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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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
Why not sign up for a free trial? Get access to expert insights and independent research and become a better investor.
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*PLEASE NOTE: Transcripts are autogenerated and may contain errors, especially Stock Codes and Names.
SPEAKERS
Chichi Nwokocha, Henry Jennings, Chris Conway, Marcus Padley, Layton Membrey, TEAM, Music: Convoy
Marcus Padley 00:12
Morning everyone, Thursday 14th of April. We are of course just about to head into Easter for a long weekend. We have four sorry three, four day weeks on the trot and this is the end of the first of them and our market doing okay today ASX up 44 What was going on overnight? Christopher?
Chris Conway 00:30
Good night in the US overnight thanks Mark has dealt up 344 points tech stocks even better with the NASDAQ up 2%. The moving part overnight was this idea around peak inflation and we saw the Fed Governor Wallah saying that the march levels inflation and the CPI print recently this week might be quote unquote pretty much the peak so that was what was placating markets and saw as I said before tech stocks rally we saw us earnings season kick off JP Morgan was the big result overnight this shares were down more than 3% numbers were a little bit soft impacted by the Russia sanctions and then outside of that we saw commodities doing reasonably well. So oil up another 3.6% Following on from the previous session solid gains.
Marcus Padley 01:13
Thanks Christopher and I've written in the strategy piece my first strategy point today is peak inflation peak bond yields question mark the bond yield 10 year bond yield in the US since the CPI number this week the US 10 year bond yield has peaked and come off two days on the trot and obviously inflation has peaked and interest rates have peaked then you go risk on and you start buying tech stocks and all this sort of thing but let me just give you some of the headlines that are hanging around this morning. Okay if we if you think this is peak inflation increase in PPI underscores tough inflation battle for fed China's widening COVID curbs threatened global supply chain paralysis, oil traders to cut Russian oil purchases from May the 15th obviously energy prices feeding into inflation that's not going away New Zealand hikes rates by 50 basis points biggest in 20 years as inflation grows and I love this one apart from UK inflation hits 30 year high more sensible one but this one Argentina's central bank hikes benchmark rates to 47% as inflation bite and that's just headlines today so I don't think we can really even though I use that as a strategy point in suggested maybe that's the post it note needs to go on our screens today is peak paranoia, but you look at those headlines and you realise this Russian thing is going to keep pressure on prices for some time to come. I'll get to something else on the strategy piece about fertiliser prices which are skyrocketing and there's a food crisis in countries that usually import grain or fertiliser, including ourselves from China and Russia and that isn't going away anytime soon, nor a Russian sanctions and then you've got the Chinese COVID issue. There is no reason to believe that we are out of the inflation problem yet even though bond yields have gone down for two days. Sorry I Witter on what else have we got? Oh, I'm on Tom's away today. What's happening in our market? Well, today we've got jobs numbers got a bit going on. Actually everyone trying to squeeze everything in before he said we've got an ECB interest rate decision and press conference we've got in Australia unemployment numbers for March. We've also got CPI expectation numbers for April. We keep putting those in the diary. I don't remember ever registering the relevance of an expectations number but anyway, that keeps appearing on the diary in the US tonight. The main thing is we've got results season having started last night we've got Goldman Sachs, Citigroup, Wells Fargo, Morgan Stanley, though the bank's results season gets going in the US tonight and whole results season gets going. They also have retail sales initial jobless claims usual stuff and we've got a couple of activities today. New Hope coal main nhc and on the events today, we've seen bank of Queensland it's down 3.9% On first half results. First half results are up 38%, which is a more reflection of the last set of results than this set of results but their net interest margin is down and their net interest income actually fell. So the market hasn't taken that particularly well. We've got all Kim AK II talking about tripling lithium production. They're up 6.4% Iluka has been downgraded by Citi Group they're down 2.2% And what else Transurban has had traffic numbers hardly move a little bit up net wealth has had some fun numbers are down 1.3% Simek has confirmed guidance they're unchanged on the day and that'll probably do it for the moment. Right Layton anything going on from brokers?
Layton Membrey 04:42
Thanks Marcus. Domino's one of the river stocks that we hold Morgan's has an ad recommendation for it but has lowered its target price to $100 just to allow for recent inflation pressures but despite those price pressures, the broker says upside current share price over the next 12 months. $100 Target there implies a 26% Upside Medibank private has been upgraded to accumulate at odd minute. And this is just based on the current share price retreat with signs of a supportive claim environment and rising bond yields. The brokers lifted its target price to $3.50 implying an 11% Return western areas has been downgraded at Morgan. So western areas received an increased offer from igvault. And it's currently trading at around that offer price, which is about $3.85. But the broker has retained its target price of $4.45, which implies a 16% upside and that's just ahead of results that they've got coming out at the end of the month. And there is a fair bit of commentary out around the Lucca resources with that planned demerger that they announced yesterday, Citigroup, as you said has downgraded to a sell, but other than that there was nothing too exciting from the brokers they all seem to like the demerger, and have said that it allows the luchar to focus on their core operations, they've all done some revaluations, which include about a 60 cent per share decrease, we'll have to wait and see where that one goes. An average target price is $11.45, which is about 9% below the current share price. Thank you.
Marcus Padley 06:14
Thank you, Layton. And Chris, what have we got going in technical trades today?
Chris Conway 06:19
Thank you, Marcus. The chart of the day is champion iron. It's what I have featured before his chart of the dates that the people's champion, as I've called it, just a really great looking trend, obviously in the material space, leveraging those higher commodity prices. So that's the chart of the day but it's also theme Thursday. Now I did a chart of the day yesterday, which was elders and wrote at the time that I like agriculture stocks, and then we've had a really good conversation this morning on the desk. That's a great thing about Marcus day we have these conversations. And out of that has born the idea of launching the agriculture theme which I will launch in the lunchtime edition of the newsletter today. So Elder's GrainCorp and a few other stocks will be in there leveraging what Marcus was talking about earlier in terms of food inflation, food prices, being on the rise and a bit of a crisis in terms of fertilisers and things of that nature. So that will be the theme that I want you today.
Marcus Padley 07:07
Thank you, Chris Henry, what's going on in the sunny climes of rainy city?
Henry Jennings 07:13
Well, luckily, it hasn't actually stopped raining Marcus briefly. We're probably due for in a minute the sun has come out amazingly. And the sun has come out very much for the small cap portfolio, which is heading back towards record highs fabulous day yesterday with lithium stocks really cruising ever higher. And just following on from that outcome announcement this morning. The interesting thing that they said is that they are aspiring to be 10% of the global lithium market. So that that is pretty significant. But the other significant thing that they talked about was this tripling up production but interestingly, that tripling of production is not till 2026 So we still have four more years where the lithium story and the lithium price I suspect is going to be at elevated levels so they're going pretty well today other lithium stocks are going very well like resources, etc. Doing well. As far as the food thing goes as people that follow my stuff will know I've been in New riser for some time new riser is the artist formerly known as Lee Creek was trying to get a urea project off the ground in South Australia at Lee Creek, it changed his name recently. And that's changed his fortunes along with the fertiliser price helping of course, and that's up to 25 cents now. So I think we bought that around 14. And it's suffered for a long, long time of going nowhere, but it's day is coming. So that's good. Also today just talking about Canada and the rate rises there because that's an economy that's very similar to ours, half a percent yesterday half percent in New Zealand. So this is a happening thing. I just saw a Fed chief on CNBC saying that they were doing a great job because they've managed to push mortgage rates in the US up to 5%, which is up 200 basis points since they started jawboning interest rates up and the market was doing their work for them. Hence the slide in US housing little bit of a tip there that maybe ours will follow if it isn't already. That's it for me today.
Marcus Padley 09:01
Thanks Henry. And on all cam, we had a fabulous tray from the Russian bottom we in 20 days we made 29% In all camp it's up another 9.6% since since but Pilbara minerals which we also made a 25 odd percent profit on in 20 days. That's down 11%. So pick your lithium stock and all came a very good and you do get to pick this up if you follow a stock or can we're very good at feeding the ducks which is constantly putting out announcements some companies bother some don't but they know whilst the ducks are quacking on lithium, keep feeding them and that's what they've done. Right I've got a few couple of strategy points. I've talked about peak paranoia on inflation, which would probably not and I've got a chart which I stole off investing.com A website showing the expected earnings grow from sectors now that we've got into this us first quarter results season and the obvious standout there is that the energy sector is expected to see a 2252% rise in earnings first quarter this year on first quarter last year. And this is really the point the other sector that's doing particularly well is materials or if you cut out metals and mining metals and mining and just makes the point our energy companies and resources companies in the last quarter, especially with the Russian war have been printing money on the back of higher commodity prices. So although I've said one of the biggest risks in the market is this sector tipping over resources sector tipping over they're certainly not happening yet. And as I say, the every day that goes past their results are just being underwritten again and again and again. So expecting good results from them next results season the interesting bit maybe for some view or a little bit of a value add is just to look at the ETFs that are exposed to the resources sector and I'll put a list of those in apart from fuel which is global energy companies fu el, there's a crude oil ETF which is oh which I will tell you will put you to sleep at NVR is the Vanek Australian Energy and Resources ETF Oh Zed is the Spyder ASX 200 resources ETF and QRE is the better shares ASX 200 resources sector ETF so there are a few things to choose from if you don't want to play in individual stocks, all those ETFs tend to have much lower volatility risk and you can sleep at night if you just want to play the theme. The sectors by the way, which aren't expected to do well, according to this forecast earnings is financials and we saw that with JP Morgan down 6% overnight and we'll see how Morgan Stanley Goldman Sachs, Citigroup and Wells Fargo go tonight. But this suggests us deal flow for US investment banks has dried up a bit. The other thing I had to look at was is it time to travel I noticed overnight, Delta Airlines jumped 6% on results. And you sort of have to keep an eye on this sector because it's a recovery sector still. And I've had to look at the charts have a look in the strategy piece. There's also another I've started looking at picking up ETFs for you but there's an ETF called the airline hotels and cruise lines ETF not listed here. It's in the US but that is going nowhere. If you look at it is just going sideways Delta Airlines may have had one good night, but the trend is still down. And I've looked at Qantas Webjet you'll see the charts corporate travel, they're all going sideways. Plus, of course who wants to fly over Eastern Europe at the moment is pretty much a no fly zone. You've also got 25 million Chinese residents locked up which isn't exactly good for Australian travel firms. And then of course, you've got a mass shooting in Brooklyn, which doesn't exactly scream let's go to New York and check out the gun violence sounds like fun, so good to be Australian. I think sometimes, if not all the time. And if you've seen the photos of the Sydney Airport this weekend, you'll be glad you ain't lying anywhere for Easter. So flying sort of not an activity worth the effort. In my humble opinion at the moment. It's so 2018, to go flying on holiday. And then I've also listed the agricultural stocks on the back of the themes we've been talking about record fertiliser prices, and I noticed apart from our stocks, there is again an ETF I started checking out the ETFs this morning called food which is the better shares global agricultural companies X Australia, so not including us as a tiny wee anyway, but the food ETF is going off again, slow moving, but it is up wrong about $7 at the beginning of the year to $8.76 has just spiked a bit. If you wanted a low volatility exposure to the food sector, you could probably have a crack at that if you think this squeeze is going to stay for a long period of time. Right that's about that. We are going into Easter I will write a skeleton newsletter tomorrow which will just cover what happened in the US overnight and say Happy Easter and we'll be back next Tuesday. And so the question of the day today is What are you doing for Easter Chichi? What are you doing for Easter?
Chichi Nwokocha 14:01
I'm gonna have a city staycation because everyone else is going away and then to take advantage of clear quieter Melbourne and try and spend some money in the city.
Marcus Padley 14:09
They you keep the retail world alive. Layton what are you up to?
Layton Membrey 14:13
I'm heading down to Torquay for the weekend with my friends. We go down there every year, but we've missed it for the last couple of years. A friend of mine, surprisingly, we've had moustache anyway. Yeah, yeah, a bit of rest and relaxation. Come back fresh next week ready to go.
Marcus Padley 14:30
And Christopher?
Chris Conway 14:31
I'm off to enveloppe with my family, my wife and my two beautiful boys to do some camping down there. So that should be fun. Ben and I have a bit of depravations as Yeah, turn the phones off, turn the laptops off, turn everything off, and I'll be away next week. So it'd be back the week after that.
Marcus Padley 14:47
Good stuff. And Henry, you are I believe heading into Broken Hill where I was in a thunderstorm about three weeks ago.
Henry Jennings 14:54
I am indeed I'm heading over to the Monday Monday plains just outside Broken Hill for the muse is a festival that's taking place next weekend so we've got campervan and we're heading west we've got ourselves a convoy as well we've got a couple of walkie talkies, a couple of friends going so it's going to be fun to vans and yeah what could possibly go wrong?
Marcus Padley 15:14
I hope you've SPECT up on your who was it? Who's who sang the song. It was Kris Kristofferson saying we've got us a convoy...
Henry Jennings 15:22
It wasn't it wasn't actually it wasn't actually Christmas stuff. So there was another guy and he died last week. He was 92 I think, he went breaker breaker.
Marcus Padley 15:38
Orange light and blue white, coming at you got ears on...
Henry Jennings 15:41
Got your ears on good buddy...
Marcus Padley 15:43
So you have a bit of fun with that Henry and I of course will be working all of next week with Layton holding the fort and this weekend. I have got four rounds of golf booked in with my dislocated shoulder we'll see how that goes. And it keeps coming. Imagine it's restricted my driving you know from I can't hit 280 metres anymore. I'm hitting sort of 250 now...
TEAM 16:06
Laughter!
Henry Jennings 16:10
You got to hit them straight remember...
Marcus Padley 16:11
That's it. Have a fabulous Easter everybody we will those of us who are working we'll see you back here on Tuesday. Have a good weekend.
TEAM 16:20
See ya Henry.
Music: Convoy 16:21
Breaker one nine, this here is rubber duck, you got a copy on the pig fam come on... oh yeah ten four big ben, for sure for sure. By golly it's clean glitter to flag town, come on...Yeah it's a big ten four, big ben yeah we definitely got the front tour good buddy we're first shake to live, looks like we've got ourselves a Convoy.
Music: Convoy 16:49
It was a Dark of the Moon on the sixth of June in a Kenworth full of love. Cabo repeat with a reefer on at a Jimmy Holland Hoggs. We as hidden for bear on I 101 about a mile out of shaky town. I says big ben this here's a rubber duck and I'm about to put the hammer down...
Music: Convoy 17:05
Cause we gotta little old convoy, trucking through the night. Yeah we gotta little old convoy, ain't she a beautiful sight...
Music: Convoy 17:15
Come on and join our convoy aint nothing gonna get in our way. We gon grow this trucking convoy, across the USA...Convoy...Convoy...