As I’ve mentioned so many times before, my dislike of reporting season is immeasurable. It’s a choppy time to be in the markets and a steady hand is needed at all times. How many times have we heard this story?
We thought it prudent to send a note this weekend since the Trump/North Korea situation appears to have moved off Twitter and into the real world. We can’t and won’t predict what exactly will happen in Korea but there are ways to profit & protect capital from the escalation of tensions.
It’s a frustrating thing when writing occasionally funny yet always insightful market commentary that something you’ve been putting together for a week on the unwinding of bond proxies suddenly becomes temporarily moot.
It has often been said the Australian market is made up of banks and miners and little else. The banks are facing headwinds of a housing bubble, regulatory scrutiny & increased taxation. The miners are facing declining oil prices, erratic iron ore pricing and a slowing down of Chinese growth.
On the 31st May the ASX 200 Index closed at 5724 points.
On the 30th June the ASX 200 Index closed at 5721 points.
A whole month with no outcome was a welcome relief following the 3.3% hammering the market took the month previous. Before too many eyes turn to the seasonally strong month of July (up 4.4% & 6.3% in ’15 & ’16) it might be worth having a look at some of the better hits of a “June Swoon” we’ll soon forget.
We’re being a little dramatic, we know. Last week’s note stressing the closeness to the recessionary precipice on which Australia currently stands is still being circulated and we still stand behind it. (The note, not the precipice) We, as a country, are in real trouble and the market is screaming that at us as well.
According to ancient investment legend, “Sell in May & go away” now gives way to the “June swoon” and we reiterate that if you’re making investment decisions based on rhymes you need to rethink your strategy.
With reports of a third aircraft carrier heading to the Korean Peninsula maybe it’s time for a little levity. I stress that, although significant, the risk of nuclear war isn’t the most immediate risk to local equities markets at this current point in time.