Investor Insights

For many Australian investors today, small steel fabricators can be just as interesting as BHP. Here’s why.   These Aussie businesses are not afraid of hard work. When customers need fabricated steel for residential and industrial construction, they don’t sit around talking, they start cutting and loading.    I love that.

Are you seeing these alarming headlines from global consultancies? Some making the big claim that Australia will soon ‘enter a consumer recession. ’ Really? It’s like they know better than actual Australian consumers.   From the indicators I see, Australians are buying and selling with terrific energy.

The monthly Consumer Price Index indicator rose by 6. 8 per cent in the year to April 2023. This month’s result is higher than the 6. 3 per cent rise reported in the prior month.

We have been optimistic about the prospects for equities this year despite fears of recession. And even though investors have listed a deeply inverted U. S. Treasury yield curve, a sharp drop in the oil price, falling consumer demand, credit tightening and declining M2 money supply as reasons to justify expectations of a recession, the outcome is not guaranteed.

I recently concluded that while Copper’s near-term outlook remains closely linked to global industrial production expectations, as the global supply/demand curve heads into a deficit later this decade we expect the Copper price to hit record highs.

2023 has been a challenging year for stock markets, when we commenced in January we launched with a bang, with strong market returns occurring across the globe. By the time February approached volatility had set in and we find ourselves in a situation where like tropical weather, the forecast can change at a moment’s notice.

Talk to anyone on the street these days and the conversation will inevitably turn to how inflation is increasing their cost of living in some form or another. Inflation has risen steadily since the beginning of 2022 despite the determined efforts of Reserve Bank of Australia (RBA) to bring it back towards its target range of 2-3 per cent.

Over the past decade, regulatory capital treatment has seen Authorised Deposit-taking Institutions or major Banks (ADIs) pull back from originating specialised asset-based loans, instead gaining exposure via asset-backed facilities secured by asset-based loans originated by non-bank lenders. Due to ADIs’ preference to invest only in large, mature facilities with a AAA rating, there is an inherent funding gap.

  In this week’s video insight I joined Montgomery’s head of distribution Scott Phillips to discuss two stocks we currently hold in the Montgomery Small Companies Fund including insurance broking, underwriting agency and risk management businesses AUB Group (ASX:AUB) and lithium producer Allkem (ASX:AKE). AUB Group falls into the category of stable compounders, those businesses with defensive growth characteristics.

Back in the 1960s, AMP Limited (ASX:AMP) built the tallest building in Australia, with magnificent views over Sydney harbour. It was a symbol of the firm’s dominant place within the local financial sector.

Around 75 per cent of the World’s lithium reserves, according to the U. S. Geological Survey, can be found in Latin America (58 per cent in Chile, Bolivia and Argentina) and Australia (17 per cent). Meanwhile, China currently has 80 per cent of the global refining capacity.

With inflation finally coming down, it looks like the U. S. Fed Reserve could soon stop lifting interest rates and start cutting, possibly as early as this year.   That’s great news for equity markets, which tend to rally when rates are lower. And it’s particularly good news for technology stocks and small caps. U. S.