Viewpoint: Bullish
Copper has surged higher at the start of 2023 and it now looks on track for a test 10-20% higher as China looks to reinvigorate its economy as it reopens following the failed attempts of its Covid zero policy.
Last week saw US equities bounce back towards the psychological 4000 area which has acted like a magnet over the last 12 months, our preferred scenario is another ~5% upside to fresh 5-month highs.
The ASX200 has enjoyed a strong start to January and it’s set to open only ~3.6% below its all-time high this morning, overall it’s been a wild ride on the stock/sector front but the index has been relatively calm over the last 18 months.
We will deliver The MM Annual Outlook Report in the coming weeks but today’s first report for 2023 is likely to provide some clues on our current thinking for the coming year with stock/sector volatility looking set to be firmly on the menu yet again i.e. another year for the Active Investor. In a number of key financial markets, we have strong views on…
CNI is a stock we discussed in our recent Portfolio Positioning webinar – Watch Here – and a position we hold in both the Income & Emerging Companies Portfolio. This is at the smaller end of the property spectrum, and they are more leveraged to interest rates given their decision not to ‘pay up’ to hedge interest rate risk like many other property companies have done, however, we are backing them to take advantage of this current downturn.
PPT bounced +3.2% yesterday and dragged Pendal (PDL) up as a consequence given the looming takeover that seems likely to proceed, with the ratio now worth $5.16 for each PDL share versus yesterday’s close of $4.99 i.e. PDL is still the cheaper way to buy Perpetual (PPT) and the reason we own PDL in the Income Portfolio.
Gold stocks have enjoyed a resurgence over the last few months as this extremely cheap sector benefits from a softening in bond yields and a “wobbly” $US Dollar, it’s important to remember that if macro influences remain flat that gold stocks remain cheap creating plenty of upside potential, especially if inflation looks to have peaked.
European stocks remain firm due to their lower dependence on growth/tech names, they remain poised to make multi-month highs which would trample the numerous bears towards the region in the process.
US stocks rallied strongly overnight with the Dow closing up more than 500 points, while all 11 sectors rallied energy was again the standout performer enjoying gains of ¬2%. In the context of things, the index looks to have stopped falling but there are no clear buy signals coming through at this stage.
Nickel and lithium producer IGO has now corrected almost 20% from its November high but we’re still not tempted to increase our 3% position, short term we remain more a seller of strength than a buyer of weakness. While we are major fans of this business and its strategic direction moving forward the stocks already corrected 54% and 40% at points in the last few years, so why not again?
