Ground Control DWA Managed Accounts

The strong rally in equity markets, both domestically and globally, appears to have lost steam as the progress on disinflation seems to have slowed particularly in the U.S. Inflation remains a key risk to investment markets in 2024. If the downward trend in inflation continues to stall, central banks are less likely to cut interest rates. This could have significant implications for company earnings and global economic growth in the second half of the year.
 
Can equity markets continue to move higher, then?
 
In this edition, Emmanuel Calligeris, Chair of the DWA Investment Committee, and Monik Kotecha, Chief Investment Officer of Insync Funds Management, offer their outlook on market valuations. They also touch on the U.S. fiscal deficit and its implications for global financial markets in the long term. Tune into this episode to hear their insights of recent equity market movements and the economic challenges faced by Australia.

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Welcome to the first Ground Control of 2024!
As we look back, 2023 ended with strong momentum, with both the equity and bond markets delivering solid returns. Just a few months ago, the investment landscape was fraught with concerns over "higher for longer" interest rates. With inflation on a downtrend, however, the spotlight has shifted towards the trajectory of rate cuts. Following a notable rally in both domestic and international equity markets as we enter 2024, we ask ourselves - what will be the forward paths of inflation and interest rates, company profits and market valuations.
In this edition, Emmanuel Calligeris, Chair of the DWA Investment Committee, and Grahame Evans, Director of DWA Managed Accounts, will offer their insights on the outlook for 2024. They will cover a variety of topics, including expected interest rate reductions in the U.S. and Australia; the economic implications of the U.S. election; Australia's vulnerability to global economic shifts – especially the potential impact of China's slowing growth; and India's rising significance as an economic powerhouse. We anticipate a stronger first half, followed by a more volatile second half.

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Good news regarding easing inflation, and bad economic news around slowing growth, continue to push share markets higher both overseas and domestically. This is a notable turnaround as more and more investors expect central banks to start cutting rates sooner than previously anticipated. Are we finally near the end to monetary policy tightening for this cycle? What is the outlook for inflation and interest rates in 2024?  Tune into our final edition of Ground Control in 2023. In this episode, Emmanuel Calligeris, Chair of the DWA Investment Committee, and Grahame Evans, Director of DWA Managed Accounts, discuss key economic and market trends as we look ahead to 2024 and 2025. They also examine the impact of government policies on the housing market, particularly in Australia, discussing issues like foreign investment and the balance between immigration, job market needs, and housing availability. Emmanuel offers a balanced yet optimistic outlook for 2024, suggesting stabilising markets due to peaking inflation and declining interest rates.
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Recent weeks have witnessed a substantial rise in bond yields and a noticeable retreat in equity markets, raising concerns about the future path of company earnings and economic growth.
How much longer will interest rates stay elevated as economies transition from abnormally low interest rates to a more neutral setting? Why do bond yields continue to rise? How have rising bond yields affected the performance of growth assets?
In this video, Emmanuel Calligeris, Chair of the DWA Investment Committee, and Grahame Evans, Director of DWA Managed Accounts, delve into the effects of rising bond yields. Covering topics from debt and deficits in the U.S. to equity market valuation and to inflation and interest rates, their perspective offers a balanced outlook on the economic landscape, emphasising the importance of cautious optimism in the short term.

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August was another interesting month for markets as investors grappling with a higher for longer interest rate narrative from global central banks, softer economic data from Europe and worse-than-expected outlook of China. While the resilience of growth in the U.S. helps to support investor sentiment, the near-term outlook continues to present challenges.
In this video, Emmanuel Calligeris, Chair of the DWA Investment Committee, and Grahame Evans, Director of DWA Managed Accounts, talk to the economic development in various parts of the world as well as company earnings in both Australia and the U.S. Easing inflation pressures and the Federal Reserves' decision to leave interest rates on hold suggest that we are even closer to the end of the interest rate tightening cycle. However, with interest rates are likely to remain higher for longer whilst growth is slowing, do equity market valuations look expensive, fair, or cheap?
Tune in to this month's Ground Control as we share with you our views on investment markets from property to shares and to bonds.

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In our recent updates, we engaged in extensive discussions regarding interest rate rises, share market valuations, and long-term government bond yields in both Australia and the U.S. These discussions involved deep dives into topics such as inflation expectations, economic indicators, and global macroeconomic trends at that time.
As we look ahead, the near-term outlook continues to present challenges. In this video, Emmanuel Calligeris, Chair of the DWA Investment Committee, and Grahame Evans, Director of DWA Managed Accounts, talk about various risk factors that contribute to the current elevated market volatility.
Don’t miss out on this Ground Control. Discover why rising labour costs and slowing demand could pose challenges for company earnings and gain valuable perspective on the growth of Chinese economy as well as other investment opportunities in the emerging markets.

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