Few would disagree that a strong regulator is required for a strong superannuation system. But APRA’s myopic focus on cost to members means its $70,000 Christmas party is unlikely to help its reputation.
Good investing requires real sacrifices, according to Oaktree’s Howard Marks, but you can’t expect to be compensated just for making them.
Market weakens as unwind looms, Platinum hits record low, GrainCorp surge continues
A strong rally to close out the week, with the S&P/ASX200 finishing 0.5 per cent higher, wasn’t enough to offset downward pressure during the week, with the market ultimately losing 0.2 per cent.
Performance was varied on Friday, with materials and industrials both outperforming, gaining 1.3 and 0.9 per cent amid surging commodity prices and both real estate and technology retreating, down 0.3 per cent.
Among the biggest movers were GrainCorp (ASX: GNC), Nufarm (ASX: NUF) and Paladin (ASX: PDN) up 5.8, 4.1 and 13 per cent each.
GrainCorp was the standout, with management upgrading earnings guidance once again, now expecting $590 to $670 million up from $480 to $540 million just a few weeks ago.
Profit is set to climb by a similar amount as the Ukraine crisis and a global shortage has caused massive demand for Australian grain and oil seeds, how long this is sustained is another question.
Platinum Asset Managed (ASX: PTM) was at the other end of the spectrum, falling 15 per cent to a record low after announcing a near $2 billion reduction in assets under managed.
The value manager’s core funds have underperformed significantly, with only $200 million in outflows and the majority driven by falls in market value.
Over the week the highlights were once again the staples and energy sectors, up 1.7 per cent each with Pendal (ASX: PDL) and Mineral Resources (ASX: MIN) the standouts gaining 17.6 and 12.3 per cent.
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Dow rallies, tech shares selloff, Tesla upgrades deliveries, earnings ahead
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The Dow Jones managed to eke out a small gain on Friday, up 0.4 per cent, with both the S&P500 and Nasdaq retreating, down 0.3 and 1.3 per cent respectively.
Investors continue to digest the impact of both surging food and energy prices, as well as the cost of capital with many indicators now flashing a growing recession risk.
Hedge funds have delivered their worst quarterly performance since 2020, falling 1.1 per cent on average in 2022.
Just four of the major sectors fell, led once again by technology, discretionary and communication names.
The biggest investment banks in the world will lead off reporting season this week, with expectations of another strong quarter of growth, with some benefit to come from higher bond rates and net interest margins.
Shares in Tesla (NYSE: TSLA) finished 3 per cent lower despite Musk’s commitment to 2023 deliveries of the long-awaited Cybertruck.
In a sign that more mature, defensive businesses remain in favour, WD-40 (NYSE: WDFC), which makes cleaning and work products jumped more than 7 per cent after delivering a significant earnings beat with inflation to have a limited impact on profits.
Over the week all three benchmarks were lower, the Dow down 0.3, the S&P500 1.3 and the Nasdaq 3.9 per cent.
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The beginning of the end, searching for relevance, lightning rods
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This week may well mark the beginning of the end of investing as we know it.
After more than a decade of expansionary monetary policy, the Federal Reserve this week flagged a clear intention to unwind its balance sheet.
This involves letting any maturing government bonds it owns mature and not reinvesting the proceeds as it has for many years.
Ultimately, the result should be higher bond yields, interest rates and generally less liquidity in the market.
This has already seen bond investment suffer their worst selloff in history and may well occur at the same time that demand is being destroyed by high oil prices increasing the risk of a recession.
Perpetual’s bid for junior player Pendal was the highlight of the week, with Platinum’s 15 per cent drop on Friday potentially the lowlight.
Most fund managers, particularly value-focused managers suffering even short-term underperformance, are continuing to struggle for relevance in an environment where low-cost ETFs are dominating flows and pressure grows for fee reductions.
It wouldn’t be a wrap without mentioning Elon Musk and his decision to buy as much as 9 per cent of Twitter.
The investment is $3 billion of his reported $300 billion in net worth, but has attracted headlines across the world for what it means for the future of social media; as always, headlines tend to get ahead of the story.
