Archives: Reports

There have been a number of major issues locally with the likes of SGR and unlisted Crown but our penchant for an inquiry in Australia is arguably the main headwind – just ask the banks and aged care operators. We find it hard to imagine that Australian casinos are the only premises used by organised crime to launder funds and we question if the optimum course of action is for large fines to vanish into the government’s coffers while directors who received large bonuses along the way simply walk away untarnished into their next role.

Last week saw the US yield curve remain around levels not seen for 40 years with the 2-Years closing 0.93% above the 10s, traders are still pricing further hikes by the Fed (just fewer) and a likely recession thereafter. However, we believe the economic pessimism has become stretched and the yield curve will move back towards parity over the next 6-12 months which suggests if we do see a recession it will be shallow in nature.

The Greenback has tumbled to fresh 15-month lows this week as a Fed pivot appears extremely close at hand, in our opinion the move has been exacerbated by the defensive positioning of many investors who sought the safety of the $US during the recent macro-economic and geopolitical uncertainty. The correlation between US bond yields and the $US is not surprisingly strong with much lower levels on the agenda if we do indeed see US 2-year bond yields back under 4%.

This week saw Megaport (MP1) surge higher following an upgrade which indicated that the company resetting strategy was working i.e. implementation of pricing & cost-out initiatives and a pivot back to a direct sales model. However, another huge factor in the stock’s move was fund managers were positioned underweight the stock and traders short hence following the news there was a dearth of sellers, to say the least!