US jobs report surprises on the upside

August 8, 2022
Markets were fairly buoyant for most of the week before a very strong US jobs report upon Friday doused investor hopes that the Fed might pause its interesting rate hiking cycle.

Markets were fairly buoyant for most of the week before a very strong US jobs report upon Friday doused investor hopes that the Fed might pause its interest rate hiking cycle. That left the S&P 500 and European indices more or less unchanged while Australia and Asian markets (which had closed by that time) eked out a 1%gain. This was an OK result given that long term rates started to head up again last week. With inflation expectations staying steady, one might have expected the uptick in real (after inflation) rates to have upset markets a little more but the largely positive earnings season has probably helped, especially as the market was braced for bad news. It all adds up to a fairly resilient economic picture. Most investors are now expecting a US recession but it's not showing up in the data. Central banks increasingly believe they need to engineer a recession, or at least the fear of one, to dampen economic activity and head off inflationary pressures which would have even more damaging implications in the long term. Nowhere was this more evident than in the UK where the Monetary Policy Committee raised rates by 0.5% while emphasising that they saw no way of avoiding a year long recession amidst crippling rises in gas prices. Mean while many commentators question whether raising interest rates would even be effective against supply side constraints and one might reasonably question whether higher rates in the UK will do much to dampen global demand for oil or induce OPEC to increase production, for instance. A global recession might do the trick though and in any case central banks, having acted too late to head off inflation can’t be seen to be sitting on their hands. Against this backdrop it was perhaps surprising to see markets, including that of the UK, remain so calm.

 

In the US, tech stocks continued to do the heavy lifting and energy stocks continued to fall along with the oil price and most other commodities. The oil price has fallen more than 20% in the last 2 months and is back to where it was before the invasion of Ukraine.  That is also true of wheat and in fact most other commodities across the metals, agricultural and energy sectors, which may suggest that markets have indeed already priced in the recession that we are in the middle of or are about to have, depending on who you talk to.  

 

If bond markets are pricing in a recession, it is a fairly modest version that leaves cashed up corporates relatively unscathed as credit spreads narrowed again last week. In Australia the market is also looking through all the talk of a consumer squeeze and falling house prices as bank share prices continued to recover and most other sectors were in positive territory apart from Energy and Real Estate Trusts.  Banks are now almost back to where they where at the beginning of the year while Consumer Discretionary, IT, Real Estate Trusts and Materials stocks are the only sectors to be significantly off their highs. This implies the equity market is hoping for a rebalancing type of recession where some belts are tightened but there are few forced real estate sellers.  This week we will find out if the corporate sector agrees as the local reporting season starts in earnest.  

‘Buy the dip’ opportunism start surfacing

August 2, 2024
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.
Read More

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%.
Read More

Helping your clients assess the climate impact of their Portfolio

August 2, 2024
Nathan Fradley explains how the ethosesg technology can help you assess and design an ethical portfolio that aligns to an investor’s personal values.
Read More

It's going to be a long six months

August 2, 2024
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…
Read More

What is a fair way to compare funds?

August 2, 2024
How Can We Do Apple With Apples Comparisons For Industry Funds With Different Asset Allocations And Levels Of Illiquid Investment?
Read More

"What do I tell a client who wants to invest in Crypto?"

August 2, 2024
With 2021 bringing cryptocurrencies into the spotlight for both retail and institutional investors, is there a place for these currencies within client portfolio's?
Read More

What is a fair way to compare funds?

August 2, 2024
How Can We Do Apple With Apples Comparisons For Industry Funds With Different Asset Allocations And Levels Of Illiquid Investment?
Read More

Finding value and maintaining confidence in a FOMO world

August 2, 2024
Join host Toby Potter of IMAP with Nick Kirrage of Schroders and Jonathan Ramsay of InvestSense as they discuss value as a style, and as a driver of conviction when investing.
Read More

Inflation in 2022 - Beware of cross currents in 2022

August 2, 2024
With inflation appearing to be on the way up again, what are some of the possible scenario’s for 2022? Where does inflation go from the zero bound we’ve reached?
Read More

What happened in markets in 2021, and why?

August 2, 2024
Join InvestSense Director, Jonathon Ramsey to reflect on the price action seen in markets in 2021 and what this might mean for 2022.
Read More

We've got a bad case of FOMO, but it's not what you think

August 2, 2024
With valuation still being the lightening rod for when markets react to external forces, the most expensive things tend to move the most. What does this mean for global asset allocators, and what is InvestSense’s position?
Read More

Markets ended up on the back foot after an unexpected U-turn by Fed Chair Jerome Powell on inflation. Or was it so unexpected?

August 2, 2024
Markets ended up on the back foot after an unexpected U-turn by Fed Chair Jerome Powell on inflation. The large local miners and banks fared much better but Australian market was dragged down by quite big reactions to news from a handful of stocks.
Read More

Andrew Hunt's visit to New York and some key implications for global markets

August 2, 2024
Last week Andrew visited the InvestSense offices and shared his observations and findings from his visit to the United States, specifically New York.
Read More

Helping your clients assess the climate impact of their Portfolio

August 2, 2024
Nathan Fradley explains how the ethosesg technology can help you assess and design an ethical portfolio that aligns to an investor’s personal values.
Read More

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.
Read More

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.
Read More

Bad news equals good news

August 2, 2024
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.
Read More

‘Buy the dip’ opportunism start surfacing

August 2, 2024
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.
Read More

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%.
Read More

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...
Read More
Icon of a letter

InvestSense insights, delivered straight to your inbox.

Icon of a letter

Get the latest industry news

Icon of a letter

Get the latest industry news

Icon of a letter

Get the latest industry news