Investors aren't panicking, yet
Investors have been banking profits and positioning their portfolios for an escalation in the “Trade Wars”. Panic and fear haven't gripped the market gauging by the increase in the Volatility Index (VIX) over the past few days but that could all change with further tit-for-tat tariff increases.
Investors could generate significant returns waiting for the VIX to reach 25 before buying into the market, this signals ‘near maximum' pessimism as investors get sucked into the market noise.
President Trump won't let his “Trade War” derail his biggest barometer of success, being a bullish stock market that has increased almost 30% since winning the presidency.
And when you look beyond the noise to the fundamentals, there's a lot to be positive about. Global companies (using the S&P500 as a proxy) have reported increased earnings, increased sales and have positive earnings outlooks in Q3 and Q4 of 2019.
Investors should be buying into the market slowly, starting today, to position their portfolios for 2019. It should be the year the JSE escapes it's multi-year phase of low returns.
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The week ahead:
Local Data: Retail trade sales (15/05)
Results Due: CGR, NTC, RBX, VOD, YYLBEE (13/05); LTE, LON, MZR, MIX, REB (14/05); BWN, GTC, IPF, L4L, SNV, SPP, THA, TCP (15/05); CTA, DTC, DCP, GPA, INL, INP, UPL (16/05); ADR, CVW, INLP, CFR, SEA, SSK (17/05)
LDT (14/05): ALP; MDI; PSG; VVO
Special/Share Premium Dividend: IDQ (14/05)
Other Economic data releases of interest…
Tuesday: Average Earnings Index, Unemployment Rate (UK); Wage Price Index (AUS); German ZEW Economic Sentiment (EU); FOMC Member Williams Speaks (USA); Fixed Asset Investment, Industrial Production (CNY)
Wednesday: Unemployment Rate, RBA Assist Gov Bullock Speaks (AUS); Core Retail Sales, FOMC Member Quarles Speaks (USA); Flash GDP (EU); CPI (CAN)
Thursday: German Buba President Weidmann Speaks (EU); BOC Gov Poloz Speaks, Manufacturing Sales (CAN); Philly Fed Manufacturing Index, Treasury Currency Report (USA); MPC Member Haskel Speaks (UK)
Friday: Prelim UoM Consumer Sentiment, FOMC Member Clarida Speaks (USA); Parliamentary Elections (AUS)
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