25 November 2019
Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, two are ‘red’ and three
‘amber’. The cyclical positioning has been classified as ‘downswing’ with
decelerating global growth forcing a negative change to expectations, a loss
of output momentum in China, the largest national user of metal, and less
supportive monetary policy settings than have prevailed for most of the
post-2009 period.
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Market Directions
The three major US equity price indices made new records although the
index of smaller stocks again hit the ceiling which has prevailed throughout
2019. US economic growth appears to have stabilised after moderating
through 2019, giving equity prices a foundation from which to move higher.
Government bond yields finished the week pointing to a firming in the
growth outlook. The downward bias in the indexes of major global miners
persisted. Current levels are little changed from those at the start of 2019
despite the broader strength of equity prices.
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Portfolio Performance and Positioning
Phase II stock prices turned overwhelmingly negative in the past week as
a wide range of companies on well defined development paths were repriced
despite a modest negative return for the benchmark. Nickel exposed stocks
have taken a hit over the past few weeks as the metal prices has retraced
earlier gains. No changes have been made to portfolio models which remain
biased to the Phase I stock category. Phase I stocks are likely to show
less leverage to cyclical weakness since they are starting from already
historically low price levels.
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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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