Author: james Carter
I have spoken to a number of subscribers over recent days who have commented that my last few morning reports were news, not opinion focused. This is great feedback as it’s exactly what we are NOT trying to achieve, but it’s a reflection that I have been a little 50-50 short term and with the exception of the recent Telstra (TLS) purchase devoid of opportunities.
Will BHP follow Caterpillar’s poor company result?
**Please view our midday commentary on Interest rates and Telstra buy (TLS), plus any opportunities in the commodities space?**
Comprehending negative interest rates and potential ramifications
• The ASX 200 extended its rally to its fourth straight day. It ended 52 points higher and was clearly a “dividend frenzy buying” as anticipated, the yield players such as Commonwealth Bank (CBA) ended up 1.6% at $87.63 after hitting an all-time high of $87.65. Telstra (TLS) also rallied, ending the day 1.6% higher at $6.444, hitting a +14-year high.• In the iron ore space, Fortescue Metals (FMG) continued its descent and ended its day down 2.4% at $2.08, as it seems investors switched some of their positions into the bigger players, such as RIO Tinto (RIO) down 0.1% at $56.80 after trading as low as $55.21 this morning.• The gold sector closed weak, Newcrest Mining (NCM) ended down 1.7% at $13.56 and Regis Resources (RRL) unchanged at $2.00. • The Energy Sector continues to underperform the broader market, with Oil Search (OSH) ending its day down 3.4% at $7.66 and Santos (STO) down 3.1% at $7.56.• ResMed (RMD) extended its gain today, up 7.4% at $8.38 today and up 13.6% since announcing a better than expected 2Q2015 result.
Central banks are clearly winning the battle, the war has much further to run!
• The ASX 200 rallied as expected, ending 82 points higher at 5502 as bets on the RBA to reduce rates in the near future builds.• The yielding stocks performed well, with Commonwealth Bank (CBA) up 1.2% at $86.23, ANZ up 1.4% at $32.20 and Telstra (TLS) up 1.1% at $6.34.• China manufacturing hindered for 2 months in a row, with its HSBC/Markit Flash PMI reported at 49.8 in January, 50+ is an indication of a positive economy.• The Oil market surged today, following the passing of the King of Saudi Ariabia, will there be a change in policy soon?• Please watch out for the Hickman Report tomorrow.
Will Australia follow Canada and slash interest rates?
• It was a choppy session in the ASX 200 today, starting off in its day highs at 5432, only to fade in the afternoon and close on 26 points higher at 5420. As investors wait for further anticipated stimulus package by the ECB.• The yielding stocks continue to prosper during the current times of uncertainty, Westpac (WBC) ended up 1.4% at $33.86 and Telstra (TLS) at $6.27.• The major resources sector outperformed the broader market, with BHP Billiton (BHP) up 2.9% at $28.85 and RIO Tinto (RIO) up 2.6% at $56.50 due to Bank of Canada unexpectedly slashing its rates overnight.• Virgin Australia (VAH) closed 2.2% higher at 47c as investors embraced its stance on reducing its fares to Los Angeles due to the ever falling cost of oil. Will this be a positive flow to Sydney Airports (SYD)?
2016, the year of big trend changes Looking back over 2015, one element that is clearer than ever is that the ‘set and forget’ investment approach simply does not work in this market. Shocking share price drops in ‘old favorites’ and ‘household names’ like Santos, BHP, Dick Smith Holdings and Slater & Gordon capitulated worse than what was seen in the GFC – this just goes to show that blindly buying and holding stocks in your portfolio is more likely to lose you money.
Really bullish, there's more to go in the reflation rally
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