A short note on our market view and inflation expectations:
Despite tension between the downside risks from the Covid19 Delta variant, and ongoing supportive fiscal and monetary policy, Endorphin Wealth’s medium-term market view is still positive for risk assets such as Shares and Property.
Covid19 continues to drag down global supply chains. Vaccinations are taking longer than authorities had hoped to roll out. The clear downside risks to growth are driving concerns that the recovery has slowed and could falter. On the other hand, central banks have stayed committed to accommodative monetary policy, despite inflation moving higher. In the US, CPI inflation have recently remained at around 5%. This is well above the Fed’s targets.
The impact of the Delta variant has dragged down the global consumer and business confidence. In Australia, consumer confidence was 4.4% lower in August. Business confidence also plunged. In the US, consumer confidence plunged to a decade-low in August. This is a risk to the recovery if households begin to wind back their spending plans.
Endorphin’s market view is that the fall in confidence added to expectations that central banks will not begin tapering their accommodative support for some time to come. Equity markets are hence largely still looking forward to higher vaccination rates. This has seen the US S&P500 moved further into new record highs. It closed the week 0.7% higher and is now 19.0% higher year-to-date. Most developed economy equity markets at the moment are sitting on double-digit returns year-to-date, with many now at record high price levels.
Here at Endorphin Wealth, we are not licensed or owned by the big banks and financial institutions, so the advice we provide is always in our client’s best interests. We have the advantage of being able to access a range of products from different providers that can be tailored to our client’s goals and needs.
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