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What to invest in next

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4 years ago

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By Michael O’Connor

In a turnaround that seemed unthinkable as we stockpiled toilet paper and hoarded disinfectant wipes in March 2020, Global equity markets are now 24% above pre-pandemic levels.

Such an accelerated recovery against the backdrop of a persistent global pandemic has left investors fearing limited upside from here on out.

The S&P jumped 2% in July to clinch its sixth straight month in the green, shrugging off concerns about the latest wave of COVID-19.

All three major US stock indexes head into August with impressive year-to-date gains under their belts, but the question remains, Can the growth continue?

STOCKS

The Stock Market continues to focus on record-breaking Q2 earnings. At the halfway stage, S&P 500 companies have reported a 90% increase in profits from last year, making it the best earnings performance since 2009.

Takeaway: As mentioned previously, it's easy to look at record high stock market valuations and assume a bubble, but record earnings figures and improving fundamentals from the biggest hitters in the index will continue to act as a support, justifying further gains.

BONDS

The yield on the 10-year Treasury fell from 1.75% to 1.18% since mid-March as concerns about runaway inflation start to roll over.

While the downward move in rates has been somewhat surprising given the economic growth and higher than expected inflation data, it suggests the market participants view the latest inflation jump as transitory. I expect to see inflation figures subside somewhat as supply-side contractions and stimulus effects normalise.

Takeaway: With real rates likely to stay negative for the foreseeable future, investors face wealth destruction in real terms if they continue to hold excess cash and/or traditional high-quality bonds.

CRYPTO

Bitcoin Bounce

Bitcoin posted its first positive monthly gain in four months, as the cryptocurrency rallied more than 30% from $30,000 to $40,000.

J.P. Morgan's announcement that it would make Crypto Funds available to all wealth clients for the first time coincided with aggressive buying by institutional entities according to (OTC) trading volumes data. Pushing prices higher.

All eyes will now be on the remaining big banks to see if they follow suit.

Takeaway: As the Wall Street elite continue to build out their Crypto infrastructure, Institutional investors will have the opportunity to participate in the crypto space, creating further demand.

The Month Ahead

Despite the faster than expected recovery, equity indexes can move higher, driven by a combination of robust earnings growth, attractive valuations relative to bonds, and accommodative central banks.

Everything is relative

Many investors assess the various investment options available to them as stand-alone opportunities. In reality, most investment decisions are relative; thus, a great deal of the selection process is comparative.

In today's market, the negative real interest rates on offer in the fixed income market must be factored in before making any investment decision. These historically low rates are helping to moderate US equity valuations, bolstering the case for owning stocks on a comparative basis.

With this in mind, I view equities as relatively more attractive, given the potential for bond yields to rise and corporate earnings to offer more positive surprises.

For fixed income, short duration, high yield bonds are still the preferred way to generate income.

No free lunch

While this base case scenario is broadly optimistic, the potential headwinds can't be ignored. Most notably, depending on the length and severity of the recent COVID spike, Delta may prove another big test. Year-over-year growth trends across mega-cap tech companies are likely to decelerate after peaking in Q2. Supply chain snags, less forgiving comparison figures and higher expectations will make outperformance harder in the second half of this year. As a result, equity markets will need to rely on market rotation to push stock prices higher. As always, caution and patience are the order of the day.

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Cost of agricultural land set to increase by 8% this year

By Ted Healy of DNG TED HEALY The results of a survey on agricultural land values conducted by the Society of Chartered Surveyors Ireland (SCSI) was published earlier this week. […]

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2 years ago

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1 May 2023

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By Ted Healy of DNG TED HEALY

The results of a survey on agricultural land values conducted by the Society of Chartered Surveyors Ireland (SCSI) was published earlier this week.

It predicts an increase in land values by an average of 8% this year and an increase of 14% on average in rental values.

The report titled, ‘SCSI/Teagasc Agricultural Land Market Review & Outlook Report 2023’, analyses the agri sector performance over the past year and projects how it will perform over the next 12 months.

In all 134 agri professionals and valuers were surveyed, who expect the outlook for dairy farmers to ease and a challenging future for sheep and tillage farming.

Rental Land values in Munster increased by an average of 13% in the last year with a 9% increase experienced in Leinster.

The report indicates that the average non-residential farmland prices in 2022 ranged from €5,564 per acre for poor quality land – up five percent from €5,308 in 2021 – to €11,172 per acre for good quality land – up two percent from €10,962 the previous year. Strong demand from dairy farmers for good quality land is driving the market.

The majority of those surveyed believe there is likely to be an increase in demand from dairy farmers to purchase farmland in 2023.

One point to note however, is that changes to the European Nitrates Directive, particularly measures aimed at protecting water quality, may have an impact on land prices, especially rental prices.

In order to maintain current levels of milk production – and to comply with the directive – many dairy farms will need to either increase their land area or reduce milk production.

The Residential Zoned Land Tax (RZLT) is also coming down the line at an alarming rate, farmers have until May 1 to make a written appeal. Under the new legislation farmers owning currently zoned land face an annual tax bill of 3% of the market value of their zoned land.

This will result in countless numbers of landowners facing crippling tax bills from next year on. It is expected that this new tax may bring forward extra land sales later this year before the tax takes hold.

The IFA (Irish Farmers Association) have this week sought a senior counsel review of the legislation governing the Residential Zoned Land Tax.

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What is a Fire Safety Certificate?

By John Healy of Healy Insurances A Fire Safety Certificate is an official document that verifies if a building design submitted as part of an application will, if constructed in […]

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2 years ago

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1 May 2023

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By John Healy of Healy Insurances

A Fire Safety Certificate is an official document that verifies if a building design submitted as part of an application will, if constructed in accordance with the plans and specifications approved by the Building Control Authority, comply with the requirements of the Building Regulations.

Fire Safety Certificates are issued by a Building Control Authority. The certificate confirms that the building has adequate escape facilities and that the building is designed in a way that prevents and limits the spread of fire. While all buildings must comply with the fire regulations, not all buildings will need a Fire Safety Certificate.

Which developments require a Fire Safety Certificate?

The Building Control Act (1990 & 2007) specifies the development types that require Fire Safety Certificates:

· Works in connection with the design and construction of a new building
· Works in connection with the material alteration of a day centre, a building containing a flat, a hotel, hostel or guest building, an institutional building, a place of assembly, a shopping centre
· Works in connection with the material alteration of a shop, office or industrial building where additional floor area is being provided within the existing building or where the building is being sub-divided into a number of units for separate occupancy
· Works in connection with the extension of a building by more than 25 square metres
· A building as regards which a material change of use takes place.

Some developments are exempted from requiring a Fire Certificate and can include:

· Certain single storey agricultural buildings
· A building used as a dwelling (other than a flat)
· A single storey domestic garage
· A single storey building ancillary to a dwelling which is used exclusively for recreational or storage purposes or the keeping of plants, birds or animals for domestic purposes and is not used for any trade or business or for human habitation
· Works in connection with a Garda station, a courthouse, a barracks and certain government buildings.

If a building is inspected by a member of the building control authority and it transpired that no Fire Safety Certificate is in place, the building could be subject to closure. For more information see www.kerrycoco.ie/home3/building-control/firesafetycerts.

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