Momo investors don't like rising yields

Mathan Somasundaram

Deep Data Analytics

Local market had a flat day with mining doing the heavy lifting on China data while weak US data keeps piling up. US markets finished positive on stimulus and vaccine but the senate republicans rained on the stimulus deal straight after their market close. Vaccine hope is still medium term catalyst for the economy while short term economic slowdown was further confirmed with manufacturing and auto sales data. Pandemic outlook in the US suggests there are restrictions coming sooner than later. Media speculation is just about everyone in the White House is boking in a presidential pardon. Supposedly there is so much of that going one…there is even reports of pardon for donation being investigated. Nothing that happens in the White House can surprise anyone anymore!

RBA started their update with…we don’t target property market and then just about everything had a link to the property market. Australia has two growth engines…commodity bubble or property bubble. Fighting with China creates uncertainty for commodities and further forces the risk in property bubble. Every so called reform and handout is targeting property bubble. Almost 60-70% of fund managers chase direct or indirect property bubble exposure and government handouts. Small business is the biggest employer and they have not paid rent, utilities or wages…and that is about to change. Government basically paid workers wages to classify them as employed while being unemployed. Just imagine the amount of money being pumped to keep the property bubble afloat in rising unemployment, falling migration, falling rents and oversupplied apartments. Someone will be paying taxes for decades to unwind this mess!

US 10 year bond yield is breaking higher again and forming the Golden Cross pattern with 50 day and 100 day MA breaking above 200 day MA. Reflation trade is building momentum. Growth multiples are going to come lower and value stocks will continue to catch a bid on cyclical recovery. Has the 40 year bond cycle? If not…we are falling into double dip recession in the US and that is a credible option now due to pandemic management.

US market had a positive day on the back of stimulus and vaccine hope over Covid pandemic and economic issues. Bipartisan group has put together a stimulus bill around $1t and it's already getting hit my Senate Republicans. Deal looks to be on the slow path as both sides are more than $1t away from each other. Vaccine hope is pricing in perfect execution in production and distribution in a unproven tech and logistics level. Doctors are worried about decent side effects on 10-15% may keep them from coming for their second shot...ignoring the 20-30% on political reasons. Covid is rampant and economic data has started to fade. Bonds, USD and Oil fell. Gold, Copper and yields moving up. NASDAQ was the best and DOW was the laggard. Gold and Banks were the best sectors while Industrials were the only red sector. Yields are too high again and growth stock multiples can't hold. Do you have enough Gold? Never enough in this market.

Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle’s going to get bumpy!!!

Not already a Livewire member?

Sign up today to get free access to investment ideas and strategies from Australia’s leading investors.

Deep Data Analytics provides this financial advice as an honest and reasonable opinion held at a point in time about an investment’s risk profile and merit and the information is provided by the Deep Data Analytics in good faith. The views of the adviser(s) do not necessarily reflect the views of the AFS Licensee. Deep Data Analytics has no obligation to update the opinion unless Deep Data Analytics is currently contracted to provide such an updated opinion. Deep Data Analytics does not warrant the accuracy of any information it sources from others. All statements as to future matters are not guaranteed to be accurate and any statements as to past performance do not represent future performance. Assessment of risk can be subjective. Portfolios of equity investments need to be well diversified and the risk appropriate for the investor. Equity investments in listed or unlisted companies yet to achieve a profit or with an equity value less than $50 million should collectively be a small component of a balanced portfolio, with smaller individual investment sizes than otherwise. Investors are responsible for their own investment decisions, unless a contract stipulates otherwise. Deep Data Analytics does not stand behind the capital value or performance of any investment. Subject to any terms implied by law and which cannot be excluded, Deep Data Analytics shall not be liable for any errors, omissions, defects or misrepresentations in the information (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the information. If any law prohibits the exclusion of such liability, Deep Data Analytics limits its liability to the re-supply of the Information, provided that such limitation is permitted by law and is fair and reasonable. Copyright © Deep Data Analytics. All rights reserved. This material is proprietary to Deep Data Analytics and may not be disclosed to third parties. Any unauthorized use, duplication or disclosure of this document is prohibited. The content has been approved for distribution by Deep Data Analytics (ABN 67 159 532 213 AFS Representative No. 1282992) which is a corporate approved representative of BR Securities (ABN 92 168 734 530 and holder of AFSL No. 456663). Deep Data Analytics is the business name of ABN 67 159 532 213.

1 topic

3 stocks mentioned

Mathan Somasundaram
Founder & CEO
Deep Data Analytics

Over 25 years’ experience in the finance/tech industry. Mathan has worked extensively in all parts of the finance sector (i.e. County NatWest, Citi, LIM, Southern Cross, Bell Potter, Baillieu Holst and Blue Ocean Equities). Currently Founder and...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Please sign in to comment on this wire.

trending on livewire
Get the best of Livewire by signing up to our popular daily newsletter