4 March 2019
Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, two are ‘red’ and three
‘amber’. The cyclical positioning has been classified as ‘downswing’ with
global growth decelerating, a loss of output momentum in China, the largest
national user of metal, and less supportive monetary policy settings than
have prevailed for most of the post-2009 period.
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Market Directions
Equity prices generally maintained their upward trajectory in the face
of cross currents from US-China trade talks and the failure of negotiations
to denuclearise the Korean Peninsula. Confirmation from the Federal Reserve
chairman that the end of the central bank’s balance sheet rundown is in
sight reinforced the recent policy pivot which has buoyed markets. Commodity
prices have reacted to news about US-China trade talks as if trade frictions
are the principal reason for the slowing in global growth, setting up the
sector for disappointment when structural impediments to growth remain
evident after a trade deal is concluded.
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Portfolio Performance and Positioning
Several Phase II stocks produced strong recoveries unrelated to market
conditions in the past week. Partially offsetting those gains were losses
in Phase I and Phase III stocks which were more closely linked to broader
equity market dynamics. A relatively large weighting in Phase I companies
has been retained. Portfolio changes have been made to reflect relative
performance outcomes.
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Stock Reviews and Rating Analysis
PortfolioDirect rating reports analyse the quality and risk
attributes of proposed mineral developments. Rating criteria apply to mining and oil and gas stocks at any stage of
development. PortfolioDirect uses a five point rating
scale to measure the risk adjusted quality of proposed mineral developments
or companies.
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The 'Steak or Sizzle' blog provides summary judgements on
the top performing ASX-listed resources stocks.
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