Viewpoint: Bullish
US stocks experienced another volatile session overnight, they initially rallied strongly before reversing lower through most of the session with sentiment whipsawing around Yellen’s comments on Thursday and Friday. Her reassurances late this morning appeared well-timed as they reversed a falling market which by definition illustrates the fragile nature of the recent recovery in stocks.
US stocks experienced another mixed session overnight after initially rallying strongly before indices then reversed before finally recovering as Yellen tried to undo her comments yesterday, the Dow closed up +0.2% while the tech-facing NASDAQ posted a gain of +1.3% – at about 6 am this morning Yellen said that “the US is prepared for additional deposit actions if required”, it appears that she’s been scolded by the powers that be but after watching the relative lack of impact it feels like the damage has already been inflicted on market confidence.
PMV -3.29%: Hit hard today following a downgrade from UBS who moved to a NEUTRAL rating ahead of their 1H23 results on Monday, essentially the thesis being that it’s too expensive for the trends playing out across the sector meaning the risk/reward no longer stacks up.
The market’s ongoing belief that the global economy is moving toward an inevitable recession combined with China’s fairly muted growth targets for 2023 has sent energy prices tumbling from their dizzy highs just one year ago e.g. Brent Crude is trading 45% below where it was this time last year.
US stocks experienced another volatile session overnight but overall we felt they looked good until Janet Yellen’s comments which make zero sense unless she’s seeing more trouble on the horizon for the embattled banking sector which in itself is a contradiction of Jerome Powell. The tech-heavy NASDAQ posted a fresh 7-month high early in the session even as the Fed continued to hike rates suggesting the “bad news” was fully built into stocks but they couldn’t handle the negativity delivered by Yellen. Our view hasn’t waivered through 2023 as we look for this growth index to rally towards the 13,500 area, or another 6% higher.
Google as most people still call it has tumbled -45% from its 2021 high, not as bad as some tech stocks but still more than most people expected back in late 2021, including ourselves. We believe that this revaluation of Alphabet is complete and the stock is starting to recover some of the painful losses endured as rates soared higher over the last year which caused most growth names to be dramatically re-priced.
Apple is a great illustration of quality stocks/companies rising to the top post the GFC, this $US2.55 trillion business still looks on track to challenge its all-time high in the $US180 region. The household name continues to deliver and innovate even as the economic backdrop challenges most businesses on several fronts.
NSR (Trading halt): Was out raising some $$ today to replenish the war chest, something they typically do about once a year. The $325m equity raise was being structured as an institutional placement ($300m) with an attached $25m share purchase plan for existing retail holders.
