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?
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.
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.
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.
Get your vehicle winter ready
By John Healy of Healy Insurances As we approach October it is a good time to get your vehicle ready for the winter and the change in conditions on the roads. Here is a checklist of the common items to help you prepare: * Check your liquid levels, screen wash, anti-freeze, coolant, oil, and fuel* […]
By John Healy of Healy Insurances
As we approach October it is a good time to get your vehicle ready for the winter and the change in conditions on the roads.
Here is a checklist of the common items to help you prepare:
* Check your liquid levels, screen wash, anti-freeze, coolant, oil, and fuel
* Check your car battery
* Clean your windows inside and out
* Clean your lights
* Check your tyres
* Consider fitting winter tyres
* Check your wiper blades
* Clear leaves from under your bonnet
* Ensure your car has a phone charger
* Make a winter survival kit
Many car garages and dealers will offer a winter service so it is worth checking locally.
In addition, here is a checklist of the items you should keep in your car this winter:
* Ice scraper and de-Icer
* Torch and spare batteries
* In-car phone charger or a power pack
* A road atlas in case you don’t have GPS
* First Aid kit
* Empty fuel can
* Hi-vis jacket/warning triangle
* Jump leads
* Spare clothes
Many insurers now include breakdown cover as standard on your motor insurance policy. Keep this number in your phone and in your vehicle.
Mortgage approval received, what next?
By Ted Healy of DNG TED HEALY Once your mortgage application is approved, you should look for mortgage protection cover which is insurance that will pay off your mortgage if you die within the term of the policy. You should not wait until you have made an offer on a house or apartment before shopping […]
By Ted Healy of DNG TED HEALY
Once your mortgage application is approved, you should look for mortgage protection cover which is insurance that will pay off your mortgage if you die within the term of the policy.
You should not wait until you have made an offer on a house or apartment before shopping around and applying for mortgage protection insurance. It can take some time to get approval, particularly if you have had poor health in the past. This could delay the sale as, by law, your lender must make sure that you have this cover before giving you a mortgage.
Most mortgage lenders offer to arrange mortgage protection insurance for you when you apply for a mortgage. You do not have to take your lender’s insurance, you are free to shop around for better value or a more suitable policy with other providers and brokers.
Another important element is appointing a solicitor to act on your behalf in the conveyancing – this is the legal work to transfer ownership of the property from the seller to you. It is a good idea to choose a solicitor before you start looking at properties, because as soon as your offer is accepted, the estate agent will ask for your solicitor’s details to pass onto the seller’s solicitor. Your solicitor will also check that the sale of the property is legal – that the person who is selling the property owns it and has the right to sell it, and that nobody else could claim to own it.
Your solicitor will also liaise with your mortgage provider at this point and help you through the whole process of mortgage drawdown, when the time is right.
You are now ready to look at properties and place bids with mortgage approval in place.
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