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1) US inflation slowed from 9.1% in June to 8.5% in July, a print that was lower than expected.
Cue a big rally in US markets as investors looked ahead to a moderation of the Federal Reserve's interest rate rises as it attempts to get inflation back under control.
The Nasdaq 100 jumped 2.9%, simultaneously exiting bear market territory and entering a bull market, having risen 20% above its June lows. The index is still 19% below its November 2021 high.
No wonder I'm feeling better about my investments than I was just a few weeks ago.
And there could be more gains ahead as hedge funds unwind shorts, funds which fled to cash rush to get back into the rising market, and retail investors buy the dip.
As Bloomberg puts it…
"Nobody saw it coming, and now everyone wants in. That's a nutshell synopsis of how an improbable equity market bounce is threatening to become a melt up."
2) The S&P/ASX 200 Index (ASX: XJO) has taken somewhat of a lead from Wall Street, although not to the same extent, up a somewhat modest 54 points to 7046 in lunchtime Thursday trade.
No melt up here, sadly, although that shouldn't be expected given the ASX 200 is dominated by huge banks and mining companies.
3) Long-suffering Telstra (ASX: TLS) shareholders finally have something to cheer about… the first increase in the total Telstra dividend since 2015.
Outgoing CEO Andy Penn said the increased dividend "recognises the confidence of the Board following the success of our T22 strategy, the ambition in our T25 strategy of high-teens earnings per share (EPS) growth from FY21 – FY25, the strength of our balance sheet and the recognition by the Board of the importance of the dividend to shareholders."
Given the Telstra share price is largely flat over the past almost 20 years, any investment in the company has long been about the fully franked dividend.
Despite Mr Penn's ambitions of turning Telstra into a growth company, it remains a large utility company operating mostly in two very competitive environments – mobile and broadband. From an investing perspective, utility companies are yield plays.
Based on the full year dividend of 16.5 cents, Telstra shares trade on a fully franked dividend yield of 4.1%. Not bad, but in this rising interest rate environment, not as attractive when compared to alternatives, including risk free term deposits.
Valuation-wise, Telstra shares are off the charts, trading on 28 times earnings. They are anything but risk-free.
4) One dividend stock flying under the radar is one I own, GQG Partners (ASX: GQG), the boutique global investment manager headquartered in the United States.
In what has been a tough period for the sector – hurt by outflows and poor investment performance – funds under management have increased by 2.4% from the previous year.
Floated in October last year at $2 per share, like most recent IPOs, the GQG share price has traded below its issue price.
Like all fund managers, GQG's results will largely be driven by its investment performance over the long term, and all strategies are ahead of their benchmarks over a five year period.
Unlike many fund managers, most of GQG's revenues in the first half were derived from management fees, and not performance fees. As such, profits are far less volatile than typical fund managers like Magellan Financial Group (ASX: MFG) and Pinnacle Investment Management Ltd (ASX: PNI). I also own the latter.
Given GQG's relatively predictable results, if you extrapolate the roughly US$0.02 quarterly dividend across the full year, converted to Aussie dollars, GQG shares trade on a dividend yield of around 7.1%.
Not bad for a growing company trading on roughly 13 times profit. This $4.7 billion company looks to be flying under the radar of most income investors.
