Over the week, the technology and discretionary sectors pulled the S&P/ASX 200 (ASX: XJO) down 0.5%, while US markets delivered their third-straight week of gains.
Here are my three key ASX takeaways from the week.
This time is different
This may come back to bite me, but could this time actually be different? The longer the bull market extends the more calls come regarding this being the biggest speculative bubble in history, or that the market is trading at ridiculous valuations.
Naturally, we make comparisons to the most recent catastrophic events, like the GFC or Dot Com bubble, yet is there really that much to compare? The Dot Com occurred at the beginning of the digital age, and the GFC from a massive run-up of leverage.
We continue to be faced with an ageing demographic and deflationary technology advancement, and as we have seen in history, forecasters have been great at predicting the last two bear markets on more than a dozen occasions.
Transitory growth or inflation
Comments from the Federal Reserve and RBA during the week around the less certain nature of the economic recovery have me asking whether it is actually growth, not inflation that may be transitory?
With supply chains hit, the pandemic looking likely to extend into a third year and consumers still in shell shock, perhaps bets on a breakout in inflation are too hopeful; this would be a positive for ‘growth stocks’.
‘Extracting value’
Finally, IFM’s aggressive approach for Sydney Airport Holdings Pty Ltd (ASX: SYD) once again drew attention to the huge amount of corporate activity, with management focused on ‘extracting value’ in what seems to be a low growth environment.
Demergers, IPOs, asset sales and acquisitions appear to be in vogue as management seeks to deliver any growth at all.