Viewpoint: Bullish
Overnight was a firm session for US indices ahead of their reporting season which saw strength in the Resources & Banking Sectors, similar to our own yesterday.
Self-storage business NSR went to the market in June looking for $325m to repay debt and add liquidity to its balance sheet after its recent acquisition spree – The ~$2.5bn business currently owns 150- sites across Australian and New Zealand. Only back in March of 2020 US-listed $US54bn goliath Public Storage (PSA US) bid $2.40 for NSR which it promptly withdrew as the pandemic accelerated around the world.
MM was getting very frustrated with our LLC position and then a couple of weeks ago we saw a downgrade to guidance following a resurgence in COVID cases, also a kick up in the cost of materials will assumedly also be hurting the contractor who works on a number of fixed price contracts. However as has been typical through 2021 when stocks look their worst its often time to step and buy / average aka Whitehaven Coal (WHC) and a2 Milk (A2M).
Stocks kicked off the week on a very positive footing following the strong gains in Europe and the US on Friday but it was the sterling performance from the large cap miners that caught my attention e.g. BHP Group (BHP) and Fortescue Metals (FMG) both closed up over +3%. MM has been looking for some weakness in the Resources Sector to increase our exposure but its currently proving to be a long wait!
CWN – 1.27%: Shares were lower today while the 4% decline in the Hybrid Securities (CWNHB) also caught our attention. Chair Helen Coonan was in the witness box doing her best to argue that the ‘old Crown’ is no more and that new management and a refresh of the board was enough to offer regulators piece of mind.
NWH +11.97%: Rallies strongly today on the announcement that its subsidiary Golding Contractors will sell 38 major mobile mining assets for about $81m. The deal struck will only reduce earnings by a small ~1% however it will reduce gearing substantially, taking net debt from about $115m to about $34m. That has been a cause of some concern in the market and today’s news is clearly positive in that respect.
The FANG+ index looks to represent a basket of highly traded growth stocks Apple (AAPL US), Alibaba (BABA) and the volatile Tesla (TSLA US).
The “Fear Index” remains around its pre-pandemic levels although last week it did pop above 20% when US stocks wobbled, we remain bullish from a risk / reward perspective but the trend does remain down.
No major change in the crypto currency, we’re bullish at current levels looking for at least another 15-20% upside i.e. buy dips but don’t be afraid to sell strong rallies.
No real change here, the $US appears to be consolidating before an assault on our targeted 93-94 area implying the outperformance by the tech sector, especially in the US, has further to unfold.
