18 January 2021
Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, one is ‘red’, three are
‘amber’ and one is green. Cyclical conditions have been disproportionately
affected by the unprecedented surge in liquidity from central banks.
Commodity markets are at risk of a slowing in monetary momentum, in the
absence of other supporting factors. Stronger anticipated growth for 2021
conceals a tendency for weaker outcomes through the course of the year and
for levels of global output to remain below 2019 outcomes. 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 expansionary monetary
conditions have underpinned recent industrial metal price strength as well
as a broader array of asset price gains, including for gold. Strong
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. Emerging energy storage
innovations remain too far in the future to have an effect now on 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
Early stage companies once again performed strongly even as the market
leaders lost ground. All development categories have benefitted from near
term optimism about the world economy and improved market liquidity. Phase
I stock returns have been boosted by improved investor sentiment toward
uranium related stocks and a general willingness among retail investors to
take speculative risks. Phase I also offers uncorrelated returns from
discovery opportunities. Gains among Phase II companies have been relatively
modest for the risks incurred, since these are among the most indebted firms
in the sector and heavily reliant on execution success. Portfolio models
are biased to the Phase I stock category. Cash positions have been reduced
recently to accommodate greater exposure to uranium exposed companies and a
small number of Phase II companies which have lost ground against the
sector.
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...