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1. Inventories rising…

Target, Walmart and other retailers’ shares have slumped recently after reporting rising inventory levels. Many retailers experienced tremendous one-off growth as a result of COVID lockdowns. They should have taken the profits and run. Instead, they upped their production, optimistic that the super growth would continue… Now that consumers have diverted their spending to travel and experiences, retail revenues are down, costs are up, and warehouses are full…

Source: Commerce Department, The Daily Shot

2. European Debt Crisis #2 averted?

Talk of rising interest rates sent European government bond markets into a spin last week. The 10-year government bond yields of highly indebted EU members like Greece and Italy spiked to their highest levels since 2014… While tight-belted EU member states like Germany are eager to stamp out inflation, higher interest rates could spell disaster for less disciplined states. At a 5% interest rate, Greece’s annual interest repayments would amount to 10% of GDP… The European Central Bank (ECB) flew to the rescue on Thursday. At an emergency meeting, the ECB announced it would buy struggling government bonds to put downward pressure on borrowing costs.

Source: Firetrail, Bloomberg


3. Chaos strikes Australia’s electricity market…

Severe supply constraints are causing chaos in the Australian electricity market this week. To make matters worse, the supply shortage is occurring when electricity demand is high due to a cold snap… Over the long term, wholesale electricity prices are typically ~$70 / MWh. This week, prices spiked to a staggering $15,100 / MWh! The high prices led to a $300 price cap being enforced and finally the regulators took control of power stations. A $300 price is not profitable for power producers. However, the regulator has promised they will be refunded their cost to generate plus a small margin.

Source: Firetrail, AEMO


This article is prepared by Firetrail Investments Pty Limited (‘Firetrail’) (ABN 98 622 377 913, AFSL 516821) as the investment manager of the Firetrail Australian High Conviction Fund (ARSN 624 136 045), the Firetrail Absolute Return Fund (ARSN 624 135 879), the Firetrail Australian Small Companies Fund (ARSN 638 792 113) and the Firetrail S3 Global Opportunities Fund (ARSN 653 717 625) (‘the Funds’). Pinnacle Fund Services Limited ('PFSL') (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the relevant Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.

Links to the Product Disclosure Statement: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

Links to the Target Market Determination: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

For historic TMD’s please contact Pinnacle client service Phone 1300 010 311 or Email

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