• Clifford Bennett , Chief Economist at ACY Securities


• 13.08.2021 10:30 am
trading

Sunrise global market update. Click on image or use this link to watch now https://youtu.be/_W2cvWKil0k

Australia Already in Recession Q3 Q4

with risk into Q1 2022.

* Australian dollar, chart below, is pointing the way. 70 or 68.

* Australian stock market could well be topping out exactly now at time of writing.

* Extremely active investment portfolio monitoring and potential hedging has never been more crucial.

* Excellent risk/reward opportunity, with a new high from here representing a very close loss limiting scenario.

* The downside to be fuelled by intensifying recession.

* Hopefully not to be the case, but possibly, also from the risk of the Victorian and ACT situations continuing to see fast rising case numbers.

Not a great morning,

The Delta Crisis sweeping south east Australia is intensifying.

We do not want this, but it does appear a fast developing trend.

Markets are most certainly not positioned for such an eventuality. This is immediately a high risk investment environment.

We should avail ourselves of all hedging tools available, and perhaps look to lockdown at least some of our overall investment portfolios in a manner similar to the experience of those in actual lockdown zones. Their situation, speaks to everything that describes the near term outlook for the economy.

Recession is already occurring for Australia as a whole.

The only real support to aggregate GDP will remain agricultural and mining exports. Though, these too, are coming under increasing pressure. Commodity prices are broadly stalling out. Gold should separate and begin to strengthen as a Delta hedge. The relationship with China continues to be damaged, rather than repaired, and further reductions in exports to that part of the world may eventuate.

The domestic economy will enjoy continued and enhanced targeted support measures. From both the federal and state levels. These will however, in totality not match the levels of stimulus seen last time round. With less overall stimulus finding its way into the economy, lounge-rooms now stacked to the ceiling with new sofas, televisions and washing machines, there is unlikely to be anything of the kind of the previous boom recovery out of this situation.

Australia is in trouble on both economic and health fronts. We will get through this, and again shine on the other side. But, unfortunately, not so brightly this time.

The truly worrying trend of the current health situation and lockdowns, is that the light at the end of the tunnel is much further off, than any of us would like.

Considering immediate hedging tools and strategies is an appropriate response to the current situation.