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We've had our say on the FTSE before... πŸ‘‡


Why Is The FTSE A Bad Index?
Here’s why the FTSE is so bad and what it can do to recover.

And we've also mentioned how important it is to know your indices...


Are All Stock Markets Created Equal?
All animals are equal but some are more equal than others- George Orwell (Animal Farm)Orwell was clearly a fan of the stock markets...

Today's a great example of WHY it's important.

Here's a chart showing the YTD performance of the FTSE 100, FTSE 250 (represented by the XMCX ETF) and Unilever... πŸ‘‡πŸ‘‡πŸ‘‡



What do we notice?

  1. The mid-caps (FTSE 250) are outperforming
  2. Unilever is having a shocker, down by 6% today alone

Unilever is weighted at 5.82% of the FTSE 100, second only to AstraZeneca πŸ‘‡πŸ‘‡πŸ‘‡



What's gone wrong?


Inflation worries overshadow Unilever’s strong first half, hit shares
Unilever Plc (ULVR.L) warned on Thursday that surging commodity costs would squeeze its full-year operating margin, overshadowing strong second-quarter sales growth fuelled by the easing of pandemic-related curbs in many of its markets.

Higher costs that they can't pass on (good job inflation is transitory 😁).

The key point: 'operating margins now seen flat'

In other words πŸ‘‡



Even though sales growth actually beat forecasts, those extra costs have eaten away at the profits.

On the back of strong Q1 sales, Unilever had forecast a slight increase in underlying operating margin for this year, despite double-digit inflation on some raw materials, such as soybean oil and tea.

Turns out that forecast was misguided.

Difficulty passing higher costs onto customers means Unilever has dragged the FTSE 100 down today.


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Seasonality: One of my least favourite indicators, but it always pays to keep an open mind.

Goldman Sachs published a wonderfully bearish SPX seasonal composite for the next few weeks... πŸ‘‡


(there's an entire thesis based on flows, option gamma unwinds, lower August liquidity and more)

Which takes us right up to Jackson Hole...

Is the combination of weak seasonality and a 'macro vaccum' enough to send the S&P lower in August? πŸ‘‡



Goldman also urged clients not to buy Monday's dip...

U.S. Retail investors weren't paying any attention, and bought a record $2.18 billion of equities according to Vanda πŸ‘‡πŸ‘‡πŸ‘‡


Retail investors flocked to stocks in Monday’s rout, Vanda Research says
U.S. retail investors bought a record amount of equities on Monday, buying the dip as stocks took their biggest tumble in months over fears the fast-spreading Delta variant of the coronavirus might spark renewed lockdowns, analysts at Vanda Research said.

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Chart(s) of the day:

Monetary policy 'down under' is about to get interesting.

The RBNZ have already stopped QE, and now traders are looking at the August meeting for the first rate hike.

The RBA continue to say that they don't expect to hike before 2024.

ANZ forecast that the RBNZ will hike at every meeting (until they reach 1.75% in 2022) πŸ‘‡πŸ‘‡

A story in two charts: