Viewpoint: Bullish
Bond yields have undoubtedly been the driver of sector rotation through October / November but while the shorter end bonds look poised to make fresh 2021 highs into Christmas their upside momentum is slowing. The recent consolidation by yields appears to have helped the NASDAQ regain some of its “mojo” – its even managed to absorb…
Overnight US stocks had a mixed session with the S&P500 ending slightly lower, we feel US stocks are consolidating their recent strong gains before eventually finding a base to rally into Christmas. Our overall stance hasn’t changed, we’re keen buyers of any dip towards 4600 while we will consider fading a rally towards the 4800 area.
Our recent addition to the MM Global Growth Portfolio RMD was the 2nd best performer on the ASX200 yesterday as investors appear to finally agree with the MM view that value has returned to the sleep disorder business following its 16% correction. We remain bullish with a break above $40 our preferred scenario into 2022 – this is one stock that hasn’t stayed down for long over recent years.
XRO has bounced well after delivering a softer than expected report last week, yesterday it bounced 2.5% to regain around half of last week’s post result decline. This is a great company but as we’ve highlighted for a while its far from cheap, the stock still looks ok but the risk / reward is diminishing as we approach the $150-160 area.
On Monday the ASX200 tried and failed yet again to break through the 7480 barrier, perhaps it will be 8th time lucky. By lunchtime yesterday it actually felt like the local market was going to break out above its October / November high but the buyers aggressive morning appetite faded after lunch although we still managed to close within 10-points…
Last week saw MM increase our gold exposure through Northern Star Resources (NST) when at the same time we were considering an aggressive foray into the iron ore space, one of the reasons we decided to plunge towards the precious metal option was the CFTC report which shows commercial traders are very long the likes of the Swiss Franc…
As we all know iron ore has more than halved from its May high illustrating the cyclical nature of commodities although in this case in rather nuclear like fashion due to the combination of Chinas shift in policy and the demise of China Evergrande which dragged with it the construction industry in the world’s 2nd largest economy. We still believe…
Commodity prices largely consolidated last week dancing a similar tune to bond yields, we see further upside over the weeks / months ahead but the “easy money” is probably behind us for 2021. However as inflation picks ups up MM will be long or out reflation focused stocks / sectors, we could not be short if we were trading the space.
Australian bond yields recommenced their climb last week fuelled by the major move by US inflation, we feel short dated yields will now consolidate into Christmas but any surprises are far more likely to be on the upside i.e. most of the markets change in view towards the future for interest rates is already priced into prices.
European equities have finally broken out on the upside and we still see another 4-5% upside for the region short-term, a great read through for the ASX which is highly correlated to the EURO STOXX 50 et al – unfortunately the crash of iron ore prices dragged with it the likes of BHP Group (BHP) and RIO Tinto (RIO) hence it’s likely the ASX…
