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The major development in the markets over the last month has been the coordinated pivot among global central banks from a monetary policy of tightening to one of easing. The European Central Bank kicked off the pivot with a 25 basis point cut in June, and another in September. The U.S. Federal Reserve began its rate-cutting cycle with a 50 basis point cut on September 18. The next week, the Chinese government unveiled a round of rate cuts and fiscal stimulus on September 24.
The Bank of Japan (“BOJ”) was the lone central bank fighting the trend, by raising rates instead of cutting them. That was until last week, when the BOJ halted its early-stage rate hiking cycle – after getting its overnight lending rate up to just 25 basis points.
These coordinated easing measures have sent many global stock market indexes toward all-time highs, along with many of the names in the current Big Secret on Wall Street portfolio. Our commodities holdings in particular have benefitted from this rate-cutting environment, with the shares of our coal, oil, and mining related companies posting double-digit returns over the last month.
At the same time, several of our holdings are facing company-specific challenges that have prevented them from participating in the broader market rally. Below, we dive deeper into these issues, and make the case for why we remain bullish on these recommendations despite their recent price declines.
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