We’ve
charted the S&P/ASX200 over the last 5 years, as well as YTD 2013.
- 2013 YTD has had one of the most aggressively positive starts to the year.
- A pullback within Q1 is common (08, 09, 10, 11,13).
- Following a pullback in the Q1 or shortly thereafter, a rebound through Q3, Q4 is common (09, 10, 12).
- Consensus commentary was that the rally from 2Q12 to date was aggressive however when compared to 09, the rally appears mild.
- Our current position is higher than all other years with the exception of 08, and higher than all year end positions. This is worrying, however taken in the context of global economic health, our view is that we’re on surer footing now than in previous years. By this we mean that key challenges (EU debt, US debt, CH policy change, AU commodity price falls) have now been exposed, faced and at least partly addressed. We could see 2H13 recapture a flat 2Q13.
- Looking ahead, the next key event will be next US reporting season which commences in April. We need to see an ongoing improvement in company earnings (E) to match current multiples.
- If the market only holds our current position then investors will still be ahead through distribution payments which implies that equities remain appealing in a falling interest rate environment.
- The caveat to this is of course unknown, unknowns – war, natural disasters, corporate defaults, unexpected sovereign defaults (emerging nations) etc.
Indices:
The
Australian All Ordinaries Index has moved down decreasing -24 points (or -0.4%) since closing last
Friday to 02:50 pm today.
The
rest of the world as measured by the MSCI index increased +7
point (or +2.0%) in A$ from closing last Friday to end of trade
Thursday.
Have
a great weekend,
The Team at IPS
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