Three things that got the team talking this week - Firetrail Investments

Weekly insights from the Trail

Three things that got the team talking this week

September 30, 2022October 7th, 2022

Feature Image

1. Throw away the textbook…

Central banks and governments have shown they are prepared to do whatever it takes, so we have decided to throw away our economics textbooks (Sorry Doyley!). This week the Bank of England said it would buy government bonds to stabilise the UK bond market, following on from the UK Government’s mini-Budget last Friday. It has been mayhem in markets, with the yield on the UK 10-year gilt rising from 3.50% last Thursday to 4.51% over the course of 3 trading days. Sterling was also hit hard, falling to a record low versus the US dollar of 1.07.

UK government bonds are known as ‘gilts’ because, historically, the paper certificates issued with fixed-interest securities had a gilt-edge. By buying bonds, the BoE is seeking to reverse what it sees as “dysfunction” in the bond market. Specifically, the central bank is seeking to address problems facing pension funds, which are very sensitive to sudden drops in long-dated bond prices and in extreme market conditions a vicious cycle of forced sales and further price falls can set in.

Meanwhile the coping mechanism of choice by the Brits in this uncertainty seems to be buying bitcoin…go figure!

Source: James Butterfill

2. Shopaholics anonymous…

Australia’s nominal retail sales rose for an eighth straight month in August, up +0.6% m/m. Sales in July and August were nearly 2% above the monthly average in Q2. Amongst the contributors, department store sales rose to a new record, while household goods retailing had its largest rise since March. Meanwhile the August CPI reading showed inflation slowing slightly. CPI rose 6.8% in the year through August, from 7% in the prior month, according to the ABS.

But the shopaholics aren’t isolated to Australia, the Americans enjoy shopping too it seems.

Maybe we can all buy whatever is in the water over in NZ, so our business confidence goes up too!

Source: ABS, Macquarie Macro Strategy

Source: Oxford Economics/Haver Analytics

Source: The Daily Shot

3. The bright spot…

We’ve found a bright spot amongst all the market angst. Europe and UK are importing solar panels at an increasing rate.

Source: BloombergNEF

Disclaimer

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 service@pinnacleinvestment.com

This communication is for general information only. It is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. It has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice before doing so. Past performance is for illustrative purposes only and is not indicative of future performance.

Whilst Firetrail, PFSL and Pinnacle believe the information contained in this communication is reliable, no warranty is given as to its accuracy, reliability or completeness and persons relying on this information do so at their own risk. Subject to any liability which cannot be excluded under the relevant laws, Firetrail, PFSL and Pinnacle disclaim all liability to any person relying on the information contained in this communication in respect of any loss or damage (including consequential loss or damage), however caused, which may be suffered or arise directly or indirectly in respect of such information. This disclaimer extends to any entity that may distribute this communication.

Any opinions and forecasts reflect the judgment and assumptions of Firetrail and its representatives on the basis of information available as at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future.

Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this communication is prohibited without obtaining prior written permission from Firetrail. Pinnacle and its associates may have interests in financial products and may receive fees from companies referred to during this communication.

This may contain the trade names or trademarks of various third parties, and if so, any such use is solely for illustrative purposes only. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with, endorsement by, or association of any kind between them and Firetrail.