Last week’s RBA September meeting flagged a tapering of bond purchases, with its base case being positive economic growth in Q421 and solid growth through next year. Just a week earlier, at its US Jackson Hole conference, the US Fed hinted at a likely tapering of its bond purchasing program before year-end, although it left the exact timing open-ended. So, what exactly are the implications of a winding down of QE and will it spell trouble for the stock market?

The national accounts for the second quarter showed Australia’s GDP rose 0.7% relative to the previous quarter. This was above the consensus expectation of a 0.4% rise. The year-on-year (YoY) pace rebounded to a record 9.6%, albeit this is based on a comparison to last year’s deeply depressed second quarter.

At Wilsons Advisory, we believe an allocation to private equity (PE) makes sound strategic sense within the broader alternative investments portion of diversified portfolios. In our view, the case for private equity investment rests on three key pillars: a strong performance track record for the asset class, a deep and differentiated opportunity set, and significant diversification benefits.

In May 2020 our research spoke to a satellite holding in emerging market equities (EM) having the potential to add value for investors over the medium to longer-term. Following very strong performance from EM equities in the second half of 2020, the past 6 months have been more challenging, with a broadening regulatory crackdown impacting the Chinese equity market in particular.

The global earnings cycle continues to surprise with its strength. Both US earnings and European earnings are significantly exceeding analyst expectations.

It is noteworthy that bond yields have fallen back to very low levels while the US and Australian equity markets have continued to push higher, reaching record highs. Are bond investors foretelling a significant slowdown in global growth that equities investors are ignoring?

With the global economic recovery expected to broaden and policy settings still very supportive we detail our third quarter strategic asset allocation.

In Australia, property prices have surged over the last year, increasing by 13.5% in the year to May. This situation is not isolated to Australia. House prices across most developed nations have been rising.