Rudi’s View: ANZ, AUB, Beach Energy, CSL, Flight Centre & Newmont

Always an independent thinker, Rudi has not shied away from making big out-of-consensus predictions that proved accurate later on. When Rio Tinto shares surged above $120 he wrote investors should sell. In mid-2008 he warned investors not to hold on to equities in oil producers. In August 2008 he predicted the largest sell-off in commodities stocks was about to follow. In 2009 he suggested Australian banks were an excellent buy. Between 2011 and 2015 Rudi consistently maintained investors were better off avoiding exposure to commodities and to commodities stocks. Post GFC, he dedicated his research to finding All-Weather Performers. See also "All-Weather Performers" on this website, as well as the Special Reports section.

Rudi's View | May 16 2024

By Rudi Filapek-Vandyck, Editor

It is the eye-catching recurring theme in investment strategy reports and investor surveys this month: investors have become more confident about the medium-term outlook, despite delays to future rate cut expectations.

And as I highlighted in my Weekly Insights earlier this week, corporate results and market updates have made a crucial contribution to this boost in general market sentiment.

The graphic below is taken from the latest investment managers survey organised by S&P Global, which, unsurprisingly, shows global risk appetite has rapidly recovered from the April confusion to its highest level since late 2021.

The graphic shows how expectations have turned into a net positive on the basis of quarterly corporate financial releases in the USA. Weekly Insights this week suggested, arguably, the underlying picture/trend for Australia is a net positive too.

Post this week's Federal Budget, which yet again has amped up the public debate about inflation versus growth, Macquarie strategists stated the following:

"With more than 50 countries around the world holding elections in 2024 (incl Biden vs Trump), Australia is unlikely to be the only government that delivers a pro-growth budget as they look to re-election.

"All this pre-election spending should support the growth cycle and corporate earnings. The risk to markets is higher bond yields as inflation remains higher for longer and delays rate cuts.

"At this point, downside risks to growth are more likely in 2025 when governments would be expected to deliver some typical post-election discipline."

And that, as the Devil's Advocate would suggest, sums it up quite nicely.

For what it's worth, I view the latest $300 power bill compensation as announced by Treasurer Chalmers as simply the government playing the rules of the game. It will reduce official CPI readings by an estimated -0.5%, simply because that's the way these things are measured and included in the CPI calculation.

As wealthy Australians are less likely to spend the extra benefit, or maybe they will do it overseas, that statistical trickery might actually outweigh the spending by less-wealthy households. With cost-of-living pressures continuing, nobody was seriously thinking any government was simply going to watch disasters unfold and do nothing?

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