Weekly Research Report – 10 December 2018

Weekly Research Report – 10 December 2018

Clay Carter

Another tough week for global markets. The silver-lining is a weaker AUD providing a nice tailwind. Uncertainty around US and China trade has continued to be a drag. Investors need some visibility / resolution re; China/US trade.

Global Market Returns 10 December 2018

Source: Bloomberg


The U.S Economy

Employment numbers

November nonfarm payrolls of +155K missed the +195K estimate, leaving the unemployment rate unchanged at 3.7%.

However, according to a recent study by investment bank UBS:

“Global unemployment has fallen to its lowest level in almost 40 years, a breakthrough economists attribute to changes including more flexible working practices, lower wages and rock-bottom interest rates. The worldwide unemployment rate has dropped from 8 per cent of the workforce in 2010 to 5.2 per cent in September 2018, the lowest level since 5 per cent in 1980.The survey encompassed 48 developed and emerging economies, which between them account for 84 per cent of global output.”

The Yield Curve: No inversion here!

The market’s favoured 10-year-2-year spread isn’t flashing red, either. With a gap of 0.11 percentage points on Wednesday, it was last at these levels and falling in November 2005 – two years before the recession, and a great time to own stocks, at least for a while.

US Treasury Actives Curve

Source: Bloomberg


Rates and Commodities

10-Year Treasury yield: 2.84% (-0.15%)
AUD: US$71.83 (-1.64%)
Oil: US$52.61 (+3%)


The Week Ahead

U.S. Economic Calendar

Inflation data (PPI & CPI) and retail sales will be closely watched.

Week Shares Forecast December 10 - 14

Source: Briefing.com


Chart of The Day

This chart shows annualised asset class returns since 1998 in U.S dollars.

Note the returns of small cap stocks vs large cap and stocks vs. bonds vs. cash.

Value performed better than Growth – but not by much (0.1%).

More than anything it makes the case for diversified equity portfolios.

Annualised asset class returns since 1998 chart


Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual and does not constitute financial advice. Consider the appropriateness of the information in regards to your circumstances.

This content may contain opinions, conclusions, estimates and other forward-looking statements which are subject to various risks and uncertainties. Actual events or results may differ materially, positively or negatively, from those reflected or contemplated in such forward-looking statements.

Past performance is not a reliable indicator of future performance.

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