The past month has seen the market trade with increased volatility, recently due to a new COVID
strain, ending with little net movement in the index.
Global growth remains well above trend, although central back monetary policy (interest rates)
remains at a level that would indicate a recession or worse. It appears the Australian Federal
election may be bought forward, with the usual spending being promised by both sides of politics.
Overall, monetary policy and fiscal spending should be supportive of businesses.
Whilst debate rages about inflation (transitory or not), interest rates and any number of
macroeconomic topics, we prefer to focus on businesses and earnings. At the moment, we are
seeing resilient and growing earnings in most companies we look at. Interest rates remain extremely
low and company earnings are improving, creating a greater disconnect between the two asset
classes. Right now, equities appear relatively appealing compared to money on deposit.
We, again, encourage investors to maintain vigilance over the businesses they own and the
fundamentals impacting earnings. Take a long-term view and don’t get distracted by headline
grabbing issues. Today’s newspaper is tomorrows fish’n’chips wrapper, so you can read all about it
over lunch during your Christmas break.
Have a safe and relaxing festive season.