Viewpoint: Bullish
Locally the talk in money markets has recently been all about short-term bond yields soaring ignoring the RBA who are attempting to hold cash rates at suppressed levels. However the US 10-years have also started to edge higher and in typical fashion just as people are starting to discuss the flattening yield curve the move might be over, good news for banks as we discussed earlier.
Overnight US stocks saw a small recovery in the tech space which flags some reversion to the recent sector rotation from growth to value i.e. the markets accepting bond yields are going higher. We still see the US tech space testing fresh highs i.e. rallying another 3-5% into Christmas – some alarm bells might be ringing for nervous investors but MM remains happy to stay aboard the risk train for now.
The ASX200 continues to struggle to advance much above 7400 as it pays respect to the historical statistics in play i.e. the bulls may have to wait until the Melbourne Cup runners are off and running before we can see a sustained challenge on 7500, and above. Yesterday saw the index drift from its lunchtime highs in sympathy with US futures, the COVID re-opening…
CWN -0.53%: held its AGM today and there wasn’t a lot of new news to report. They reiterated the huge refresh that has occurred at board and senior management level, they talked to opportunities in the future but near term challenges, they copped heat and rightly so from shareholders about termination payments which were excessive delivering the board…
CRN +0.34%: 3rd Quarter production out for the coal miner today with production up almost 7% on the quarter to 4.5mt. Revenue surged 35% though with strong coal prices coming through. Net debt dropped to a measly $US154m, down $US82m in the three months, compared to revenue for the quarter of $US574m – at this rate Coronado expects…
MFG +2.31%%: Held its AGM today and this is where its Chairman & CIO shines,. Hamish Douglass is a very accomplished orator and today that was enough to see the shares higher. He focused more on Barrenjoey, the star studded investment bank that Magellan owns 40% of, saying they have made a profit in 1Q22 after booking a big loss in FY21, although…
A play in NST is by definition a vote for a bounce in the gold price which is our preference at this stage as the recovery in the $US runs out of puff. In our opinion this is one of the cheapest market groups and if we do actually see a recovery by precious metals the stocks should follow in a very leveraged / amplified way. At current prices, the risk / reward is simply very attractive.
Whether we look at the $A, equities or Bitcoin the mood has clearly turned back to one of “risk on” with the later surging to all-time highs overnight while the Aussie is supported directly by strong commodities e.g. in London nickel surged to its highest level in 7-years. Equity markets are backing the economic recovery which bond yields are clearly embracing without the jitters often associated with rising interest rates – at least so far!
Overnight US stocks continued to rally with the broad based S&P500 index closing within a few points of its September all-time high, if the big tech names had fared better we would have already breached the ceiling i.e. Google (GOOGL US), Amazon.com (AMZN US) and Microsoft (MSFT US) all slipped last might. While we remain bullish I would again…
MM has been a little disappointed by AWC over the last fortnight but we look upon this as an opportunity, we are considering increasing our position from 4% to 6% in our Flagship Growth Portfolio if we see a test / break of $2. Our positive outlook hasn’t faded, we believe the tailwinds from the underlying commodity price and dividend stream should continue well into CY22.
