Viewpoint: Bullish
The coal price has rallied exponentially higher over the last 18-months yet Whitehaven Coal (WHC) is less than 50% of its price 3-years ago, the miner may have dropped the ball operationally a few times but the disconnect has stretched too far in our opinion, the tricky question is by how much.
Overnight US stocks retreated late in the session due to energy jitters but the Dow remains almost exactly in the middle of its trading range of the last 6-months i.e. again the markets holding firm on potentially bad news which is encouraging although it would be refreshing to see some positives cross the newswires!
MM has on a number of occasions referred to our preference for value stocks over growth as we approach 2022 however it’s important to reiterate that we’re not saying abandon ship with regard to the likes of Tech & Healthcare, simply that we believe the Banks & Resources will embrace a rising yield environment more positively. Moving onto one…
Only last Friday we noticed SGR slipping lower while CWN rallied reinforcing our preference for the embattled CWN but as we often say “what a difference a few days makes” in this case Star Entertainment (SGR) has fallen under the scrutiny of the regulator following claims to similar wrongdoings as at rival and previous target CWN – the allegations aired…
On Monday the ASX200 again recovered strongly from early losses to end the session down less than 0.3%, when we take into account weak US S&P500 futures throughout much of our day and Star Entertainment (SGR) plunging almost 23% on more regulatory scrutiny for the sector, we felt it was another solid performance by the local market. It may sound…
IAG +3.08%: the insurer has a test case in front of the Federal Court regarding potential liabilities around their Business Interruption Insurance as a result of COVID-19. An announcement today suggested they had some wins in their second run through the courts. IAG said the “Federal Court found in favour of insurers on a number of policy wording questions” with policyholders…
China is enduring an energy crisis which could still be in its infancy while in Sydney fuel prices surge towards $2 a litre, ouch! However when we consider the energy complex in general over the last decade things aren’t too bad and we’re still hovering below the mid-point of this period i.e. panic buying could clearly take prices much higher.
Bitcoin is now suggesting its time for “risk on” to re-emerge, this leading indicator for both speculation and investment liquidity has broken out to fresh multi-month highs – remember MM has repeatedly described the current bull market as a liquidity as opposed to a deep value driven advance.
Volatility is rife in the commodity sector at present with crude oil rallying 50% while iron ore has halved all in the matter of a few weeks, elastic bands as we like to say are becoming stretched but there are some major fundamental forces at play with China front and center:
A couple of times in 2021 we have drawn the comparison between the EURO and its correlation to sectors MM would prefer to be overweight, current levels are suggesting it’s time to switch to resources from tech, a scenario that’s been slowly playing out if we conveniently ignore the iron ore names. We see no reason to be fighting this indicator…
