Rudi’s View: RBA Hikes, US Recession, Portfolio Adjustments

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 | 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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