Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, two are flashing ‘amber’ and three have turned ‘red’. Sluggish pre-pandemic productivity growth, now exacerbated by war in Europe, intensifying trade restrictions and reversal of the post-2020 central bank liquidity surge, has re-emerged as a constraint on raw material demand expansion. A rising US dollar, one previously overt negative factor, has stalled after a modest reversal of prior gains.  Supply side constraints in metal markets have become less severe. The cyclical positioning has been characterised as a ‘downswing’ phase.    More...

Market Directions
Withdrawal of unprecedentedly supportive monetary and fiscal conditions and erosion of the value of income and savings by surging inflation have stemmed speculative capital flows connected to retail investors. Professional money, by continuing to discount a recession, has provided some market relief but surging costs of capital are placing a cap on equity values.  While heavily hyped energy storage innovations are stoking sector interest, they are yet to affect metal demand meaningfully. Metal price risk premiums have risen without correspondingly beneficial impacts on related equity valuations.  New tax incentives are diverting capital for mine development and downstream processing capacity to sponsoring nations. Persistence of a 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
Modestly positive results for the week were led by a large majority of stocks in the Phase III development category.  A gain in the Phase II category reflected improved uranium market conditions. While Phase I returns remain the most threatened by weaker speculative capital flows, the same companies would be primary beneficiaries of any eventual monetary policy easing and may also deliver value-enhancing discovery opportunities uncorrelated with market conditions.  Although further along the development path and closer to profitability, Phase II companies carry risks arising from their indebtedness and heavy reliance on execution success in sometimes unfamiliar markets.  Performance within the Phase III category is more likely to be driven by institutional allocations responding to longer term views of changing macro conditions and cross sector valuations.   A prolonged cyclical reversal in market values for the bulk of the sector has warranted a reassessment of  which stocks are likely to have the greatest leverage to a momentum change in conditions.   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.    
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The 'Steak or Sizzle' blog provides summary judgements on the top performing ASX-listed resources stocks. More...