With the S&P/ASX 200 Index (ASX: XJO) today recording yet another day of gains and, once again, pushing over 6,000 points, investors will no doubt be celebrating. The ASX 200 is now more than 30% above the lows we saw in March. And there is definitely more goodwill in the markets today than fear (from where I’m standing, anyway).

But could this be the calm before another storm, aka, an ASX market crash? Or more dramatically, are we in the eye of the storm, the calm lull between 2 tempests?

Well, that’s what a growing list of investing experts are hinting at. Today we’ve heard from 2 investing legends – Ray Dalio and Howard Marks – on the dangers they see in the markets right now.

Experts warn of danger ahead

Dalio is the most successful hedge fund manager in history and an expert on market cycles. His fund, Bridgewater Associates is the largest of its kind with hundreds of billions in assets under management.

Marks, of Oaktree Capital, is another ultra-successful hedge fund manager, respected by investors as great as Warren Buffett.

In an article by the Australian Financial Review (AFR), it’s reported that Dalio’s Bridgewater is warning of a ‘lost decade’ for global share markets:

“Even if overall profits recover, some companies will die or their shares will devalue along the way. Left with lower levels of profits and cash shortfalls, companies are likely to come out on the other side of the coronavirus more indebted.”

It’s this indebtedness that Bridgewater is warning could weigh on share market returns for years to come.

In separate reporting by AFR, the publication also quoted Howard Marks. The investor warns that the unprecedented intervention by the US Federal Reserve is the only thing currently pushing markets higher:

“[Investors have] no reason to believe the Fed insists on good value, high prospective returns, strong creditworthiness to protect it from possible defaults, or adequate risk premiums…The higher the market went, the more people believed that it was the goal of the Fed to keep it going up, and that it would be able to.”

Marks notes that passive investments and index exchange-traded funds (ETFs) are exacerbating the problem. Marks said they ‘just buy everything’, they are not value-sensitive and do not bring price discovery to the table.

What should investors make of these ASX market crash warnings?

I think all investors should take the remarks of these 2 seasoned and experienced investors seriously. Thus, I think we may see adverse consequences in the American financial markets from its government’s intervention. If this was to occur, it would almost certainly flow into ASX shares.

Therefore, I think the importance of investing prudently and at prices that make sense is as high as ever – as is keeping some cash on the sidelines.

More reading

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Mesoblast limited (ASX: MSB) has been one of the standout performers on the ASX over the past three months. The company’s share price dropped as low as $1.02 on 23 March amid the economic fallout from the coronavirus pandemic.

Since then, however, the Mesoblast share price has really soared and is currently trading at $4.18. That’s a massive 310% growth in the company’s share price in just three months. This includes a 4.5% increase so far today.

Mesoblast has become a world leader in developing allogeneic, off-the-shelf, cellular medicines. The ASX listed biotech has successfully leveraged its proprietary cell therapy technology to establish a range of commercial products and late-stage product candidates.

So, what is behind this strong recent rally in the Mesoblast share price?

Helping win the fight against coronavirus

It’s pretty likely that the recent rise of the Mesoblast share price is linked to some promising progress the company is making with its treatment for COVID-19 patients.

In early May, Mesoblast commenced Phase 2/3 trials in the United States of its remestemcel-L treatment. The trials encompassed patients with moderate to severe coronavirus symptoms who required ventilator support.

The trial achieved an 83% survival rate and reported that 75% of patients managed to come off ventilator support within a ten day period. The remestemcel-L product works by counteracting the inflammatory process in the lungs caused by COVID-19. These initial encouraging results were first revealed back in late April at a New York hospital.

Further encouraging results were revealed at the end of May. Phase 2 trial results concluded that remestemcel-L, given in four monthly intravenous doses, significantly improved the outcome for patients with inflammatory lung disease, such as that suffered by COVID-19 patients.

Strong financial performance

Mesoblast’s recent financial performance has also been strong.

The company recorded an 113% increase in overall revenues to US$31.5 million for the first 9 months of FY 2020, compared to the prior corresponding period.

Mesoblast also recorded a 127% increase from milestone revenues involving strategic partnerships.

Where to now for the Mesoblast share price?

With the Mesoblast share price rising by over 300% in the last few months, only time will tell if it can continue this strong performance moving forward. Judging by today’s price, the market is likely expecting further promising clinical trial results to come from this dual listed biotech.

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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Australian retail sales surged 16.3% in May to $4.03 billion. This is the largest month-on-month rise in 38 years. The release by the Australian Bureau of Statistics showed a surge in sales right across the retailing industry. This is good news for retail ASX shares and the broader economy. 

However, does this mark a turning point that ASX retailers had been dreaming about? Let’s begin with a dive into the impact on retail shares and the economy.

Impact on retail ASX shares

Wesfarmers Ltd (ASX: WES) will benefit as hardware, building and garden supplies, clothing, electronic goods and footwear experienced large increases in sales. This is good news for its Bunnings, Target, Kmart and Officeworks brands. 

Similarly, JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) will benefit from sales increases in household goods. Products such as furniture, floor covering, houseware, textile goods, electrical and electronic goods saw an increase in turnover. 

In addition, there is positive news for supermarkets owned by Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Metcash Limited (ASX: MTS) with food retailing rising solidly. 

Impact on the economy

A rise in retail sales is good news for the broader economy as it illustrates consumers are feeling more optimistic about their finances. Government intervention in terms of Jobkeeper and Jobseeker could also explain the spark for retail sales. Increased foot traffic to retailers is also marked by the easing of restrictions. Also, strong retail sales is a positive development for jobs in the industry.

Does this mark a turning point for Australian retail?

Many retailers are hoping so. Unfortunately, the 16.3% increase in May follows a 17.7% fall in April.  More light will be shed on whether there is a recovery playing out in the industry as retail data is released over the coming months.   

The shift in how we work and study could also explain the surge in retail sales.  Working and studying from home has prompted a sharp rise in demand for office-related furniture and equipment. Furthermore, the reduction in time travelling to work meant we have more time to do DIY projects at home. This may shift with a return back to the office.

While the strong rebound in retail sales is excellent news for the ASX retailers mentioned above, cautious optimism is needed. Jobkeeper has an estimated expiry date of September which will be a hit to consumers discretionary income and Jobseeker payment is set to revert back to levels pre-crisis. As a result, the consumer’s optimism may quickly evaporate and tighten their wallets. 

More reading

• Temple & Webster shares continue to grow despite coronavirus restrictions
• 5 ASX dividend shares that could potentially smash term deposits
• Where to invest for reliable dividend shares
• Why the Wesfarmers share is beating the ASX 200
• How the ASX 200 can help first home buyers save for a deposit

Motley Fool contributor Matthew Donald owns shares of Harvey Norman Holdings Ltd. and Wesfarmers Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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