14 June 2021
Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, two are ‘green’ and
three 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, in the near term, forecasts being upgraded to take
account of unanticipated COVID-19 economic strength. 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
Prices of most Phase I, Phase II and Phase III stocks traded lower amid
fears that US interest rates would move higher more quickly than previously
anticipated. Despite the market weakness, a general willingness among retail
investors to take speculative risks continues to favour the earliest stage
companies which also offer 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.
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The 'Steak or Sizzle' blog provides summary judgements on
the top performing ASX-listed resources stocks.
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