14 June 2021
Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, one is ‘green’ and four
are flashing ‘amber’. Cyclical conditions have been disproportionately
affected by the unprecedented surge in liquidity from central banks and
accompanying fiscal expansions. Looking ahead, commodity markets are at
risk from an inevitably slowing monetary momentum. An apparent acceleration
in global growth, reflected in forecasts for 2021, is concealing a tendency
for weakening growth through the course of the year and into 2022 despite,
im the near term, forecasts being upgraded. The cyclical positioning has
been characterised as being near a peak and at risk of moving into a
‘downswing’ phase. More...
Market Directions
A weakening US dollar and unprecedentedly loose monetary conditions have
underpinned price strength among a broad array of assets, including those of
industrial and precious metals. Speculative capital flows connected to
retail investors are supporting sector prices and offsetting the negative
effect on mining equities of physical market balances tilting into surplus
due to a slowdown in demand. Heavily hyped energy storage innovations are
stoking interest but remain too far in the future to affect current metal
demand. 1990s style investment performance - when modest sector equity
price gains occurred in the midst of sometimes highly disruptive macro
conditions - remains the underlying theme. More...
Portfolio Performance and Positioning
Stocks in the Phase III development category once again led minor gains
in the sector with overall returns evenly divided between positive and
negative outcomes. Despite last week’s relative strength among the leaders,
a general willingness among retail investors to take speculative risks
continues to favour the earliest stage companies with Phase I stocks also
offering uncorrelated returns from discovery opportunities. Phase II
companies, among the riskiest investment options due to their indebtedness,
heavy reliance on execution success and need for strong global economic
conditions to sustain sales, are struggling to match risk adjusted returns
in either of the other two development categories. Portfolio models remain
biased to the Phase I stock category with cash positions reflecting the
cyclical risks associated with slowing rates of monetary expansion and
output growth.
More...
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.
More...
The 'Steak or Sizzle' blog provides summary judgements on
the top performing ASX-listed resources stocks.
More...