Fund Monitors Pty Ltd

www.fundmonitors.com
© Copyright 2022
Printed: 05 July 2022 10:13 PM

News

17 Jun 2022 - Hedge Clippings |17 June 2022
By: FundMonitors.com

    

Hedge Clippings | Friday, 17 June 2022

Central Banks are caught between a rock and a hard place, namely inflation and a recession. Of course with the benefit of hindsight, history shows putting off the inevitable doesn't work, and that hope is not a viable strategy.

RBA Governor Philip Lowe is now saying inflation is likely to be around 7% by the end of the year, and it is reasonable for the cash rate to hit 2.5%. Given a further 0.75% rise in the US - the largest for almost 30 years - another 50 bps from the RBA in July is not out of the question, with another 50 bps prior to Christmas.

The issue for Lowe is that many, if not all, of the drivers of inflation are outside his control, with only higher interest rates at his disposal to rein in the problem. The combination of higher prices for fuel and everyday food, combined with increased mortgage costs, and the threat of energy shortages and increased costs, will only add further to inflation, and risk impacting consumer confidence, demand - and spending.

Which of course is the objective, but it's a fine balance.

Whilst central banks pumped free money into the system via QE, and lowered interest rates, investors happily responded by inflating markets, particularly tech and growth stocks, with the usual cry of "this time it will be different". Realistically it rarely is, and investors are now faced with the fact that markets often fall faster than they rise.

Comments from fund managers that Hedge Clippings speaks to follow a common thread: Buy quality stocks at a reasonable or discounted price, and understand that markets will be volatile, and overshoot both on the upside and downside. To that we would add diversify, both across funds, strategy and asset class.


News & Insights


Is this a buying opportunity? | Equitable Investors

Why country risk matters | 4D Infrastructure

Why it's all about Earnings Growth | Insync Fund Managers


May 2022 Performance News


Bennelong Emerging Companies Fund

Quay Global Real Estate Fund (Unhedged)

Insync Global Capital Aware Fund

L1 Capital Long Short Fund (Monthly Class)

ASCF High Yield Fund

Airlie Australian Share Fund


If you'd like to receive Hedge Clippings direct to your inbox each Friday

JOIN OUR MAILING LIST


 

Australian Fund Monitors Pty Ltd
A.C.N. 122 226 724
AFSL 324476

Email: [email protected]