Rudi's View | May 04 2023
By Rudi Filapek-Vandyck, Editor
This week's "surprise" rate hike by the RBA only further strengthened the view of Canaccord Genuity Chief investment strategist Tony Brennan that investors should not misinterpret the April rally in equities as more evidence the worst of central bank tightening and US banking problems is now well and truly behind us.
Brennan has remained firm in his view this year's share market rallies are occurring on borrowed time and more weakness shall follow as market optimism meets the cold hard reality of slowing economic growth and lower corporate profits later in the year.
This week's RBA rate hike, with likely one more to follow, is simply yet more evidence for investors to remain alert and cautious, with Brennan declaring the RBA delivered a reminder of the risks that corporate profit forecasts might be cum further downgrades as economies can decelerate substantially on the lagged impact from central bank tightening.
These risks, suggests Brennan, are currently not incorporated into analyst forecasts or in present share prices.
Canaccord's macro advice has been to move portfolios Underweight equities, both in Australia and internationally, alongside Overweight allocations to fixed income, alternatives and cash. More tightening from the RBA has simply reinforced that position.
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