THE MARCUS TODAY MORNING MEETING - Wednesday 13th April

Anyone who has been in broking will tell you that the Morning Meeting is how all brokers start the day.  The format is to have a quick look at the overnight markets, consider what's coming up in the day ahead, hear from the analysts, share ideas and get set up for the day's stock market activity

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Transcript

DISCLAIMER:

Marcus Today offers information that is only general in nature. It does not take into account your personal financial situation, needs or objectives. Nor does it take into account the financial needs of any specific person. You should consider your own personal financial situation and needs or seek financial advice before making any decisions based on this information. For more information please see our Financial Services Guide.

*PLEASE NOTE: Transcripts are autogenerated and may contain errors, especially Stock Codes and Names.

SPEAKERS

Chris Conway, Ben O'Leary, Henry Jennings, Layton Membrey, Marcus Padley

Ben O'Leary  00:00

Good morning, everyone, it is Wednesday, April the 13th. All eyes were on that all important inflation read last night. What was the worship from that Marcus?

Henry Jennings  00:22

Well, the inflation numbers smack in line with expectations eight and a half percent and six and a half percent at the core level. But the interesting part of it is this debate about whether that's peak inflation as you know, we've come into that number and the suggestion is that that's as bad or as high as it's going to get to the highest number since 1981. And if you strip out energy and food and the Russian thing has affected food prices, by the way, if you strip out energy and food and energy that the gasoline price or the petrol price to you and me is at a record in the US, it was up 18% So that's really pumped this number up and if you strip those out, some call goods called goods actually fell 0.4% So you suddenly think Well, if the Russian situation sorted itself out, the oil price fell over. We got rid of some of these supply issues, you might actually find that there is very little inflation pressure and all this is a temporary transitory thing anyway, is this peak inflation don't discuss that in the strategy piece today. But the inflation number really didn't cause a report because it came in smack in line. So our market is up 19 Today futures were down seven Dow Jones was down at eight there was that Brooklyn was a Brooklyn underground subway Yeah, Brooklyn subway shooting 17 people killed...

Chris Conway  01:36

No injured at this stage. No one killed shooter still at large though was the latest headline that I saw so going on..

Chris Conway  01:42

 Well yet well, not good. Otherwise, Putin...

Henry Jennings  01:45

You know what is scary about that? I'm sorry, they've had 41 mass shootings since the start of the pandemic in New York...

Chris Conway  01:50

They really need to ban automatic weapons but that's a conversation for another time.

Henry Jennings  01:54

Out of my dead hands. It was at the expression for the National Rifle Association. Out of my dead hands anyway, there you go. Thank God we live in Australia great, great. At least if somebody went off in an underground you've got a good chance of getting out of the shot anyway, the oil price overnight up 6.3% That's on Putin saying peace talks have hit a dead end and they will pursue a methodical war and suggestions that they are about to launch big new offensive so that drags on and that obviously keeps inflation pressures on because it keeps energy prices up as I've written in the strategy piece today we could trade the energy prices it's very volatile at the moment every day looks like a wow why didn't I buy or why didn't I sell but really when things are this volatile? I think we all just stand back and leave it to people far cleverer stroke luckier than ourselves rather than bothering to trade oil cartel feeling this whole energy complex is inflated at the moment and at some point will deflate otherwise gold up met iron ore metals up resources doing okay today there was this Bank of America global fund managers survey which is quite a good survey if you google it but talks about global optimism at a record low at the moment. I've been looking to see whether the chances of a rate rise on May the fourth changed overnight. There's no indication yet of what the CPI number did but bond yields fell so another indication this might be peak inflation. We've got the results season starting tonight with JP Morgan's results in the US and Goldman Sachs Citibank otherwise a quiet roll into Easter.

Ben O'Leary  03:29

Thank you for that Marcus. Tom not with us this morning. Not a whole lot happening locally. So not bad timing on that. As you mentioned energy and miners are leading the assets higher I've got a few little company announcements nothing overly major or scrap leisure provide an update on their CFO transition confirmed that Julie Kevin DOE's last day will be April 15 unsurprisingly that's not moved the share price a whole lot.

Chris Conway  03:52

Now if it was a CEO maybe but a CFO tends to fly under the radar. Yep, yeah. 

Marcus Padley  03:56

Up on cent.

Ben O'Leary  03:58

Aluca resources has the AGM today they've announced they intend to do a merge Sierra have a tool that up 2% ML payments are up 4% After news broke that Bain Capital was taking a look at it as a takeover target that was a report in the AFR now up 12% on that report...

Chris Conway  04:16

Just interesting on that sort of jump in been apparently have walked away at this point. So interesting that the stocks up 12% on the news being that they've actually walked away but seemingly they're in play now. 

Ben O'Leary  04:26

Taking the words out my mouth, it seems that they're up on the concept of if Bain is looking at them as one of the leading FinTech companies in the world is fair chances so I'd be interested in running the ruler over them. And the other one we had was pointsbet have launched their online casino in the US state of Pennsylvania. They're marginally higher in early trade we've got a couple of X dividends in wham leaders W L a future generation investment fg X and Duxton water D to own all around 3% Gross yields but none are overly notable income stocks and on the economic front Today we have Westpac consumer confidence for April domestically in Japan. They've we've got the Reuters tanken index for April machinery audits for February Chinese balance of trade. It's out for March UK has their inflation rate from March tonight and the US PPI for March will also be coming out tonight and that's about all we've got locally today Layton, much broker stuff happening?

Layton Membrey  05:21

Thanks, Ben. I'll go through a couple here at Bre that's a BC has been downgraded to equal weight at Morgan Stanley has following unfavourable construction conditions and the broker has highlighted that competitive baarle has already downgraded earnings forecasts due to weather and rising costs and the target price for Abra has been lowered five and a half percent to $3.40. That still implies a 13% Upside AGL energy Morgan Stanley has lifted its earnings per share estimates for the coming years due to higher oil prices in New South Wales and Queensland and the broker retains the equal weight recommendation and lifted the target price 13% $8.48 The current share price is 858 I haven't seen if it's changed yet this morning. But that's just about in line with the current share price there and lioness rare earths LSA March quarter results showed a mixed bag according to Macquarie with lower rare earth prices offset in volumes and production which resulted in a 6% Miss on Macquarie's revenue forecasts. McQuarrie has lowered its near term commodity price forecast to reflect the recent drop in rare earth prices and the broker has retained its outperform recommendation and lowered its total price 9% $12.80 Which still implies a 32% upside.

Henry Jennings  06:40

Just don't AGL that's the second or third broker raid we've had in the last couple of weeks. There has been a share price is already up from this is the jobs stock in the top 50 of the market for the last couple of years. And it's bottomed it bottoms about five bucks five bucks 10 I think and it's now 850 And a few brokers upgrading. It might be worth a look.

Chris Conway  07:03

Yeah, just on the back of that I spoke about origin yesterday very similar company and utilities and energy have been the two hottest sectors in the last quarter. So AGL and origin driving that utilities rally.

Ben O'Leary  07:13

Well utilities only has three or four stocks and AGL on Origin make up about 70%...

Chris Conway  07:18

18 small ones. Yeah.

Marcus Padley  07:20

AGL it used to have a big yield used to have a seven 8% yield, it's dropped to 3.8% But back to 5% next year, but zero franking final expense, but it's you know, it's a boring stock return on equity. 5% 6% not a growth stock, but it's now recovery situation.

Ben O'Leary  07:37

Very good. Thank you. Layton. Chris, what have you got for us today?

Chris Conway  07:40

Yeah, I'm taking a look at elders today. So I still actually quite like agricultural stocks. There is an entity called the Australian Bureau of Agricultural and Resource Economics, otherwise known as a bears and they put out crop forecasts. And at the start of the march, they lifted their forecasts for all major crops expecting the value of agriculture in Australia to reach 81 being this financial year of more than 12 billion from last year. And that's because Australian crops achieving the highest prices they've seen in 32 years. I could throw some more stats at you. But essentially, the message that I'm trying to pass is that they're about three or four upgrades in a row. Now analysts still expect that the next time they deliver their crop forecasts even perhaps the next couple of times, I think it's quarterly that they will upgrade yet again because the conditions here in Australia are so favourable for crops that feeds into wildlife elders as my chart of the day also like GrainCorp and new farm both very good looking charts as well. But ours has broken out of trading range that was held captive by the $13 level punched above that has come back and retested that level and bounced and essentially I wrote this morning that you could have a crack at at whatever the opening price might be it opened at around 1375 and it's already up more than two and a half percent on the day trading now at 1409. So hopefully some members follow that little chart of the day idea and bought it earlier this morning and already off to the races so to speak. But yeah, like I said, I think the conditions are good for agricultural stocks and elders fits the bill as the chart of the day.

Ben O'Leary  09:03

Nice, thank you Christopher. Henry, what's happening up in Sydney?

Henry Jennings  09:06

Well just for changes raining so that's good just in time for Easter.  Today I guess fat unhappy at Easter has been my theory for some time hence I guess when Easter falls but after the Easter break, we do tend to go into a bit of stasis of course and we do have federal elections etc. And bank results in two days. And we just take just took some profits yesterday in calyx, which turned out quite well and also looking to take some profits in Red Five, which has been pretty successful gold stock for us as it nears production and just highlighting I guess what happened to gold rode with its Greer production when that went from a sort of an explorer constructor into a actual producer and how the fact that it peaked at $1.60 and has basically done nothing ever since. So looking to take money off the table in Red Five and also talking about the lithium story. While it has come back. The story hasn't changed. There's still massive demand. I'm for lithium as I was talking about this this morning my by day was Easter eggs my whole was the lithium sector and my cell was taking some measure of profits in the banks as it could be as good as it gets but certainly lithium sector is still got a massive attraction given the car Evie story is willing to in tech Honda announces today that we'll be paying we're spending 40 billion US dollars to provide 30 New Evie models by 2030. So although China is slowing because of COVID and we have seen car sales in China, I think they fell 11% Last month the story remains intact. These guys have committed to Electricals and there is not enough production globally to satisfy it. So that's about it for me fat and happy.

Ben O'Leary  10:44

I was wondering if you might do a little look at Nero group in the lead up to Easter?

Henry Jennings  10:49

Nero group? 

Henry Jennings  10:50

Nero group ticker EGG.

Henry Jennings  10:55

No, I haven't. Remember April fools day about Cathy wood on the on the couch. And nobody even questione.

Ben O'Leary  11:04

Yes, yeah, very good. And last but not least, Marcus?

Henry Jennings  11:08

Have a read of the strategy stuff it was just about is that peak inflation? And the answer is I don't know. But certainly the bond market came off or bond yields came off. That could be a pivot point on the bond market, but no one's going to bet on it yet. And otherwise, I did a seasonal chart of the ASX 200. A couple of weeks ago, I've been that inner game. Basically the market had a really good run from December to today and then go sideways for a couple of months. And so we're just into the period where the market starts to go sideways. And I think Henry said it before fat and happy at Easter usually leads to a bit of a disaster afterwards. And I wouldn't say a disaster but we are into the flat period in the market. And by the way, there is a sell signal on the ASX 200 Heck Annachi chart but the interesting thing I thought today was in the ideas section which I've called the no ideas section because the market is trending the wrong way and I don't really want to be adding anything ahead of Easter I want to have a relaxed Easter without thinking about the stock market but there was an interesting list have a look at the ideas section and interesting list of RSI buy signals and there were only about eight of them but they included B bars which is the Australian strong bear ETF so it goes up when the market goes down. There's B bus which is the US strong bear ETF so it goes up when the s&p 500 goes down. There's the bear which is the bear ETF goes up when the market goes down. Then there's the XA n which is the inverse of the ASX 200x and V which is the inverse of the ASX 200 ETF X vi which is the ASX 200 vix volatility index which is going up and that made a really good list of things you would buy in a falling market so put that little list in your back pocket for the next time the market falls over which may be now anyway the other the only other stocks going up where the US dollar ETF and St. Barbara mines, which of course is a stock you'd only ever buy when everything went to hell, because it usually goes to hell at all over times. And that was about it for me today. One more day to Easter. And that's that's just what do you call it in Australia that that now you just use padded out or something.

Ben O'Leary  13:23

Put the nightwatchman. Yeah. Very nice. And Question of the day today, pretty simple one Finfluencers yay or nay? Marcus do you wnat to star us off?

Henry Jennings  13:32

Finfluencers. Now the reason you brought that up is because of that AFR article about the asset coming down on fin fluences and then providing unlicensed information and some of their stuff can be construed as advice. So I really don't care about influences. I think some of them are obviously there every spectrum of chracter hero and if you get value out of watching a free influencer, especially if they look nice, which most of them seem to go for your life. I'm ploughing my furrow, let them plough, there's.

Ben O'Leary  14:03

Chris?

Chris Conway  14:04

I can only bring it back into the context of the markets today world and just you know, what we go through in terms of compliance, which are can be arduous at times, but I have a healthy respect for it because it is designed to achieve certain outcomes. So yeah, I guess I think that the regulation is probably a good thing.

Marcus Padley  14:20

I've gott say, if we aren't that over regulated, in my humble opinion, I think we are too. Yeah, hugely, you would assume that there are some people in the Australian Government that think idiots need protection from themselves. And they have taken on the task where the truth is, it should really be the responsibility of an idiot to look after themselves. And so we've got I, in my humble opinion, a mollycoddling attitude towards financial advice in the UK, for instance, you don't have to have a licence to hand out a general advice. It's it's Buyer beware. And I think we do a lot better with that sort of approach but so for people to think that we need to regulate for influencers rather than allow people To make their judgments on what they're watching is whether it's ridiculously wrong or not is, is again, too much interference, I think, let them go.

Chris Conway  15:08

Just on that as well. I don't want to get on the wrong side of ASIC, but you would think there might be bigger things bigger regulatory problems that they might focus their attention on rather than what Finfluencers...

Marcus Padley  15:17

Well if they are trying to contain social media postings on on financial advice, be it hocus pocus or genuine, they've got far too big a task and far too few people less than not enough money to direct. Exactly. So so it's never going to be good. 

Marcus Padley  15:31

Yeah, there we go. Henry?

Henry Jennings  15:32

I think influencers generally are not a bad thing. At least it has drawn attention to finance for a whole generation of people that really have not been that engaged in it. So I think that is a good thing. You just have to be careful who you listen to, I think we are massively over regulated. I think at the end of the day, we do have a full service stock broking industry that is more intent on making brokerage and not getting sued them making you money, which, unfortunately, is the way of things with clients, I wish that we could all have sophisticated investors on their books if you are a broker. But that's not always the case. But I think generally, influencers have been a positive, but there should be buyer beware, you just got to be careful with these guys, because some of them are out for their own, they should certainly not be completely and wholly trusted. But then they are doing a relatively good service. I think drawing attention to parts of the market.

Chris Conway  16:21

Layton, Ben being the younger generation to which these influencers are generally aiming themselves. What do you think of it? Do you get any benefit out of it?

Ben O'Leary  16:29

I think, yeah, I was gonna come from the younger perspective, I think the financial literacy in our generation is not that good in general. And you've put these Finfluencers..

Marcus Padley  16:38

Can I just say it's a heck of a lot better than our generation. Yeah, you guys are more financial savvy than we were...

Ben O'Leary  16:45

Which is worry, because there's still a long way to go. But the you put these people that have a million followers on Instagram, and it is it gives them a kind of legitimacy, legitimacy, that people our age will go, oh, they they're trustworthy, they've got that many followers, they must pay. And then if they say, Oh, mate, just put your money into some bitcoin, some really risky crypto or this stock guarantee. And they speak in that language of you know, you can't not make money by doing this. And people don't understand managing the bank role or risk or anything. And it's so easy to get access to trading accounts with leverage and all these sorts of things and people giving really dangerous advice. And I think there's room for you know, as Henry saying, there's some really good ones out there. But it's I think the without any regulation, the risk is really high in the ones that just don't necessarily know they're being dodgy. They just don't understand they don't have enough knowledge themselves. So I've just made a few lucky bets. And then they're like, I'm a genius. Now. We've got enough lights on in the stadium territory. See, all the ones are out, as Marcus puts it well.

Henry Jennings  17:46

And followers Ben is no indication of trustworthiness because you can buy followers, I want to pay five bucks and got 5000 followers on my Twitter feed so that I want to bet with my mate Richard Morrow in Melbourne. It was very shocked when my post went viral with a new 5000 followers and he only had 150. And he had to buy me lunch on the back of that. So you can buy followers? I think it was five bucks, two and a half 1000 I think I spent 10 and got 5000. Eventually they do drop off but they're there for a while.

Ben O'Leary  18:19

Yeah, no, you're exactly right. There's no legitimacy into it. And we have to as people in finance, we have to go through so much training and then compliance and get licences and registrations to be able to even say general, general statements. 

Chris Conway  18:32

Yeah, with caveats and disclaimers and everything else. It goes a long way. So yeah, that's pretty obvious. So buyer beware, as always, the very least buyer beware and just know that Marcus today is fully licenced regulated disclaimers on everything. Don't say anything that we are saying.

Henry Jennings  18:46

We spend a lot we do. And we all do our compulsory development points every year, which is a pain in the ass. Yep. And 40 hours worth and we all do it individually. We could just do it as a corporate entity, in which case we wouldn't have do CPD points. We just had a licence. We have chosen for all of us as individuals to be individually licenced, so just so everyone knows.

Chris Conway  19:09

There we have it. 

Ben O'Leary  19:10

Thanks, guys. 

Chris Conway  19:11

Thanks, Team. 

Ben O'Leary  19:11

See you back here tomorrow.