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Month: June 2016

Market Matters Afternoon Report Thursday 23rd June 2016

by james Carter

Market Matters Morning Report Thursday 23rd June 2016

by james Carter

Market Matters Afternoon Report Wednesday 22nd June 2016

by james Carter

Market Matters Morning Report Wednesday 22nd June 2016

by james Carter

Looking at 3 building stocks as the papers forecast a property crash!! A number of our local papers have moved on from BREXIT overnight, assuming the result is a “Remain” and focused on our federal election which is only 10 days away. We all know they love a headline and today its property which is set to fall 15% if Labour wins the election – we believe both events are unlikely. Much has been discussed around the Australian property bubble especially as the supply of units begins to outstrip demand. Our view remains that is it not a time to be gearing up into units / off the plan developments, especially in some parts of Sydney, Brisbane and Melbourne however of equal importance, it is not necessarily the time to throw the “baby out with the bathwater”. In Australia people often forget that the property market is very similar to stocks which of course can go both up and down. For example units / townhouses in Port Douglas, QLD, are still ~50% lower than in 2007 pre-GFC. We believe units in Australia’s major cities are likely to fall from today’s elevated prices but the “trading costs” of real estate agents / stamp duty make selling now and trying to buy later at a cheaper price a large risk within itself. However, we would be very concerned if highly leveraged to property and unable to cope with interest rates higher and especially rents lower. The other implication comes from tightening regulations on overseas buyers. In the NSW budget yesterday, the Treasurer outlined plans for lower stamp duty for local buyers, however, an increase in stamp duty for overseas entrants.
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Market Matters Afternoon Report Tuesday 21st June 2016

by james Carter

Market Matters Morning Report Tuesday 21st June 2016

by james Carter

Looking through smoke that’s surrounding markets It’s amazing that an Australian election next month is being ignored by the local stock market but that’s the power and importance of the BREXIT vote. We also have Janet Yellen speaking tonight in front of the Senate Banking Panel as part of her two-day semi-annual testimony – but it’s getting very little attention. The UK staying or leaving the EU is a binary outcome that will be determined by Thursday’s vote and the subsequent trading on Friday is likely to be historic in its nature. At Market Matters, we like to combine both technical and fundamental analysis with this week’s anticipated volatility requiring an extremely clear thought process. Markets often tell us the outcome of events beforehand and hence must be watched closely. The recent price action in most markets from the VIX, currencies, bonds and stocks tells us that investors have understandably positioned themselves very cautiously. Yesterday’s surge in stocks, as the “Remain vote” appeared to edge ahead in the polls, clearly illustrated the mountains of cash sitting on the sidelines and in safe havens like gold and bonds. We still believe that a BREXIT will not occur assigning it a 30% weighting BUT that remains a huge risk for an event that will potentially affect equities for much of 2016. Let’s have a simple look at what markets are showing us today…..we look forward to a fresh market next week when the BREXIT vote will no longer be the only game in town! The ASX200 remains neutral but a close over 5275 and especially 5300 will be bullish, likely to be challenged early today. The obvious key to equities is how much of the “piles of cash on the sidelines” will venture back into stocks if the EU remains united. The ASX200 Daily Chart

Market Matters Afternoon Report Monday 20th June 2016

by james Carter

Market Matters Morning Report Monday 20th June 2016

by james Carter

Beware the obvious trade! Slowly but surely from around 2013 to 2015 many retail Australian investors began adopting the simple attitude of “just buy the banks, they are the safe place to be”. It’s easy to imagine how this dangerous thought evolved with the local banking index doubling between 2011 and early 2015. Plus of course, there were the dividends, with many financial advisors saying “KISS” buy the banks with their large fully franked dividends, when compared to falling term deposits, makes them the safe and obvious investment. Unfortunately the rest is history as Australian banks have fallen around 30% since March 2015 BUT interest rates have continued to fall with the Australian 10-year bond rate dipping under 2% for the first time in history last week. We received numerous emails when we put out a sell on the banks in early 2013, some of them almost aggressive, perhaps a useful indicator for the future! Please don’t think this report is Market Matters beating its own drum as we have since bought back into banks and our positions are currently losing money – they fell further than we anticipated. This report isabout another issue / concern we see on the horizon. The Australian Banking Sector Monthly Chart

Market Matters Afternoon Report Friday 17th June 2016

by james Carter

Market Matters Morning Report Friday 17th June 2016

by james Carter

Looking at 5 more stocks that ‘BREXIT’ has affected Last night, the Dow rallied over 250 points from its lows as market jitters around BREXIT eased. These markets are simply knee-jerking around, as any news hits the trading screens. It was the awful news overnight that UK politician, Jo Cox had been tragically murdered in the street by someone shouting “Britain first!” leading to halt in campaigning by both the camps. However, it should also be remembered that history tells us, albeit from a small number of examples, that it was over the last week that supports swells for what people know as safety first kicks in i.e. “Stay” in the EU. We remain of the opinion that the BREXIT vote will be to “Stay” and hence, continue our search for affected stocks that may be showing value now, or over the coming week. Interestingly last night, the VIX / Fear Index fell back under 20%, implying investors are either regaining comfort that Britain will remain, or they have bought all their puts / protection they need! The ASX200 has recently corrected 5.2%, with BREXIT jitters the main contributor, hence it’s time to spend some of our ~36% cash allocation. Today, we will look at another 5 stocks with decent UK exposure after yesterday’s similar report.
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