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February 19 2021


1. Allocating to equities… 

There is still plenty of stimulus floating around the world, and it seems global equity markets continue to benefit from the extra cash. In the US, $113.5bn went into ETFs in the first 5 weeks of the year, 1/4 of the total for the whole of 2020! Trading volume has also skyrocketed in 2021. But interestingly investors have only just gone above-average equity allocation levels seen over the last 12 years, and there’s a way to go before they hit the peak equity allocation levels seen in the Dotcom era.


Source: Bloomberg

2. Dr. Copper is doing well…

Copper hit an 8 year high this week, as factory-gate prices in China rose for the first time in a year, strengthening bets that inflation will accelerate globally as major economies recover. We have also heard reports that due to travel restrictions, Chinese factories will continue to operate through CNY to minimise potential Covid spread, which should decrease the downturn in demand usually experienced at this time of year.

3. Aussie optimism… 

White-collar employment in Australia is back and booming, according to Dexus, and SEEK’s Australian Candidate Availability Index has fallen sharply, adding to the indicators pointing to a faster-than-expected near-term decline in unemployment. Unemployment expectations are currently sitting at the 2nd lowest level in almost a decade, whilst overall consumer sentiment has come out of 2020 at the highest levels in 5 years, and house price expectations are at a 7 year high.

Source: Dexus, ABS, SEEK, Macquarie Macro Strategy