Good day to everyone. Well the theme of uncertainty continued last week with investors going back and forth as they struggle to decide on how strong they think the global recovery is. There was a lot of movement in the individual indices but most of the major indices ended the week right where they started it. We also saw a lot of positive movement early in the week following the announcements that Europe and the USA would keep stimulus packages in place. This has helped ease investor concerns that stimulus would end in the near future. However, with markets at their current high values, and with the continued mixed data reports, hesitation and caution are likely to continue by investors whilst they try to gauge where the markets will go.
Reflecting back on the VIX index (as our readers will know, this tracks volatility and is used as a measure of investor confidence) we see that the VIX hit a six week high on Friday. This is probably a good reflection that the recent back and forth is now starting to weigh on most investors’ minds, and with the increase, signals that investors are expecting a more volatile period ahead.
If we take China as an example, May’s manufacturing numbers were printed at 50.8 which is just slightly above the positive marker of 50, but only barely. China however is certainly making a shift to become less of an export based economy and wants more growth from other sectors, but this shift will need some time to be completely reflected. In the mean time, China’s manufacturing numbers still, and will continue to, have a big impact on the global market! And with this, it’s not surprising that with numbers being neither good, nor particularly bad, this has only added to hesitation.
So while others hesitate we will continue to push on with our longer term strategy, and encourage you to do the same by maintaining a diversified and balanced approach. We will continue to ride the equity train while that continues to show momentum, purchase commodities while commodities are low so that we benefit when those sectors rebound, as well as continue to hold high yield or emerging bonds for stability in fixed income assets. And with this well diversified and balanced outlook, this should allow us to focus more on the longer term and not get overly distracted by the short term movements…
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.
Darren Cox
Co-Head of Portfolio Management
Austen Morris Associates Wealth Management & Investment Team
www.austenmorris.com
