15 May 2023 | Weekly Snapshot

Did you know?

According to the National Retail Federation (NRF), Mother’s Day spending in the United States is expected to reach an all-time high of $35.7 billion, an 11.5% increase on last year. With the average household expected to spend $274 on flowers, gifts, or special outings.

Market Movements

Australian Share Market (ASX 200) – up 0.51% and snapping a 3-week losing streak. The Info Tech sector (+2.98%) led the gains followed by Energy (+1.43%) and Consumer Discretionary (+0.93). Utilities (-1.13%) led the declines followed by Materials (-0.49%) and Consumer Staples (-0.47%). Commonwealth Bank rounded out the bank reporting season with a Q3 trading update with key takeaways from the Bank reporting fairly consistent. According to CBA CEO Matt Comyn, “As higher interest rates impact the Australian economy in the period ahead, we expect economic growth to continue to moderate,” and “Despite the challenging global economic outlook, Australia is relatively well positioned given the strength of our banking system, the economic tailwinds from a recovery in population growth and relatively high commodity prices.” Confirming those sentiments Treasurer Chalmers handed down his second budget, predicting a FY2023 surplus of $4.2 billion, which would be the first time the budget was in the black in 15 years. Since the October budget the government has realised an extra $146 billion in revenue from the full employment economy and strong commodity exports. The government unveiled a $15 billion package of welfare increases including $9.5 billion in actual welfare increases, $3.5 billion in Medicare incentives to lift the rate of bulkbilling, and $3 billion in one-off energy bill discounts. There wasn’t much in it for middle and upper incomes but there was the well-flagged increased tax rate on superannuation for individuals with more than $3m in super. The federal budget was marketed as providing cost of living relief to lower income families and that the targeted spending wouldn’t worsen the current inflation situation but by the end of the week some economists had noted the energy subsidies and welfare boost are stimulatory given they are aimed at lower income households who have greater propensity to spend, while others suggest households are less likely to increase spending given economic uncertainty and the sharp fall in disposable incomes. Bond yields didn’t move much post the budget suggesting risks are more evenly balanced.


U.S. Share Market (S&P 500) – down 0.29%, with the Dow (-1.11%) also down but the Nasdaq (+0.40%) higher on AI momentum. U.S equities remained relatively calm with the volatility index (VIX) still hovering around the lowest levels in 3 years although global growth concerns persist with barometers like iron ore, copper, and oil prices under pressure last week. Markets caught a breath after a flurry of reporting activity the past few weeks. With 85% of S&P 500 companies having reported, Bank of America had a more positive view on the earnings guidance. Although fewer companies provided guidance, of those that did there were 40% more above than below consensus guides with the three-month guidance ratio (upgrades to downgrades) well above the historical average and the highest in two years. They also suggested 2023 EPS has started to bottom, a big call but something to keep an eye on. The Fed’s Q1 Senior Loan Officer Opinion Survey showed tighter lending standards and weaker demand for all Commercial Real Estate loan categories. In terms of the outlook respondents expected a less favourable / more uncertain economic outlook, reduced risk tolerance, deterioration in collateral values, and concerns about bank funding costs and liquidity positions. The April CPI report was the highlight with annual headline CPI down 0.1% to 4.9% and slightly below estimates for 5.0%. It was the 10th straight monthly decline after peaking above 9% mid last year. Annualized core inflation decreased 0.1% to 5.5% and was slightly higher than the 5.4% expected indicative of persistent inflation although expectations are building that the Fed rate hike cycle is now complete. President Biden and House and Senate leadership met to discuss the debt limit with less than three weeks until the expected 1st June government default date with Republicans refusing to consider a debt limit increase without spending cuts, and Democrats demanding a clean debt limit increase first. Analysts suggest the likelihood of breaching the debt ceiling remains low but is likely to get increased attention over coming weeks. The weekly initial jobless claims were the highest since late 2021 and now up around 30% from levels earlier this year in further signs the super tight labour market is finally easing.

Portfolio Movements

Google (GOOG) shares were trading at their highest level since August following some artificial intelligence announcements at their developer conference last week. Google has recently been seen (as the incumbent in search) as having the most to lose from competitors like Microsoft ramping up their AI offering with the company announcing a raft of AI developments set to be rolled out. Google announced it would bring AI features to its signature search product to turn complex queries into simple answers by combining results from multiple sources, and that its suite of workplace tools like Google Docs would soon let users create new documents and fill out spreadsheets with AI. They will also make their Bard AI chatbot more widely available and that it would soon have the ability to respond in different languages.


Johnson & Johnson (JNJ) successfully spun off their consumer health business, Kenvue, last week in what was the largest U.S. IPO in more than a year. The IPO price was $22 and has since traded up to $26 with a market cap of US$50 billion. The spin-off of Kenvue, the largest restructuring in J&J’s 135-year history, is aimed at streamlining operations and refocus on its pharmaceutical and medical device divisions. Kenvue owns brands like Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena, and the J&J baby powder and shampoo and posted $14.95 billion in sales for 2022 and net income of $1.46 billion. J&J control 92% of Kenvue post the IPO with plans to distribute the remaining shares of Kenvue common stock to shareholders later this year.


Verizon (VZ) have signed a deal with Vertical Bridge to create a new profit share model to build cell towers across the US to expand Verizon’s 4G and 5G Ultra-Wideband services. Vertical Bridge has agreed to construct these towers to suit with Verizon as the anchor tenant. The new towers will add to the overall communications infrastructure in the US and will help to fulfill the need for new locations where towers do not currently exist. “Our new agreement with Vertical Bridge is an excellent alternative to the traditional tower leasing model. This cost effective, sustainable, and efficient model will allow us to accelerate our build program and provide additional services to customers,” said Lynn Cox, Chief Engineering Officer for Verizon.

The Week Ahead

Domestic economic data releases this week include the Q1 Wage Price Index on Wednesday which is expected to show wages increasing at 3.6% annual rate, up from the 3.4% annual rate in Q4. April labour force data is due Thursday where another 20,000 jobs gain is expected and for the unemployment rate to hold steady at 3.5%.

International highlights include Eurozone Industrial Production and U.S Empire State Index tonight. China Industrial Production is tomorrow with German ZEW survey and U.S Retail sales, Capacity Utilization and Industrial Production, Business Inventories, and the NAHB Housing Market Index tomorrow night. Japan Q1 GDP is Wednesday with U.S Housing Starts Wednesday night. The U.S Philadelphia Fed Index, Existing Home Sales and Leading Indicators are Thursday night with Japan CPI on Friday.

Corporate reporting slows further with just Annual General Meetings for Lloyds and CVS Health on Thursday.

Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice

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