Market Wrap July 2022

Posted in Wealth
09/08/2022 Level One


Local: The ASX200 had a strong July posting a 9.2% gain following a disappointing June result.

Global: The S&P 500 also responded positively gaining 5.7% over the month.

Gold: Spot price for gold saw large falls as prices fell by US $60 to reach US $1,753.

Iron Ore: Iron Ore prices dropped by US $5 to hit US $118/Mt as Brazilian shipments reach record highs and demand remains soft.

Oil: Brent Oil price remained stable to end the month at US $110/bbl. This figure may continue to fall as bans on Russian shipments are delayed.



Housing: Australian dwelling values fell by -1.3% in July, marking the third consecutive month CoreLogic’s national Home Value Index has fallen. After national dwelling values surged 28.6% through the pandemic growth phase, values are now -2.0% below April’s peak.

Five of the eight capital cities recorded a month-on-month decline in July, led by Sydney and Melbourne where values fell -2.2% and -1.5% respectively. Brisbane also edged into negative growth territory for the first time since August 2020, with values down -0.8%, while Canberra (-1.1%) and Hobart (-1.5%) were also down over the month.

CoreLogic’s Research Director, Tim Lawless states that although the housing market is only three months into a decline, the national Home Value Index shows that the rate of decline is comparable with the onset of the global financial crisis (GFC) in 2008, and the sharp downswing of the early 1980s. In Sydney, where the downturn has been particularly accelerated, we are seeing the sharpest value falls in almost 40 years.



Interest Rates: The RBA Cash rate has now had 4 consecutive rate rises. A 0.5% rise at the start of August has pushed the cash rate to 1.85%. With more rate rises likely before year end.

Retail Sales: Retail sales in Australia rose by 0.2% MoM to a fresh record level of AUD 34.24 billion in June 2022. The latest print was the softest rise in retail trade since a fall in December 2021, as cost-of-living pressures appear to be slowing the growth in spending. Cafes and restaurants had the largest rise (2.7% vs 1.8% in May), followed by clothing (1.3% vs -1.4%), and other retailing (0.5% vs 1.5%).

Bond Yields: The Australian government 10-year bond fell to 3.06% showing an improvement in investor sentiment. The US 10-year bond also fell to 2.64%.

Exchange Rate: In July the Aussie dollar gained value against both the US dollar at $0.700 and the Euro at $0.686 respectively.

Inflation: Inflation in Australia is currently sitting at 6.1% (June 2022 quarter), the quarterly increase of 1.8% was the second highest since the introduction of the Goods and Services Tax (GST), following the 2.1% increase last quarter (March 2022).

Consumer Confidence: The Westpac Melbourne Institute Index of Consumer Sentiment fell 3.0% to 83.8 in July, from 86.4 in June. The Index has now fallen 19.7% since December 2021, a precipitous tumble comparable to the two–month plunge during COVID (–20.8%); and the six–monthly declines seen heading into the Global Financial Crisis (–29.7%); the early 1990s recession (–20.5%); the mid–1980s downturn (–23.8%); and early 1980s recession (–18.8%).

Euro Area Consumer Confidence: The consumer confidence indicator in the Euro Area fell by 3.2 points to -27 in July 2022, from -23.8 in June. It Is the lowest reading since the series began in 1985 amid uncertain energy supplies from Russia and its impact on growth at a time the European Central Bank is starting to raise rates for the first time in 11 years.

Employment: The unemployment rate fell to 3.5% in June, with the participation rate increasing to 66.8%.

US Employment: The unemployment rate came in at 3.5% for July, the lowest reading since Feb 2020 but is in line with expectations. Nonfarm payrolls came in at 528,000, above the revised 398,000 in June and against expectations of 250,000.

Purchasing Managers Index: The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) declined by 1.5 points to 52.5 points in July 2022 (seasonally adjusted). This indicates a weaker rate of expansion across manufacturing in July. Results above 50 points indicate expansion, with higher results indicating a faster rate of expansion.

Sources: ABS, AFR, AWE, BLS, CoreLogic, Macquarie MWM Research, RBA, TradingEconomics, UBS, Westpac.



How does Australia stack up against the world’s top emitters?

SourceUnion of Concerned Scientists, IEA

Australia’s Inflation Outbreak

Source: Australian Financial Review

90-Year-Old Morgan Stanley Advisor Charged With Shooting Co-Worker

A 90-year-old Morgan Stanley financial advisor has been arrested and charged with shooting his business partner in the firm’s office in Oklahoma City.

The advisor, Leonard Bernstein, allegedly entered the building on Thursday, walked into the office of Chris Bayouth, and began firing, hitting Bayouth multiple times.

Bernstein has been charged with shooting with intent to kill, according to a spokeswoman for the Oklahoma City Police Department. He is out of jail on a $50,000 bond, according to local news outlet News On 6.

Officials said the shooting occurred after a shoving match between Bernstein and Bayouth, according to another local report, from KTUL.

A police officer who arrived on the scene said Bayouth may have been shot as many as five times, with injuries sustained to his torso, back, leg, and foot.

“Chris was laying on the floor behind his desk, and he was conscious and alert,” Officer Travis Ratcliffe wrote in an incident report obtained by Barron’s Advisor. “I asked Chris who did this to him, and he replied ‘Leonard Bernstein.’ Chris said Leonard works here, and they are (business) partners. I asked Chris what happened prior to the shooting. He said Leonard said he was going for a walk in the park and shot him.”

Police apprehended Bernstein after a traffic stop near the office building where the shooting occurred.

“There were several witnesses there that indicated that the suspect had walked in, fired several rounds at that victim and then left in his own personal vehicle,” said Sgt. Dillon Quirk of the Oklahoma City Police Department.

Bayouth was taken to the hospital and is expected to survive.

“We are cooperating with the authorities and our thoughts are with our employee,” a Morgan Stanley spokeswoman said in an email. She confirmed that the firm terminated Bernstein on Friday.

Bernstein has been facing declining health and had transferred his client accounts to Bayouth, according to News On 6.

Bernstein had worked at Morgan Stanley since August 2021, according to the online database BrokerCheck. Before that, he had worked for nine years at Wells Fargo and served two earlier stints with Morgan Stanley in a career that began in 1994.

Bayouth has been with Morgan Stanley since 1995, according to BrokerCheck. Both he and Bernstein are dually registered as investment advisors.

Source: Barron’s


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