Post by rgs2001uk on Aug 5, 2022 21:01:36 GMT 7
Latest correspondence from my stockbroker.
Dear XXXXXXX
After a difficult start to the year, I thought it worthwhile to highlight that we have seen more positive markets over the last month. To put the beginning of 2022 in context, it was the worst first half for the S&P500 since 1962 and the worst first half for Treasuries since 1788! Since the end of June, we have seen a more positive shift, with growth companies and sectors coming back into favour.
Many of the inflation data points that we follow have fallen from recent highs. Inventories stand at record levels and supply chains are improving, although growth is slowing, as demand has fallen given cost increases and energy market disruption mainly from restricted Russian supply. Inflation remains high but looks likely to fall from these elevated levels, whilst Central Banks have continued to raise interest rates yet with a lower ceiling than envisaged just a few weeks ago. This means that the rally in value and defensive assets has reversed to some extent, as a lower growth outlook returns. Those companies still able to grow in this environment will be rewarded by investors.
We have seen some positive company results over the past few weeks, with the US technology giants generally exceeding expectations, showing their underlying businesses remain profitable, cash flow generative and continue to exhibit positive growth characteristics that we expect to continue going forward. Alphabet reported revenue growth of 16% as did Microsoft, Visa 21%, while Apple beat expectations with a positive return despite headwinds. Equally, a number of other companies, particularly in the consumer goods sector (Unilever,Reckitt Benckiser) with pricing power have been able to pass on rising costs and profits have increased as a result.
This will not be a straight-line recovery, with many hurdles along with the way. Political leaders around the world will continue to influence sentiment. Pleasingly, we have seen a welcome recovery in share prices and investor enthusiasm on the back of positive earnings as many of the fundamentals of companies held are still growing. As we have discussed previously, over the long term, we continue to favour high quality companies with growth characteristics as part of a broad based portfolio.
As always, delighted to discuss further.
Kind regards
Make of it what you will.
Dear XXXXXXX
After a difficult start to the year, I thought it worthwhile to highlight that we have seen more positive markets over the last month. To put the beginning of 2022 in context, it was the worst first half for the S&P500 since 1962 and the worst first half for Treasuries since 1788! Since the end of June, we have seen a more positive shift, with growth companies and sectors coming back into favour.
Many of the inflation data points that we follow have fallen from recent highs. Inventories stand at record levels and supply chains are improving, although growth is slowing, as demand has fallen given cost increases and energy market disruption mainly from restricted Russian supply. Inflation remains high but looks likely to fall from these elevated levels, whilst Central Banks have continued to raise interest rates yet with a lower ceiling than envisaged just a few weeks ago. This means that the rally in value and defensive assets has reversed to some extent, as a lower growth outlook returns. Those companies still able to grow in this environment will be rewarded by investors.
We have seen some positive company results over the past few weeks, with the US technology giants generally exceeding expectations, showing their underlying businesses remain profitable, cash flow generative and continue to exhibit positive growth characteristics that we expect to continue going forward. Alphabet reported revenue growth of 16% as did Microsoft, Visa 21%, while Apple beat expectations with a positive return despite headwinds. Equally, a number of other companies, particularly in the consumer goods sector (Unilever,Reckitt Benckiser) with pricing power have been able to pass on rising costs and profits have increased as a result.
This will not be a straight-line recovery, with many hurdles along with the way. Political leaders around the world will continue to influence sentiment. Pleasingly, we have seen a welcome recovery in share prices and investor enthusiasm on the back of positive earnings as many of the fundamentals of companies held are still growing. As we have discussed previously, over the long term, we continue to favour high quality companies with growth characteristics as part of a broad based portfolio.
As always, delighted to discuss further.
Kind regards
Make of it what you will.