Silicon Valley Bank (SVB)

Below is an update on developing news regarding the U.S. banking sector.

Tidal Wave

As highlighted two weeks ago, fundamentals have taken a back seat whilst the central bank's war on inflation drives investor sentiment.

ASX Reporting Season

Macroeconomic events overshadowed the recent ASX reporting season.

Fundamentals have taken a back seat whilst central bankers drive investor sentiment.

Pivot Party

The financial system has taken a small but noticeable exhale, most notably in the U.S. with equities and bonds rebounding from their June lows.

Some are calling this a pivot party, with the prospect of softening inflation data and, therefore, interest rate expectations placing a temporary floor under asset prices.

Bulls & Bears

Recent financial market developments have many investors understandably nervous.

Tackling price inflation through higher interest rates has become a global phenomenon. Tighter than expected financial conditions indicate a meaningful economic slowdown, and recent equity market weakness reflects this.

Front Loading

Last Tuesday, the RBA lifted its cash rate by +0.50% to 0.85%, the biggest rate hike in 22 years and the first back-to-back rate hike since May 2010.

Patient but attentive

The past few weeks have been challenging for investors as central banks embarked on increasing policy rates in the face of persistent inflation.

Cost Control & Pricing Power 

Understandably, the war in Ukraine has overshadowed a strong ASX Report Period.   

Analysts displayed growing optimism as Australian businesses emerged from the omicron wave better than feared. This optimism translated into upgraded FY22 earnings from 13.6% to 14.2%, led by materials and energy sectors, the beneficiaries of global inflation and geopolitical risks.

Ukraine and Russia Crisis 

Below are our early observations regarding the current crisis in Ukraine.

We are monitoring the situation closely and hearing from a range of industry experts to understand the impact as it evolves.

Ultimately, short-term outcomes are difficult to predict. This reinforces the benefits of having a balanced, long-term, valuation driven approach to portfolio management.

Equities in a tug-o-war 

Below is a brief update following the recent period of heightened volatility.

Next Friday, we'll share a detailed view after our Q1-2022 Advisory Board meeting.