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Morning report

Macro Monday: How quickly will equities look through the Middle East news

Iran and a number of its allies launched a large-scale drone and missile attack upon Israel on Saturday night in retaliation for a suspected Israeli strike on an Iranian diplomatic complex in Syria. The prospects of a full-blown conflict in the region have increased dramatically over the last week, with at least nine countries involved in Saturday's conflict, projectiles fired from Iran, Iraq, Syria and Yemen were downed by Israel, the US and France, as well as Jordan. Following Iran's attack, the U.S. pledged "ironclad" backing for Israel, but President Joe Biden made it clear the US would not participate in any offensive operations against Iran.
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Morning report

What Matters Today: Is the NEXTDC raise likely to create opportunities in the Tech Sector?

As subscribers may have read, NEXTDC (NXT) is tapping the market for $1.3bn; some investors might be tempted to fund the raise by the data centre operator with other ASX tech names, hence today's report. Last night's +1.65% surge by the NASDAQ-100 illustrated there's still plenty of life left in the sector, especially if we do see the Fed and ECB start cutting rates this year. For all of the talk around excessive valuations and sticky inflation, the US tech sector is still less than 1% below its all-time high.
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Morning report

What Matters Today: Are lithium stocks about to “pop” on the upside?

The weakness across the Lithium Sector has lost its place in the financial press due to the strong rallies in copper and gold. Usually, more “clicks” are achieved from bad news and crash-style stories, but the lithium bear market has grown old in the tooth. However, as we’ve seen with other commodities and related stocks, this year is starting to look exciting for the commodity space, and we believe lithium can join the party, at least for a while. We aren’t as bullish towards lithium as copper, for example, with the supply & demand dynamics far from clear, but we can see them enjoying a strong finish to this FY.
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Morning report

Portfolio Positioning: Golds reacting more to central bankers than bonds!

Overnight, the influential former Federal Bank of St. Louis President James Bullard said he's expecting three rate cuts in 2024 as inflation moves towards the Feds target even while the economy remains resilient, i.e. the “Goldilocks” scenario for stocks. Bullard’s outlook echoed the Fed’s messaging as opposed to the increasing market expectations that two cuts have become more likely than three, e.g. Treasury yields made new highs for the year on Monday night. Mr Bullard is indirectly quoting the old adage of “don’t fight the Fed”. However, it wasn’t the ongoing commentary from the central banker that caught our attention but rather the market’s reaction following the relatively Dovish interview—gold surged over $US30 to another all-time high while bond yields hardly moved. This has been the story of 2024, which has seen gold surge around $US300/oz while bonds have drifted lower (yields higher).
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Morning report

What Matters Today: As iron ore bounces strongly, what are MM’s favourite big miners?

BHP and RIO are two stocks most closely followed by MM subscribers; just look at Saturday's Q&A. Hence, it caught our attention when one of the leading stories in yesterday's AFR was “Brokers go all in on RIO tipping 20% annual share price jump”, i.e., at MM, we’ve preferred BHP over RIO over recent years. They believe that RIO is better positioned for a boom in industrial metals, and they also think it has a stronger balance sheet. A glance at the two stocks shows they’ve pretty much danced in tandem since COVID, while so far in 2024, BHP is down -12.2% and RIO -10.3%, with iron ore weighing on both miners.
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Morning report

Macro Monday: Gold & stocks are both looking through rising bond yields

Gold surged to new all-time highs last week, shrugging off a pullback in bonds (higher yields). The trend of precious metals is usually determined or significantly influenced by interest rates, but not at the moment—higher interest rates make zero-yielding assets such as gold less attractive from a relative perspective. There are arguably three main drivers of gold at the moment, with two very bullish and one mildly bearish short-term.
Read more
what matters today Market Matters
Morning report

What Matters Today: Is it time to fade the moves in copper, gold &/or uranium?

These three unrelated commodities have surged higher recently, taking many ASX names along for the ride. For example, in 2024, Sandfire Resources (SFR) is up +24%, Northern Star (NST) +8%, and Paladin (PDN) +50%. Fortunately, at MM, we enjoyed the moves of all three themes, and today, we quickly reviewed the group to evaluate if our exposure needs tweaking as market volatility starts to increase.
Read more
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Morning report

What Matters Today: What next if rate cuts are delayed or off the table in 2024?

We believe the end-of-quarter squeeze into Easter amplified the sharp fall on Wednesday; hence, we looked back at the charts to see if this “Gut Feel” had any foundation. Only twice since COVID have stocks squeezed into the end of the quarter, and the last time was the previous quarter, which subsequently witnessed the ASX200 unravel 260 points in just three weeks. However, any further comparisons are akin to “curve fitting,” with such upside squeezes actually very few and far between.
Read more
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Morning report

Portfolio Positioning: Stocks starting to digest that rates cuts might be further-off

Tuesday delivered a fascinating session for Australian investors. A macro arm wrestle unfolded, causing significant action under the hood before the index eventually slipped just -0.1 %. This was a solid performance, in our opinion, considering Thursday's storming session to end the quarter. The bulls welcomed a resurgence in China-facing stocks, while interest rate-sensitive names struggled as the doves pulled back bets on a Fed rate cut in June. We're conscious that over recent years, bonds and stocks haven't walked a different path for very long.
Read more
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Morning report

Macro Monday (on Tuesday): Cooling US inflation sends gold soaring to new highs

Gold popped almost $US50/oz yesterday evening, posting another fresh all-time high in the process as investors/traders further digested last week's market-friendly PCE Index data. The Fed's preferred gauge of inflation is cooling which suggests the Fed is getting ever closer to cutting rates. The precious metal is also enjoying the added tailwind of powerful Chinese demand and ongoing global political tensions, what's not to like? Gold has surged ~12% over the last six weeks, and with no near term end in sight for the three bullish drivers mentioned previously, we can see it testing $US2400-2500 before Christmas.
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MM is bullish towards crude oil short-term
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MM remains cautiously bullish towards US stocks
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MM remains cautiously bullish toward the ASX200 around the 7800 area
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IVV
MM remains bullish towards US stocks in the medium-term
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MM remains bullish towards the Nikkei medium-term
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MM remains bearish toward Australian bond yields in the medium-term
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MM is bearish on US 2-year Bond yields in the medium-term
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GDX
MM remains bullish towards gold medium-term
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MM remains bullish on copper, targeting the $US500 area in the medium-term
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USD
MM remains bearish toward the $US over the medium/long term
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MM is bullish towards the Euro medium/long term
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MM is now neutral towards cryptocurrencies short-term
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MM remains bullish volatility through 2024
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Latest Reports

Morning report

What Matters Today: Is the NEXTDC raise likely to create opportunities in the Tech Sector?

As subscribers may have read, NEXTDC (NXT) is tapping the market for $1.3bn; some investors might be tempted to fund the raise by the data centre operator with other ASX tech names, hence today's report. Last night's +1.65% surge by the NASDAQ-100 illustrated there's still plenty of life left in the sector, especially if we do see the Fed and ECB start cutting rates this year. For all of the talk around excessive valuations and sticky inflation, the US tech sector is still less than 1% below its all-time high.

what matters today Market Matters
Morning report

What Matters Today: Are lithium stocks about to “pop” on the upside?

The weakness across the Lithium Sector has lost its place in the financial press due to the strong rallies in copper and gold. Usually, more “clicks” are achieved from bad news and crash-style stories, but the lithium bear market has grown old in the tooth. However, as we’ve seen with other commodities and related stocks, this year is starting to look exciting for the commodity space, and we believe lithium can join the party, at least for a while. We aren’t as bullish towards lithium as copper, for example, with the supply & demand dynamics far from clear, but we can see them enjoying a strong finish to this FY.

what matters today Market Matters
Morning report

Portfolio Positioning: Golds reacting more to central bankers than bonds!

Overnight, the influential former Federal Bank of St. Louis President James Bullard said he's expecting three rate cuts in 2024 as inflation moves towards the Feds target even while the economy remains resilient, i.e. the “Goldilocks” scenario for stocks. Bullard’s outlook echoed the Fed’s messaging as opposed to the increasing market expectations that two cuts have become more likely than three, e.g. Treasury yields made new highs for the year on Monday night. Mr Bullard is indirectly quoting the old adage of “don’t fight the Fed”. However, it wasn’t the ongoing commentary from the central banker that caught our attention but rather the market’s reaction following the relatively Dovish interview—gold surged over $US30 to another all-time high while bond yields hardly moved. This has been the story of 2024, which has seen gold surge around $US300/oz while bonds have drifted lower (yields higher).

what matters today Market Matters
Morning report

What Matters Today: As iron ore bounces strongly, what are MM’s favourite big miners?

BHP and RIO are two stocks most closely followed by MM subscribers; just look at Saturday's Q&A. Hence, it caught our attention when one of the leading stories in yesterday's AFR was “Brokers go all in on RIO tipping 20% annual share price jump”, i.e., at MM, we’ve preferred BHP over RIO over recent years. They believe that RIO is better positioned for a boom in industrial metals, and they also think it has a stronger balance sheet. A glance at the two stocks shows they’ve pretty much danced in tandem since COVID, while so far in 2024, BHP is down -12.2% and RIO -10.3%, with iron ore weighing on both miners.

what matters today Market Matters
Morning report

Macro Monday: Gold & stocks are both looking through rising bond yields

Gold surged to new all-time highs last week, shrugging off a pullback in bonds (higher yields). The trend of precious metals is usually determined or significantly influenced by interest rates, but not at the moment—higher interest rates make zero-yielding assets such as gold less attractive from a relative perspective. There are arguably three main drivers of gold at the moment, with two very bullish and one mildly bearish short-term.

what matters today Market Matters
Morning report

What Matters Today: Is it time to fade the moves in copper, gold &/or uranium?

These three unrelated commodities have surged higher recently, taking many ASX names along for the ride. For example, in 2024, Sandfire Resources (SFR) is up +24%, Northern Star (NST) +8%, and Paladin (PDN) +50%. Fortunately, at MM, we enjoyed the moves of all three themes, and today, we quickly reviewed the group to evaluate if our exposure needs tweaking as market volatility starts to increase.

what matters today Market Matters
Morning report

What Matters Today: What next if rate cuts are delayed or off the table in 2024?

We believe the end-of-quarter squeeze into Easter amplified the sharp fall on Wednesday; hence, we looked back at the charts to see if this “Gut Feel” had any foundation. Only twice since COVID have stocks squeezed into the end of the quarter, and the last time was the previous quarter, which subsequently witnessed the ASX200 unravel 260 points in just three weeks. However, any further comparisons are akin to “curve fitting,” with such upside squeezes actually very few and far between.

what matters today Market Matters
Morning report

Portfolio Positioning: Stocks starting to digest that rates cuts might be further-off

Tuesday delivered a fascinating session for Australian investors. A macro arm wrestle unfolded, causing significant action under the hood before the index eventually slipped just -0.1 %. This was a solid performance, in our opinion, considering Thursday's storming session to end the quarter. The bulls welcomed a resurgence in China-facing stocks, while interest rate-sensitive names struggled as the doves pulled back bets on a Fed rate cut in June. We're conscious that over recent years, bonds and stocks haven't walked a different path for very long.

what matters today Market Matters
Morning report

Macro Monday (on Tuesday): Cooling US inflation sends gold soaring to new highs

Gold popped almost $US50/oz yesterday evening, posting another fresh all-time high in the process as investors/traders further digested last week's market-friendly PCE Index data. The Fed's preferred gauge of inflation is cooling which suggests the Fed is getting ever closer to cutting rates. The precious metal is also enjoying the added tailwind of powerful Chinese demand and ongoing global political tensions, what's not to like? Gold has surged ~12% over the last six weeks, and with no near term end in sight for the three bullish drivers mentioned previously, we can see it testing $US2400-2500 before Christmas.

what matters today Market Matters
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