Cautious, Cashed Up, Looking For Direction

rudi-views
Always an independent thinker, Rudi has not shied away from making big out-of-consensus predictions that proved accurate later on. When Rio Tinto shares surged above $120 he wrote investors should sell. In mid-2008 he warned investors not to hold on to equities in oil producers. In August 2008 he predicted the largest sell-off in commodities stocks was about to follow. In 2009 he suggested Australian banks were an excellent buy. Between 2011 and 2015 Rudi consistently maintained investors were better off avoiding exposure to commodities and to commodities stocks. Post GFC, he dedicated his research to finding All-Weather Performers. See also "All-Weather Performers" on this website, as well as the Special Reports section.

Rudi's View | Apr 11 2019

In this week's Weekly Insights (published in two parts):

-Cautious, Cashed Up, Looking For Direction
-Not The End, Says Prudential

-Conviction Calls
-Retail REITS And The (Invisible) Risk
-Have Your Say - The CSL Challenge
-Rudi On TV
-Rudi On Tour

[Non-highlighted parts will appear in Part Two on Friday]

By Rudi Filapek-Vandyck, Editor FNArena

Cautious, Cashed Up, Looking For Direction

I am probably not revealing any big secrets when I state the local share market is getting the heebies jeebies every time the 2018 high comes within spitting distance.

This despite reassurances from technical analysts, or at least some of them, the market's bias remains to the upside. Thus far there has been no appetite to push the ASX200 too far down because, you know, Trump and Xi might actually announce something concrete and that would put equities on a higher level pretty quickly.

Investor dilemma was put on notice by the team of global strategists at Citi. On their assessment, any calls for recessions and bear markets and the like are way, way, way too early and totally overblown at this stage, but, on the other hand, further upside for global equities between now and year-end is estimated at the grand total of... (wait for it)... 2%.

Specific stock selection and allocating additional funds into pullbacks therefore look like the strategies that might generate highest returns over the next eight months.

?

Citi strategists are banking on a weaker US dollar to assist with further gains in US equities and Emerging Markets equities, with healthcare, communication services and materials most preferred sectors. The latter is an umbrella label for miners and energy producers, often also including contractors and engineers to both sectors, as well as certain old legacy inclusions such as Amcor and Incitec Pivot.

Just as an aside: I hope everyone agrees the more modern FNArena-specific sector denominations running on the FNArena website are a much more helpful tool than the plain old "materials".

Equally noteworthy, maybe, is that Citi strategists do not like consumer discretionary, utilities and consumer staples, and neither do they like equities in Japan or in Australia (both markets are treated as "underweight" regions).


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