Deluge of Data Due

Deluge of Data Due

Deluge of Data Due 509 431 AMA Team

Screen_Shot_2014_03_31_at_10.17.27_PMThis week’s Money Matters is courtesy of one of our previous guest writers, Associate Jordan Morley as Darren takes a break. Thanks for joining us as we take a look back at markets and trends over the last week, and those worthy of a mention from Q1.
With Q1 in the books, 2014 has started out a bit on the wild side. After a strong start to the year, and followed by a big pullback then creeping forward again, the S&P 500 and DOW are up +1.40% and -0.72% respectively.
The big stories in the business world for Q1 was of course the tensions in Crimea, and Janet Yellen’s comments on the potential rate rises in 2015 which we touched on in last week’s Money Matters. These stories in particular added to the volatility in both equity and commodity markets whilst issues in Crimea impacted on the markets with concerns that Russia and the west may be forced into confrontation thereby increasing potential for this to disrupt Nat Gas and oil markets. With sanctions being placed against Russia (-17% YTD) there were fears this would spill into other parts of Europe. For example Finland gets 100% of its Natural Gas from Russia.Screen_Shot_2014_03_31_at_10.42.16_PMLooking forward as we move in to Q2, the stories will continue to be around China’s manufacturing slowdown and its affect on the region. Emerging markets in general are still recovering with the MSCI Emerging Markets Index only turning positive for YTD (+0.49%) in the last week of March and still sitting at –3.71% since this time last year. We still see opportunities in the region, especially within the ASEAN region, and Africa. How this plays out will however be tied in to China. This week sees the release of China’s Manufacturing Price index, which is expected to be down slightly. Added to other disappointing data coming out of China, some investors expect a form of Chinese stimulus later in the year. This expectation is based on remarks by Chinese Premier Li Keqiang’s comments on increased infrastructure investment. In the event of Chinese stimulus, this could offset economic slowdown in China and this would likely have a positive impact on global equity markets.Screen_Shot_2014_03_31_at_10.44.43_PMFollowing previous commentary on Gold, it has rebounded after a -23% drop in price over the last 2 years and sits up +5.56% year to date but still has a long way to go before hitting the $1900 point reached in 2011. The increase in gold has been bolstered by larger physical buying in China and some other central banks due to the lower pricing amidst larger geopolitical concerns such as tensions in the Crimea peninsula. Profit taking, and a slowdown in physical buying in the last two weeks due to the higher prices, saw the precious metal finish the Quarter on a two-week slide.
Japan will also be in focus in the coming weeks given Japanese data has been weak and sentiment is negative in the short term as the Japanese sales tax will increase to 8% from 5% starting April 1st. This is expected to have a negative short-term impact on the Japanese economy for the next Quarter as both businesses and consumers adjust to the increase. Japan has seen a lot of volatility with the TOPIX falling 8.9% in Q1 following a 51% increase in 2013 and that should be expected through the rest of the year.Screen_Shot_2014_03_31_at_11.28.29_PMThe big news for the US this week will be Friday’s Jobs report. February saw an increase of 175,000 jobs in the US. March will need to come in with better numbers than that or we could see a selloff in April. If the jobs report comes in closer to or above 200,000, and is followed up with some other positive data in the coming weeks, this could see a positive performance in US equities to make up for a lackluster Q1 result. And, if the US comes in with better Jobs reports and China does commit to further stimulus, then April could be set to be a month of potential strong returns.
Lastly, following our Austen Morris Investment board meeting in mid March, there was a mutual consensus that given the amount of data due out in coming weeks, and speculative scenarios which are yet to be seen as to how they play out, we would encourage clients to hold a diversified mix of both developed and emerging equities, and diversified range of asset classes within a portfolio until this time. And for clients who may already be fairly heavy weighted within both developed and emerging market equities, hold strong positions in Asia, as well as minor attributions to commodities and bonds, to continue to maintain existing portfolios and investment strategy for the time being. For those clients who currently already hold Gold and silver, we also recommend that they continue to hold those positions but not continue to buy any more Gold for the time being. The long-term value in gold is as an inflationary hedge and until inflation shows up, Gold will continue to bounce between physical demand out of Asia, and central banks buying on lower prices and temporary price spikes due to safe haven buying on other news stories (Crimea etc). More importantly, with the above in mind, at any time that you wish to review your specific portfolio holdings or discuss any necessary changes or opportunities at this time, we encourage you to contact your Adviser directly to do so.
For Austen Morris Associates’ investors – talk with your advisor about any repositioning to take advantage of markets at this time. For more information about Austen Morris Associates please visit our website.
Austen Morris Associates Wealth Management & Investment Team
Jordan R. Morley, CII FAIQ, Associate
Jordan Morley, Associate, Austen Morris Associates
unnamedJordan provides his client with bespoke financial services and offers a diverse range of investment options ranging from education planning, growth of wealth savings, retirement plans as well as private equity. He also works with alternative investment options for high net worth clients. Connect with Jordan on LinkedIn.

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