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
Tom Wegner, Chris Conway, Ben O'Leary, Henry Jennings, Layton Membrey
Ben O'Leary 00:00
Good morning everyone Monday the second of May nasty start to the week after a bad night in the markets in America on Friday night Dow Jones was down 939 points almost 3%. At best, it was up a measly three points at worst. It was down at 1003 or close just off the lows but it's still pretty nasty 28 of the 30 components of the Dow goes lower the s&p 500 lost 156 points or 3.63% and the NASDAQ was again the worst dropping 537 points a little over 4% and it marked the biggest monthly sell off since 2008. So 14 years they're taking growth names but once again in the firing line lacklustre earnings and inflation pressures to blame all 11 sectors finished in the red the best was materials which was still down 2%. The worst two were real estate and consumer cyclicals both down around 5%. The big inflation news was the PCE Price Index showing off 6.6% year over year increase in March. That is the Feds preferred inflation measures that fed straight into the fears of assistant inflation and expectations for a shift to a tighter Fed policy stance. The data now shows an 88.4% probability of a 75 basis point rise in June on top of the already priced in 50 basis point rise next week that we are expecting so a lot of movement expected in the near term from the Fed on the earnings front Amazon which is of course one of the biggest stocks in the market dropped 14% And it was the biggest drag on the market fell on the back of downside revenue and operating income guidance for the second quarter. Things were also not helped by a 4% drop in Apple who warned of higher supply chain costs and disappointing earnings from Intel, Chevron and Exxon Mobil elsewhere European markets were stronger WTI oil pose 0.3% Lower which snapped a three day winning streak but it did lock in a 4.4% gain for the month gold added 1% But booked its worst month since September 2021. And it was hurt by the strengthen us dollar through the month the Aussie dollar fell to 70.63 cents base metals will mix to Bitcoin dropped 3% to 38 and a half 1000 and the US 10 year bond yield rose two basis points to 2.89%. And the two year rose five basis points to 2.69% and that was Friday. Tom what's happening today?
Tom Wegner 02:21
Thank you Ben yes well the market having as expected pull start all sectors are in negative territory growth names and forming value but in a down day doesn't really matter if you have value stocks, they are all in the red technology and energy are the worst performing sectors and the industrials and mind is outperforming so they're holding up a little bit better still underwater though quantity is improving. They announced they're going to buy 12 new aircrafts they also flagged a return to profitability in FY 23 Telstra announced the new CFO line town resources they inked an offtake agreement with LG mg solutions although are suffering they're underwater despite that positive update NAB is slipping a little bit as austrac comes knocking on the door and on the economic front home prices are up 16.7% On a year ago in April although growth is slowing. So for those homeowners growth is slowing that number is down from 18.2%. In March. We also had some PMI data out today which showed that we are in expansion territory despite price pressures lingering Thank you, Ben.
Ben O'Leary 03:33
Thank you, Thomas. And while you are you there? Could you please give us the strategy rundown?
Tom Wegner 03:38
Yeah, can today all eyes are glued on the RBA and the Fed I'm looking at the Chinese market which had a big recovery on the back of some stimulus talk and also back on the property price point they are going off and why that's bad for discretionary spending just signpost a few of the key dates this week. We have the RBA tomorrow the fed on May 4 and Zed results on Wednesday RBA statement on monetary policy on Friday and US unemployment data Saturday morning our time so a lot to look out for Ben good.
Ben O'Leary 04:09
Very good, thank you Tom and good pick up there. I said the Fed is expecting a 50 basis point rise next week. That is of course may the fourth which is Thursday out on Wednesday us Yes. Yeah. That's it. Thank you Tom Lydon. Well you got from the brokers today?
Layton Membrey 04:22
Not a whole lot this morning. Then I've got Cogan was downgraded to underperform at Credit Suisse after the March quarter last that they posted the target price came down 32% to $3.75, which was implying a 4% downside, but they're down another 3% this morning, and I've also got points but holdings, it's pbh. Credit Suisse has been neutral recommendation and has lowered its target price 25% to $3 to reflect higher risk free rates. And this was in line with the current share price. But again, they're down another two and a half percent this morning. That's a lot before it's moving so far.
Ben O'Leary 04:58
Short and sweet so thank you, Layton Henry Are you going this week?
Henry Jennings 05:01
Not too bad, Ben, I've got a new laptop, which is very exciting and always painful setting the thing up, but we'll get there eventually. But as far as my stuff goes today, just I guess, looking at what the RBA is going to do tomorrow and whether it actually makes any difference apart from the politics, because raising rates in the middle of an election cycle has been in the past, it's somewhat of a prelude to the opposition getting in something that the market is not really thinking about the moment I guess, is a change in government or even potentially a minority government on either side with that kind of stagnant policy agenda that we see in the US because of their own stagnant government. But so just looking at that tomorrow, and I'm sure everyone's got their own opinion on whether the RBA should or shouldn't but it is going to it's just a question of when as far as the US volatility goes, it still does require I think people to be patient to stand back at the moment and just looking at why the siren call of buy the dip, I should probably be ignored just for the time being there are too many. Well, Donald Rumsfeld had it right, too many unknowns out there at the moment, and I suspect the volatility is going to continue. And I will be using the rallies to sell into rather than the dips to buy and just ensuring that your portfolio is shopping because there certainly is potential for more shocks down the track in the next few months. So just caution, I guess is the watchword and that's about it from me.
Ben O'Leary 06:20
Great stuff. Thank you, Henry. Christopher, what do you got for us today?
Chris Conway 06:23
Thank you, Benjamin is not a great deal is leveraging what light was talking about earlier, I had a look at Cogan simply because today was obviously going to be a big down day. And it's going to put a bullish chart of the day up. So just acknowledging that downtrend, and really just making the point that picking bottoms and particularly picking bottoms around company announcements is perilous at best. You know, that thing was in a screaming downtrend. And the results the other day were not good and got smashed. And downgrades from brokers have ensued. And it's falling further. So don't try and be a hero in this sort of market environment would be the message there if I could pass one at all don't have a lot of risk on the table. And the portfolios myself at the moment are added South 32 late last week, it's the only open position that I have outside of the themes that horse although that dances to the beat of a slightly different drum. So not a lot of risk on the table by design and happy with that positioning. And then in today's manic Monday, I'll take a look at the FOMC meeting coming up. I know we've got the RBA before that but many far more intelligent people than me, we'll talk about that endlessly. So I thought I'd focus on the FOMC. Instead, we know that the 50 basis point hike is pretty much priced in the big moving parts will still be a tapering, they have talked about it being $95 billion per month, but they may grow more aggressive. That's some of the sentiment that I'll be looking at. And then of course, Powell is press conference as well as always an interesting moving base and can move markets around a little bit. And it's just worth noting that in the last six months or so markets have generally rallied post FOMC meetings, they've been de risking events and markets evolve and post Fed meeting minutes. So let's hope that that pattern continues. We get the FOMC Thursday morning our time as you were saying Ben and hopefully that we had some certainty where there is certainly some uncertainty and you know, there'll be a bit of a relief for markets with equities having sold off quite aggressively heading into that event. So like I said, hopefully that pattern continues.
Ben O'Leary 08:09
Very good. Thank you, Chris. Well, we'll find out soon enough. And that also leads us into our question of the day to day, which is quite simply move the RBA move tomorrow. And how much if you think they will Tom kick us off, please?
Tom Wegner 08:20
No, I don't think they'll move tomorrow. I think there'll be too exciting for them. And so I'm not too sure what that do probably maybe 25 beeps at the next meeting.
Ben O'Leary 08:29
Fair enough. Layton?
Layton Membrey 08:30
I'll go the other side, Tom and I'll say yes, they will. And it'll be 15
Ben O'Leary 08:35
Thank you, Layton. Henry?
Henry Jennings 08:37
Well, Layton is my favourite economist and I'll go with lightning. I have to say he's obviously putting the research in terms of that. So I'm gonna go for a rise over 15 basis points tomorrow.
Ben O'Leary 08:47
Very good, Chris. anything different?
Chris Conway 08:49
Yes, but 25 I think they'll...
Ben O'Leary 08:52
225 or adding 25?
Ben O'Leary 08:53
Adding 25.
Ben O'Leary 08:53
So taking it to 35?
Chris Conway 08:55
Yep.
Ben O'Leary 08:55
Very interesting. And I also subscribe to the economic school of life and I think they'll rise 15 bips to 25...
Layton Membrey 09:01
Great school.
Ben O'Leary 09:02
And we'll see what happens. Thanks, guys. See you tomorrow.
Ben O'Leary 09:05
Thanks, guys.