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Good times don’t last forever



The S&P 500's steady climb higher was interrupted last week, reversing course to fall nearly 2%. The biggest weekly drop since February.

The Federal Reserve acted as the catalyst for this latest bout of volatility. Last Wednesday, the FED issued a revised outlook, signalling that interest rates are set to increase sooner than previously projected due to higher inflation forecasts.

While this FED adjustment resulted in a momentary pull back, market participants quickly reverted to their default setting of unwavering optimism, with the market hitting new all-time highs just five days later.

While unrelenting positivity is enough to sustain the current investing eutopia, history suggests that volatility will return at some point in the future. So instead of basking in the glory of your unrealized gains, use these periods of low volatility to prepare. Diversify, take profits on certain stocks that have notably appreciated and implement some downside protection.

Has the rotation into 'Value' run its course?

So-called value stocks, expected to benefit from the economic recovery, have outperformed in 2021, but this rotation trade has been out of favour in recent weeks.

Growth stocks, including the major tech names like Apple and Microsoft, have rallied since the Fed announced a slightly more aggressive stance on future rate hikes last week. The S&P growth index has added almost 2% since the announcement, compared with a drop of nearly 2% in the value index.

With the S&P Value index up 13% year-to-date, much of the re-opening trade has arguably been priced in the market. With that said, specific sectors such as energy and financials may still have room to run.

Cryptos pulled back once again as China continues its clampdown on miners and the Crypto space as a whole. The recent volatility has wiped out all of bitcoins 2021 profits, with Bitcoin briefly falling below 30,000 a coin. The cryptocurrency has now lost more than 50% from its mid-April highs of almost $65,000.

Commodities like copper slumped last week while Lumber recorded its worst week in history, falling 18%. Higher commodity prices have played a pivotal role in the recent inflation jump. This pullback in commodity prices suggests that the supply chain bottlenecks may be clearing in certain sectors of the economy. From a global perspective, the 're-opening' is still in its infancy, but these price adjustments suggest the inflation we are currently experiencing is, in fact, transient in nature.

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Pandemic policy changes have left us with skewed data figures

By Michael O’Connor They say history doesn’t repeat itself, but it often rhymes – at this point however, even the rhyming has stopped. The pandemic policy changes have left us […]




By Michael O’Connor

They say history doesn’t repeat itself, but it often rhymes – at this point however, even the rhyming has stopped.

The pandemic policy changes have left us with skewed data figures, manipulated comp stats and a remarkably unfamiliar backdrop resulting in immeasurable uncertainty amongst investors across the globe.

During times like this, it is best to break complex problems down to their simplest forms and concentrate solely on the most crucial variables.

And the most crucial variables in this case are inflation and Fed policy.

An infinite number of potential outcomes are possible over the coming months, but all will be derived based on the aggressiveness of future Fed adjustments and the persistence of inflation.

There will always be risk

There is no perfect scenario here. The inflation we are experiencing is the by-product of an overheating economy.

The cumulative net worth of US Households is now almost $150 Trillion, $80 Trillion more than it was 10 years ago. The US labour market currently boasts two jobs for every one person looking for work, and corporate earnings jumped 35% in 2021, the largest increase since 1950.

Simply put, there is more money in the system than ever before.

The supply side issues have been well documented, but if inflation is to be quelled, then the demand side of the equation needs to be solved.

This is where the Fed’s tightening cycle comes in.

The Fed cannot improve supply issues, but they can negatively impact demand by dampening the labour market and decreasing the amount of capital in the systems through higher interest rates.

This tighter monetary policy is expected to bring inflation under control, but as the Fed increases the speed of rate hikes, the odds of economic contraction also increase.

In short, the goldilocks scenario of a gradual decline in inflation while maintaining labour market strength, household wealth and corporate profits, remains a pipe dream.

To strip inflation out of the system, a period of economic contraction is a necessary evil.

Crucially, this contraction does not need to lead to a crippling recession or anything of the sort. The level of contraction we experience will depend solely on the Fed’s ability to strike a balance between cooling inflation and maintaining demand.

Only time will tell if they can successfully thread the needle.

Jumping back in

Before declaring an all-clear for stocks, investors need to believe we are at the peak of policy tightening and inflationary pressure.

Certainly, we are seeing signs of improvement from an inflationary standpoint. For example, wheat prices are now lower than at the beginning of the war in Ukraine – another showcase of the unpredictability of markets.

With that said, one crucial paradox remains. Investors want interest rates to fall so stocks can rise, but any fall in interest rates is unlikely if stocks rally, somewhat capping the recent upside.

Make a plan

As always, I encourage a long-term focus. Investors will be better served focusing on the bull market opportunity on the other side rather than overemphasising what may be left in the bear market.

Those looking to take advantage of any potential upside need to get their house in order. You need to take the time to develop a clear picture of what your allocation will look like, create a watchlist of preferred names and know your entry points.

Scrambling together a plan after the fact is a sure-fire way to ensure you miss the very opportunity you were trying to capture.

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Tenant’s termination notices have risen by 58%

By Ted Healy of DNG TED HEALY It has been highlighted this week that the number of termination notices issued by landlords to tenants has risen by 58% in the […]




By Ted Healy of DNG TED HEALY

It has been highlighted this week that the number of termination notices issued by landlords to tenants has risen by 58% in the first six months of the year compared to the previous six months.

There were 2,913 termination notices issued in the first six months of this year compared to 1,845 in the last six months of 2021.

It is reported that 55% of those notices were for the purpose of sale of the property.

A ban on evictions during lockdown periods during the COVID-19 pandemic lowered the number of termination notices. However, the eviction moratorium was lifted in April 2021 and numbers have been rising significantly since then.

The figures, released by the Residential Tenancies Board, have been described as “very alarming and require urgent action”.

They highlight the ongoing crisis in the rental sector and make for stark reading. At the time of writing only four properties were advertised as being available for rent in Killarney on

The exodus of private landlords from the market is a real concern and needs to be addressed. Landlords exiting the market in greatest numbers at present are those that in the past had charged rents that were less than market rates and are now only able to minimally increase rent on their properties because they are subject to Rent Pressure Zone rules.

The Government has extended Rent Pressure Zones until the end of 2024 and has prohibited any rent increase in a Rent Pressure Zone from exceeding general inflation or two percent, whichever is lower.

However, more needs to be done to entice private landlords to stay in the market and supply of available properties needs to be increased.

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