The S&P/ASX 200 (ASX: XJO) finished the shortened week 0.6% higher, again outperforming US stock markets which finished in the red across the four days.
Here are my three key investor takeaways from the week.
Not every deal is a good one
News from Bank of Queensland Limited (ASX: BOQ) management that profit was weaker than expected in HY22, combined with a much lower than expected dividend payout ratio, once again highlighted the risk of seeking growth through acquisitions.
The purchase of ME Bank from the industry funds is clearing more difficult than expected to integrate, both culturally and administratively, which has hit both costs and revenue growth in what is an otherwise bumper period for traditional banks.
Yellen and bond rates
The Australian 10-year government bond yield continues to defy expectations, trading above 3% and well above the US counterpart. This despite the Federal Reserve having already commenced rate hikes and little to no action from the RBA.
Typically, this would suggest that local rates are moving higher faster, yet with the majority of housing loans variable, it appears difficult at best for the RBA to be as aggressive as the likes of the Bank of Canada or Reserve Bank of NZ.
For this reason, it was interesting to note that US Treasury Secretary Janet Yellen was more concerned about the threat of US recession due to overly aggressive rate hikes than the central bank’s ability to deliver them.
It’s going to get bumpy
After years of record corporate profits and expanding margins, JP Morgan’s (NYSE: JPM) earnings report on Thursday suggests it is about to get bumpy, and much bumpier than we are used to.
This quarter will provide an insight into which companies are able to pass costs onto consumers and which are struggling for growth post the pandemic.
