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The recession begins but…

The US economy shrank at an annual rate of 4.8% in the first quarter, confirming the worst fears that the world’s largest economy is already in a recession. This was much worse than the 3.5% expected.

With less than one month of restrictions included in that figure the signs are worrying for Q2. However, President Trump’s Project Warp Speed gave investors hope, as did better news on Gilead’s drug treatment success.

The result?

Global market rallies. In the US, Thursday saw gains of 2.7% on the S&P 500, 3.6% on the NASDAQ and 2.2% on the Dow Jones. European markets were all up over 2.5% overnight amid their own earnings season. The strength was broad-based with four gainers for every laggard. All-important consumer spending fell 7.6% for the quarter, which clearly had an impact on Starbucks, reporting an 8.5% drop in same-store sales, the first fall in over 10 years.

Australian markets

Closer to home the ASX followed US futures gaining 1.5% but remains around 25% below its high. Grocery retailer Coles Group Ltd (ASX: COL) reported incredible numbers, growing sales 8.2% in the quarter as hoarding increased. However, Coles stock was sold off as April sales were expected to normalise.

Inflation figures which have since become outdated saw the fastest growth in prices in six years as the bushfires hit prices of fruit and vegetables (6%) and seafood (2%). Australian cannabis and hemp product specialist Ecofiber (ASX: EOF) was one of the few companies to reiterate guidance for full-year profit after launching a hemp-based facemask during the quarter. Crown Resorts Ltd (ASX: CWN) also announced that global asset manager Blackstone had purchased a 10% stake in the casino operator clearly seeing the value in the burgeoning real estate assets.

Winners & Losers

Reporting season remains as mixed as expected with little real direction offered to investors. Farming products manufacturer Caterpillar announced a 20% fall in revenue and 40% drop in profit as inventories fell close to 80%, with management drawing down $3.88 billion in a debt facility to ensure they have sufficient cash. Its dividend was maintained.

Content delivery and cybersecurity business Akamai saw revenue increase 8% as more businesses moved online, and hacking events increased substantially. Akamai reported peak traffic on their network had grown 30% on the  previous year.

Tesla Inc (NASDAQ: TSLA) reported a surprise profit its third consecutive quarter, fuelled by strong demand for the Model 3 and the sale of its clean energy tax credits. Finally, Facebook Inc (NASDAQ: FB) gained in after hours trading as revenue was in-line with expectations, and daily average users grew 11% to 1.73 billion amid the lockdown.

This update was written by Drew Meredith, Director of Wattle Partners.

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The Golden Rules of Investing

We might be experts in retirement, but with combined financial advice experience of 35+ years, we’ve nearly seen it all. 

In mid-2023, our senior team at Wattle Partners Financial Planning put the finishing touches on a brand-new report “The Golden Rules of Investing“.

In this free report, we outline the key principles that determine all of the portfolio construction and investment decisions of Wattle Partners. Collated over decades, this paper should be seen as a work-in-progress, constantly under review in light of the ever-evolving nature of markets. 

You’ll find the free report on my Author page. Simply click the button below to view the Golden Rules.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.


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Wattle Partners is a financial advice firm, servicing clients around Australia, specialising in retirement planning (pre and post retirement). 

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