Weekly Market Recap
Getting ahead of things
Week in review
- Australian preliminary retail sales -1.5% m/m for September
- Chinese economy expands 4.9% y/y in 3Q
- RBA minutes solidify market view of November rate cut
- U.S. durable goods
- Australia CPI inflation for 3Q
- U.S. 3Q real GDP
Thought of the week
Spiraling COVID cases in the U.S. and Western Europe have done little to dampen investor appetite in recent weeks. The promise of further fiscal spending in the U.S. has been too great a pull in an environment where the alternative, government bonds, have little appeal. However, there are those that are still concerned that the equity market has run ahead of economic fundamentals. This week’s chart illustrates the gap between the market view and consumer confidence, historically a rather close relationship. The stock bond ratio compares the total return of global equities to that of global government bonds. Given the very low yields, and the supportive nature of central banks and governments, it could be argued that the gap to economic data such as consumer confidence is warranted. The alternative view is that the market has already priced in the good news to come, and it would really take a big shift in earnings expectations to drive equities higher, while the stalling economic backdrop presents a material risk of a correction.
Markets already reflect some big improvements
Stock bond ratio and consumer confidence
JPMorgan Global Research Enhanced Index Equity Fund
To achieve a long-term return in excess of the benchmark by investing primarily in a portfolio of companies, globally; the risk characteristics of the portfolio of securities held by the Sub-Fund will resemble the risk characteristics of the portfolio of securities held in the benchmark.