We’d like to think that there exists opportunities in all markets – and there does – but the (mis)behaviour of risk assets in recent weeks speaks of an increasingly irrational exuberance based on little more than the underwriting of a price floor by central banks.
Yet even the money printers of the US Federal Reserve cannot control the latest results of corporate America, which will be coming out over the coming weeks. And although we’re very much of the opinion that the US economy is in recovery, growth is still too tepid to deliver enough torque to American companies beyond what they’ve already eked out through efficiency gains: one of the unspoken reasons why US unemployment remains relatively entrenched
With global trade also subdued – as our data wrap shows this week, the US trade deficit widened in August, with exports falling 1% – and aggregate demand weakening in Europe and China it all begs the question where the next upside leg of earnings will come from. And until that leg of growth comes, what will happen to share prices?
With the theme of price reversion in mind, this week Leith van Onselen offers scenario analysis of how long and in what manner Australian property prices could revert to historic pricing norms. We continue our series on dollar-exposed industrial stocks that will benefit as the Australian dollar also returns to recognisable levels in the medium term. We look at Woolworth’s too and its decision to spin-off a property portfolio, both in terms of the impact on its shares and on the new REIT that will emerge. Liam Shorte continues his journey through the SMSF establishment process and much more.
In our model portfolios this week it was tearaway time for MacroGrowth, while gold positions held MacroTrades to a smaller gain and pushed MacroIncome to a small loss.
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