Advisory

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30U.S. corporations repurchased more than $5.1 trillion of their stock since 2010 according to S&P Global.

This share buyback activity happened nowhere else in the world anywhere even close to the scale that we have seen in the U.S.

With the S&P500 still trading at historically high valuations in face of  economic weakness, corporate defaults & bankruptcies, discounted capital raisings, it’s likely the market requires a lower valuation range to consolidate within.

The table below helps link EPS ranges with where the S&P500 should be trading.

We’re cautious about the outlook for Macquarie Bank and suggest investors remain on the short side of the trade as long as the price action trends lower.

Our reference tool for tracking the move lower is the 10-day average. A break back above the average will act as a stop loss to the “short position”.

US mega-cap technology stocks will soon provide March quarter earnings updates. With the following 4 names representing 44% of the index, investors should be watching the numbers.

The following graph displays the long term trend in Iron Ore prices and below that is the 1-year price history.

Iron Ore prices have held up surprisingly well during the early stages of the market sell-off.  We do have some concerns that resistance remains in the high USD$80 per tonne range and the pressure is now to the downside.

This forecast feeds through to our forecast for BHP & RIO, where we feel investors are best served by waiting for entry levels at lower prices.

9-year history

1-year history