Short term traders have turned bearish and this is a sign that we could have a dip in the near term which would be an opportunity to enter the market at more attractive prices.
While the year on year growth rate for the area remains above 1%, it is hard to see how the ECB could maintain a hawkish stance this year and this will also be a positive for risk during the year.
Major US indices such as the Nasdaq and the DJIA have risen 9 weeks in a row and more than 90% of stocks within the S&P500 are above their 50 day moving average.
So far, two thirds of the companies within the S&P500 have reported a positive earnings surprise and 62% had reported a positive revenue surprise for Q4 2018.
The change in language in the minutes of the FED indicate that a previously proposed 2 hikes in interest rates for the year is being put on hold for now. This is a boost to the bond markets and will be a relief to those bond issuers which rely on rolling over their securities for funding.
Investor participation is strong as fundamentals are supportive
Although the outlook could be better, it is clear that global growth of 3.5% is far from the recessionary environment some have been forecasting.
Negative short term sentiment but fundamentals are strong
The rise in annualized volatility across sectors and adverse sentiment can be attributed in part to the actions of the Federal Reserve which has indicated it will tighten rates for a few more quarters at a time when the economy is slowing sequentially.
Stellar corporate earnings but poor equity returns in 2018
The benefit of portfolio diversification was also tested as the US broad market bond ETF (BND) and commodity ETFs also closed the year in the red.
The US remains a bright spot in the global economy
If trade tensions between the US and China subside, US equities should remain firm as retail sales, wage growth and low debt levels should continue to drive consumption.
Trade tensions are causing range-bound action in the S&P500
The trade truce between the US and China did not last long as an influential Huawei official was arrested in Canada and faces extradition to the US.
Municipal Debt to Eskom at R17 Billion
Municipal debt to Eskom is growing exponentially. In March it stood at R13.57 billion and it now stands at R17 billion. Khulu Phasiwe, Eskom spokesperson, talks to Classic Business Breakfast with Moneyweb about the power utility’s difficulty to keep the lights on in municipalities despite the massive debt burden.
Global asymmetric GDP growth continues for now
Global markets are cheering the trade ceasefire between China and the US and an output cut by oil producers in Vienna on Thursday should also provide a tailwind for risk assets.
Falling oil prices may impact inflation data
Just a couple of quarters ago, some analysts’ estimates were for the 10 year US treasury yield to edge towards the 4% level but it seems that the fall in oil prices might change the outlook.
S&P500 – Expansion of PE ratios now critical for equity prices
The stand-off between the European Commission and Italy on its budget deficit should lead to the opening of an “Excessive Deficit Procedure” by the former which would widen bonds spreads and pressurize the Euro.
S&P500 – Investors remain long and bullish on growth
We have had 9 consecutive quarters of GDP growth accelerating sequentially in the US with the economy beating forecasts and reaccelerating when analysts felt the expansion was stretched.
US economic growth on track despite market sentiment
This is the quarter with the highest earnings growth rate since Q3 of 2010. The macroeconomic data for the month remains supportive as most measures of demand are growing at a nominal rate of between 3% to 5%
Portfolio diversification with innovative tools
So what is actually causing sentiment to become negative? There are a confluence of factors starting with the ratio of negative to positive EPS guidance for the S&P500 for Q4 which is, as of last Friday, 1.73.
Incremental change in economic data matters to risk assets
The earnings season currently under way in the US is proving solid but investors are keeping an eye on the sequential growth of GDP to determine whether any tactical allocation within portfolios is warranted.
PWM Connect Magazine | Issue 3 | October 2018
In issue 3 of our quarterly PWM Connect magazine you can learn about SA investors’ growing love affair with Offshore investments, how British and European leaders insisted they could still reach a Brexit deal despite the latest failed round of divorce talks as well as some of our latest investment opportunities!
Going Forward Looking for Key Signals
The global divergence continued with major European and Asia indices suffering sharp dips which increased their negative returns in the year to date.
FED hikes but yield curve does not invert
The Italian budget deficit forecast last week leaves the country exposed to downgrades by rating agencies.
Greenshoots of a reversal in the Eurozone?
PCE core inflation numbers, the FED’s preferred measure of inflation to be released on Friday should confirm that inflation remains at its 2% target rate.
A long cycle, but no sign of a recession yet
This is one of the longest economic growth cycle in history and the anniversary of the Lehman brothers’ collapse last week, reignited discussions about whether the economic expansion is coming to an end.
The US economy, dollar and equity indices
The S&P500 rallied to end the month strongly and reached all-time highs along the way. It is crushing other equity markets as growth divergences favour the US.
FED Chair provides boost to risk assets
The annual meeting of central bankers at Jackson Hole, Wyoming is scrutinised by analysts for clues about the trajectory of monetary policy in the coming quarters.
Which Sectors might outperform the market from here?
The S&P500 rose to close to its all-time high last week as a stellar reporting season, characterised by strong growth in earnings, revenue and margins, drew to a close.
US earnings power ahead
81% of companies within the S&P500 have reported earnings recently and the numbers have again been stellar.
Defense is the best form of attack
So far, 265 companies in the S&P500 have reported earnings and the year on year growth. These have been roughly in line with the price performance for cyclical sectors with some exceptions like the Industrials segment.
PWM Connect Magazine | Issue 2 | June 2018
Wondering how the Trade-war could affect emerging markets? Our 2nd issue of PWM Connect has a very insightful article discussing the role trade tensions could have on investor concerns.
Mechanics of China slowdown
There is some debate about whether the 26% fall since February of the Shanghai Composite index is solely because of the trade dispute with the US.
S&P500 earnings growth year on year
The escalating trade war between the US and the rest of the world has seen the Shanghai Composite index in China enter bear market territory while equity indices in Europe are off their highs of the year and are struggling to make further gains.
Is portfolio rebalancing season back?
Our proprietary GDP tracking model showed that the growth of the global economy peaked in January 2018 and has since slowed sequentially.
The Different Stages Of Wealth
Financially independent people have assets that generate income (cash flow) that is at least equal to their expenses. Income that is earned without having to work a job is commonly referred to as “passive income”.
South Africa Is The Largest Wealth Market In Africa
In this blog post we do a comprehensive review of the wealth sector in South Africa, including HNWI trends, prime property, luxury and wealth management trends.
10 Must-Read Books About the Financial Market, Investing and Building Wealth
Most successful people credit reading as a factor in their success. Bill Gates reads 50 books a year, which is about a book every week. We have compiled a list of must-read books.
Structured Products' Role In Wealth Planning
Andrew Oliff, Director at PWM Wealth Management joined co-panelists Melissa Dyer, the Head of the Advisory Business at Harbour Wealth and Brian McMillan, Head of Structured Products (Retail Sales Investec) on Michael Avery’s Classic Business radio show, discussing structured products and it’s role in wealth planning.
Welcome To Our New Website
Welcome to our new wealth management website. At PWM Wealth Management we provide specialist investment services to affluent individuals. We provide independent, expert advice on local and offshore investment funds, portfolios and structures. We are Johannesburg, Durban and Cape Town based and service clients throughout South Africa.