At the end of last week, speculators started to “attack” Deutsche Bank, in our opinion, they are not comparing apples with apples but investors are concerned about the German bank’s exposure to US commercial real estate. We see no reason why DBK should see any contagion apart from the obvious psychological factors, we’ve avoided catching the falling knife around global banks but if the very profitable DBK breaks below its 2022 low it’s going to look tempting from a valuation perspective – a failed attempt by short sellers with DBK could ultimately restore confidence to the banking sector.
US stocks experienced another mixed session overnight after initially rallying strongly before indices then reversed before finally recovering as Yellen tried to undo her comments yesterday, the Dow closed up +0.2% while the tech-facing NASDAQ posted a gain of +1.3% - at about 6 am this morning Yellen said that “the US is prepared for additional deposit actions if required”, it appears that she’s been scolded by the powers that be but after watching the relative lack of impact it feels like the damage has already been inflicted on market confidence.
The market’s ongoing belief that the global economy is moving toward an inevitable recession combined with China’s fairly muted growth targets for 2023 has sent energy prices tumbling from their dizzy highs just one year ago e.g. Brent Crude is trading 45% below where it was this time last year. However, we are conscious that stocks often lead major tops/bottoms in their underlying commodity prices, which in turn generally run 6-12 months ahead of the economy hence we are starting to look for clues that “enough is enough” on the downside for the energy complex.
The US Fed has already hiked its benchmark fund rate eight times over the last year to the current 4.5%-4.75% target band, another +0.25% move is now expected at this week’s policy meeting even with bank failures causing a crisis of confidence in the US & Europe. Inflation hit a 40-year high in the last year and although the central bank’s aggressive monetary policy tightening has started to reverse this major economic problem as we know it has already come at a price with the US witnessing their 2nd & 3rd largest bank failures in history.
As we see aggressive selling wash through equity markets the main question MM is being asked is “should we sell and hide, or be a buyer” with underlying sentiment understandably one of caution. Today we have taken a holistic look at our MM Flagship Growth Portfolio as we look to maintain our outperformance without taking on board undue risk. Today we’ve considered a few snapshots of this portfolio after we used recent weaknesses to deploy some funds across the banks, tech, and miners.
MM remains fairly comfortable that the regulators will end the current panic sooner rather than later although that doesn’t mean the banks are a “screaming buy” they are likely to take time to regain investors’ full confidence – people love to knock the Australian banks but its times like now where we should feel blessed by their strength and stability.
US stocks experienced a volatile but ultimately positive session overnight following the support of First Republic Bank which saw the S&P00 advance +1.8% and the NASDAQ again outperform +2.7% even as Treasuries fell and rates rose after the ECB hiked interest rates. The Tech stocks are focused on the future path for interest rates as opposed to the current turmoil in the Banking Sector – on the sector level Tech rallied +2.8% while the Financials bounced +2%.
US stocks experienced another tough session overnight as Credit Suisse (CSGN SW) plunged ever lower, the European investment bank closed down a scary -24% with the Swiss Government now looking at options to stabilise the bank – ironically economists were focusing on consumers and mortgage holders being pressured by rate hikes over the last 12 months but it has been the banks that appear to have suffered the most since central banks relentlessly marched down their hawkish path.
This time last week the market was abuzz with the previous day’s 10th consecutive interest rate hike by the RBA which in the process took the Australian Official Cash Rate to 3.6%. This morning that’s a distant memory as analysts apply stress tests to the embattled US & Global Banking Sector, the former has already fallen -39% from its January 2022 high – this week we have already seen well know Zurich based merchant bank Credit Suisse (CSGN SW) plumb a fresh all-time low showing it’s not just the vulnerable US regionals that are catching sellers attention.
Through 2023 MM has been pointing out how equities were ignoring rising bond yields i.e. the previous 4 times we saw local 3-year yields above 3.5% the ASX200 was under 7000. However, ironically this month has seen the local index plunge towards 7000 as yields finally turn lower following the collapse of SVB – a great example of what drives markets transitioning over time.
US stocks experienced another mixed session overnight after initially rallying strongly before indices then reversed before finally recovering as Yellen tried to undo her comments yesterday, the Dow closed up +0.2% while the tech-facing NASDAQ posted a gain of +1.3% - at about 6 am this morning Yellen said that “the US is prepared for additional deposit actions if required”, it appears that she’s been scolded by the powers that be but after watching the relative lack of impact it feels like the damage has already been inflicted on market confidence.
The market’s ongoing belief that the global economy is moving toward an inevitable recession combined with China’s fairly muted growth targets for 2023 has sent energy prices tumbling from their dizzy highs just one year ago e.g. Brent Crude is trading 45% below where it was this time last year. However, we are conscious that stocks often lead major tops/bottoms in their underlying commodity prices, which in turn generally run 6-12 months ahead of the economy hence we are starting to look for clues that “enough is enough” on the downside for the energy complex.
The US Fed has already hiked its benchmark fund rate eight times over the last year to the current 4.5%-4.75% target band, another +0.25% move is now expected at this week’s policy meeting even with bank failures causing a crisis of confidence in the US & Europe. Inflation hit a 40-year high in the last year and although the central bank’s aggressive monetary policy tightening has started to reverse this major economic problem as we know it has already come at a price with the US witnessing their 2nd & 3rd largest bank failures in history.
As we see aggressive selling wash through equity markets the main question MM is being asked is “should we sell and hide, or be a buyer” with underlying sentiment understandably one of caution. Today we have taken a holistic look at our MM Flagship Growth Portfolio as we look to maintain our outperformance without taking on board undue risk. Today we’ve considered a few snapshots of this portfolio after we used recent weaknesses to deploy some funds across the banks, tech, and miners.
MM remains fairly comfortable that the regulators will end the current panic sooner rather than later although that doesn’t mean the banks are a “screaming buy” they are likely to take time to regain investors’ full confidence – people love to knock the Australian banks but its times like now where we should feel blessed by their strength and stability.
US stocks experienced a volatile but ultimately positive session overnight following the support of First Republic Bank which saw the S&P00 advance +1.8% and the NASDAQ again outperform +2.7% even as Treasuries fell and rates rose after the ECB hiked interest rates. The Tech stocks are focused on the future path for interest rates as opposed to the current turmoil in the Banking Sector – on the sector level Tech rallied +2.8% while the Financials bounced +2%.
US stocks experienced another tough session overnight as Credit Suisse (CSGN SW) plunged ever lower, the European investment bank closed down a scary -24% with the Swiss Government now looking at options to stabilise the bank – ironically economists were focusing on consumers and mortgage holders being pressured by rate hikes over the last 12 months but it has been the banks that appear to have suffered the most since central banks relentlessly marched down their hawkish path.
This time last week the market was abuzz with the previous day’s 10th consecutive interest rate hike by the RBA which in the process took the Australian Official Cash Rate to 3.6%. This morning that’s a distant memory as analysts apply stress tests to the embattled US & Global Banking Sector, the former has already fallen -39% from its January 2022 high – this week we have already seen well know Zurich based merchant bank Credit Suisse (CSGN SW) plumb a fresh all-time low showing it’s not just the vulnerable US regionals that are catching sellers attention.
Through 2023 MM has been pointing out how equities were ignoring rising bond yields i.e. the previous 4 times we saw local 3-year yields above 3.5% the ASX200 was under 7000. However, ironically this month has seen the local index plunge towards 7000 as yields finally turn lower following the collapse of SVB – a great example of what drives markets transitioning over time.
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