Viewpoint: Bullish
The recent panic to the safety of bonds has seen yields fall as we have discussed at length through recent reports. While we can see some short-term consolidation as calm returns to financial markets with last night’s weaker than expected inflation read adding confidence to our view that bonds will ultimately track higher into 2024 i.e. yields lower.
While technically a technology company, Silex is shaping up to be an important player in the uranium and silicon space, developing laser enrichment technology for both chemical elements. They are currently aiming to build a commercial-scale pilot plant in a joint venture with uranium giant Cameco that, if successful, would allow the western world to become self-sufficient.
The food, liquor and hardware wholesaler copped a downgrade from Goldman Sachs on Friday and shares have underperformed as a result as the broker reduced their price target to $3.50/sh and put a sell on the stock. GS argued that moderating inflation and further competition from the major supermarkets, particularly online, would weigh on market share for Metcash which supplies IGA supermarkets, all at a time when capex spend is peaking.
The annual inflation rate in the US eased to 6% in February, refreshingly back to its lowest level since September 2021 – the market had been looking for 6.4%. This relatively weak inflation print saw US 2-year yields test 3.8% before they bounced back toward 4.25% as the SVB hysteria slowly fades. We believe the Fed/Govt. will engineer calm back into markets over the coming weeks aided by the latest inflation read easing some pressure on Jerome Powell to maintain the Fed’s aggressive hiking path.
The ASX200 has already fallen -8.2% from its February high and we believe it’s time to slowly start accumulating into weakness although we will remain very stock and sector-specific as another test of 6500 cannot be totally discounted i.e. the markets have already fallen and risen by over 1100-points over the last year, why not one more time. Coming into lunchtime yesterday we were actually down -1.25% for 2023 illustrating the fickle but exciting nature of the market we’re currently navigating i.e. everyone was bullish and optimistic in January!
We are adding to our banking exposure.
Similarly, MQG has followed global banks lower, and we expect it to open well under $180 this morning where we are considering slowly increasing our position i.e. MM is considering increasing our position from 5% to 6%.
Similarly, NAB has followed global banks lower, and looking at the SPI Futures this morning we expect it to open well under $28 where we are considering starting to slowly increase our position i.e. MM is considering increasing our position from 5% to 6%.
ANZ has followed global banks lower and looking at the SPI Futures this morning we expect it to open well under $23 where we are considering starting to slowly increase our position i.e. MM is considering increasing our position from 5% to 6%.
