldilocks, Recession and Entrenched Inflation
Markets start to believe central banks are genuine about tightening
August 2, 2024
The relative calm that markets had enjoyed during most of the Ukraine war broke last week, perhaps reminding us that financial conditions remain a key concern for markets in ways that are often less obvious than attention gapping geopolitical headlines.
We discuss Quantitative Tightening with our colleagues from Hunt Economics. With indicators continuing to show the risk of increasing inflation, central banks are looking at strategies to curb the inflation risk.
On the face of it was a fairly quiet week leading into the Easter break with most markets ending flat for the shortened week; however, you didn’t have to look too far below the surface to find volatility.
The Nasdaq finished the week with another 4% fall on Friday, closing down 13% for the month and more than 20% year to date. The wider US market was also down sharply and is now down 9% and 13% for the month and year to date respectively.
The US S&P 500 was down for the 5th week in a row last week but only by 0.6%, a margin that belied what was in fact an incredibly volatile week. The Nasdaq was up by over 5% on Wednesday only to fall by even more on Thursday.
It may be drawing a long bow but it now seems plausible that, just below the surface, AI inspired optimism has helped markets remain surprising resilient throughout this year, particularly when facing the US regional banking crisis that started in mid-March and more recently the polemic surrounding the US Debt Ceiling.
US inflation moderated, the Federal Reserve temporally paused its rate hiking cycle while consumer sales and sentiment gauges firmed. On the face of it, this looks like an immaculate ‘disinflation’, and the dominant narrative in the press is that a resilient US consumer has fanned hopes of a soft landing.
Hopes of a soft economic landing permeated markets last week and even the hapless UK market caught a bid late in the week, leaving it up a percent along with the ASX, while Europe, Japan and he US ended the quarter on a high note, up by 2-3%.
Mixed labour data sows the seeds of doubt and volatility
August 2, 2024
Last week we saw some volatility creep into markets as we turned the page on a new financial year. US labour data was mixed but just strong enough to suggest that higher rates might be around for a bit longer. This caused some volatility in bond markets, with short term (2 year) rates up again and hitting 15-year highs.
In recent years professional investors have got increasingly used to the fact that good news is bad news for markets because higher interest rates are likely to be necessary, and of course vice-versa. However, last week the effect was stronger than ever and stocks rallied mid-week amidst reports of widespread lay-offs and expectations of a weak US jobs report.
The US market finally market caught a bid last week. Early in the week the market was down few percent after an earnings miss by ad dependent social media platform Snap (of Snapchat fame) combined with weak guidance raised more doubts about the economy and economic resilience of tech companies.
US momentarily dips into official bear market territory
August 2, 2024
The seventh negative week in a row for the US sent it briefly into official bear market territory before it recovered slightly late on Friday. The world’s largest stocks (Apple, Microsoft Amazon and Google) are all down 25%.
Join Jonathan Ramsay and Andrew Hunt as they discuss what the future holds for the Chinese growth model, Where to from here, and what will the implications be for the west…
Carbon credits and investing – is it the outcome we expect?
August 2, 2024
ETFs that invest in carbon credits are now available. Why should we assume that their price will go up over time? And does buying a carbon credit ETF actually contribute positively to emissions reduction? Will it actually generate the outcome investors are expecting? This article explores the issues around investing in carbon credits.
Better World makes a difference with investment in renewables
August 2, 2024
There are many direct assets and funds that contribute positively to climate action within the InvestSense Better World Portfolios. Meridian Energy is one of the stand-out direct assets in the portfolio with a climate energy focus.
In recent years professional investors have got increasingly used to the fact that good news is bad news for markets because higher interest rates are likely to be necessary, and of course vice-versa. However, last week the effect was stronger than ever and stocks rallied mid-week amidst reports of widespread lay-offs and expectations of a weak US jobs report.
The US market finally market caught a bid last week. Early in the week the market was down few percent after an earnings miss by ad dependent social media platform Snap (of Snapchat fame) combined with weak guidance raised more doubts about the economy and economic resilience of tech companies.
US momentarily dips into official bear market territory
August 2, 2024
The seventh negative week in a row for the US sent it briefly into official bear market territory before it recovered slightly late on Friday. The world’s largest stocks (Apple, Microsoft Amazon and Google) are all down 25%.
How Mark Lewin saved 13 hours a week with Managed Accounts
August 2, 2024
Mark Lewin was a financial planner, but is now the Director of Back Office Heros. In his planning business he gained significant efficiencies by recommending and implementing managed accounts for his clients. He tells us how...
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