17 December 2018
Where are we in the Cycle?
None of the five PortfolioDirect cyclical guideposts are turned to
‘green’. The cyclical positioning has been reclassified as ‘downswing’ with
global growth decelerating and less supportive monetary policy settings.
Unusually prolonged supply side constraints which have been offsetting the
effect of weak demand growth are losing their impact as newly initiated
production starts to flow in some metal categories.
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Market Directions
Highly volatile equity prices have persisted as worries about slowing US
and global economic growth coincided with concerns that the US Federal
Reserve may not be prepared to modify its monetary policy plans in response
to the flow of data but choose a predetermined course toward higher interest
rates and a smaller holding of securities during 2019. A European Central
Bank commitment to stop buying equities, as regional growth slowed, also
signaled a transition in policy settings. The leading mining stocks continue
to hold up relatively well despite the growth uncertainties.
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Portfolio Performance and Positioning
Phase I stocks again posted large losses during the week while the
market leaders made gains leading to a net loss in the portfolio stocks
against a gain in the benchmark index. The relatively large weighting in
Phase I companies has been retained to take advantage of their strong
leverage to changes in sentiment at the bottom of the cycle. No changes have
been made to the portfolio models.
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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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