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, Tom Wegner, Layton Membrey, Marcus Padley, Ben O'Leary
Ben O'Leary 00:15
Everyone Tuesday May the 17th Marcus what happened overnight in markets?
Marcus Padley 00:20
Good morning, Benito. Right. Well, doing okay today, I think we're up 35. Last time I looked Wall Street was up 27 Dow Jones moved in a 585 point range may have closed up 27. But 585 point range, I just point out the average true range on the Dow Jones at the moment, which is how far it moves from top to bottom each day average over the last 14 days. It's currently moving, on average 778 points a day, which is as high as it's been since the pandemic and that is a reflection of uncertainty and volatility. Although I've got the VIX volatility chart in the strategy section today, and that's sort of come off the top a little bit still elevated. But it just interesting to note that you can't confidently buy a market when it's flying around which it is at the moment and otherwise, overnight, NASDAQ took it in the neck again down 1.2% s&p down point three nine European market up point six what are the observations yesterday was that our market which was up 74, at one point only ended up 18. So it came off the top that was on the back of weak Chinese data. Obviously, they're in lockdown. But in the last month industrial production dropped 2.9% retail sales 11%. And I think this is right, not a single car got sold in Shanghai, can you believe that Chinese left rates unchanged, there was also a number out of the US overnight, the New York Fed Empire State Business Conditions Index, it's only an index, but it was expected to come in at 16.5. The number doesn't mean anything, as I say just an index, it was expected to come in at 16.5. And it came in at negative 11.6. Down 36.2 points in the last month. So New York Business Conditions deteriorating and Goldman Sachs also dropped their GDP numbers. I could give you the numbers but essentially they dropped their GDP numbers yesterday for the US so everything just worrying about growth still we'll come to strategy in a minute but things still volatile and the markets not really getting behind or finding a confident floor yet. We have a Wall Street Journal interview with Powell coming up I think tonight and everyone seems to be hanging out to see what he has to say otherwise not a bad night on commodities and BHP Rio up to date on all price up 1.2% oil price up 2.4%.
Ben O'Leary 02:46
Thank you, Marcus. We'll be back with strategy shortly. As you said Tom has that all going into our market today?
Tom Wegner 02:52
Thank you, Ben look as x 200 is up 34 points ahead of what the futures had indicated this morning energy and miners are outperforming healthcare and tech names are easing. We have brambles down 6.5% CVC Capital said it will not be putting forward an offer citing market volatility so they must be paying attention to that vix volatility index, United mult group U M. G is up 0.3%. And that's even despite posting a fall in there half your profit they did reaffirm guidance for FY 22 however, a to milk has appointed a new CFO and James Hardy is slipping a touch they reaffirmed guidance and declared a US 30 cent second half dividend consumer confidence that he said Roy Morgan consumer confidence has fallen to the lowest levels since August 2020. That sort of ties in with the ATR being the highest the Dow Jones high since about that time as well. So it's all tied up together. RBA minutes still to come at 1130 expected to highlight the bank's hawkish tilt and that's from the meeting where they lifted the cash rate 25 basis points. And as Marcus said, we have Jerome Powell speaking tonight in an interview with the Wall Street Journal. Thank you, Ben.
Ben O'Leary 04:03
Thank you, Ben. I've been having a look at step one this morning. That's STP or 11.9%. When I last checked my follow up to 56% yesterday and now 90 something percent down from listing price. Yeah, yeah, exactly. But even given all of that Morgan's believes that the company will remain profitable and cash generative and has retained its add recommendation while the target price has dropped down from $2.40 to 60 cents but still implies over a 180% return.
Ben O'Leary 04:03
Great stuff. Thank you, Tom Layton anything good from the brokers?
Ben O'Leary 04:37
We were talking about that yesterday. It's gone from having a market cap of some 400 million almost half a billion dollars to less than 40 million now. So and...
Tom Wegner 04:45
And curious as well that they are profitable. I thought that for from listing price would have been a characteristic of a company that doesn't make a dollar.
Layton Membrey 04:52
Yeah, also looking at Goodman group following their guidance yesterday they increased FY 22 A EPS growth to 23%. And all the broker recommendations this morning are bullish. And the average total price there is $28.25, which implies around a 45% upside. Thanks, Ben.
Ben O'Leary 05:13
That was fun. Thank you, Layton. Henry are things up in Sydney with you?
Henry Jennings 05:17
Well the sun is shining, the sky is blue. And we look forward to a royal visit tomorrow, which is always good news in Sydney today just in my stuff, talking a few things that caught my eye. One of those things, of course, was those Shanghai new car sales, which I think last year was 26,000 new cars sold in Shanghai and not a single one, which does show the extent of the slowdown in China. And that was the thing that disrupted our market yesterday, so very much the sell the rallies kind of mantra and just pushing that one also having a little look today at stock that was asked for by one of our members, which is a new lithium mine project in Mali, which is a spin out from fire Finch, which has a gold and lithium project in Mali, fire Finch is actually spinning out the lithium one, which is called Marilla. They call it Marilla. The gorilla so having a little look at that one. Leo, lithium is the name there. And also just including the ASX IPOs, which are coming up as people do like a little look at those every now and then. And yesterday, I sat down with James Hawkins from L one Catalyst Fund, which has had a pretty good start to life in terms of performance and had a really great chat to him on the couch. So I had promised it for the weekend. Scheduling was a bit of an issue, but recorded it yesterday and released it this morning and some good feedback from L one catalyst in the company on that one. So I'd be interested to see how many people look at that. And that's about it from me at the moment.
Ben O'Leary 06:44
Thank you, Henry. Chris is still working from the shadows with COVID today, but he has put in his technical trading section. He's got AGL as the charge that day. He's also going to link to register for his chart chart on May the 25th. You register online and then submit your questions and stock code. So make sure you do that. And Marcus are you on about today.
Marcus Padley 07:02
If anyone can hear a vibrating noise in the background, I'm afraid we have a building shaking thanks and bulldozers out the bank. So apologies for that when Henry refers to a royal visit, he means Marcus is going to sit near sadly royal although I do have some royal links. It has to be said, but I will be in Sydney for the next three days. And on top of the chart chat. Did you mention Henry asked the analysts this Friday?
Henry Jennings 07:25
I didn't but I will do so. Yes As the analyst on Friday at 530. And the more the merrier. As always your chance to ask me anything you like on any stock you like and I will try and give you a reasonable answer. So yes, Friday.
Marcus Padley 07:41
And in the strategy today I've really just talked about is this bounce convincing and as I've mentioned, the uncertainty or the volatility and the Dow Jones ATR for want of a better measure, you could do it on any index is still way up there. So this is not the foundation for a confidence bounce. So I don't think I'd be buying the most obvious trades which are the sentiment dependent stocks, consumer discretionary stocks, cyclical stocks, growth stocks, high beta stocks, stock market stocks, hot stocks, lithium for instance, yet there are also a host of ETFs you could buy for gearing to the market ETFs that will not give you the similar sort of heart attack that you'll get buying technology stocks, but there are a number of ETFs you could be buying I would just point out the worst performing ETF in this correction has been and this is not a recommendation has been the L n a s is the code which is the ultra long NASDAQ ETF if you really want to get something wrong and beat yourself up that is the ETF for you. We do have on the newsletter every day the ETF spreadsheet which is updated on Fridays, click on that on the right hand side and you will find a host of ETFs to play and I also listed in the weekend email the best performing and worst performing ETFs in the recent correction. And presumably if you think the correction is going to stop or continue to come pick off those lists that aside the next piece of data we've got coming up as inflation numbers on June the 10th. We've got FOMC on June the 15th. And I would just note bond yields keep falling which suggests that the main concern at the moment is growth. As you heard Goldman Sachs have downgraded their GDP forecasts overnight. We really need China to turn around the resources sector showing some tiny signs of wanting to bounce a better day to day as well. Let's see if that happens. But overall, I think the message is nothing terribly convincing happening on the bottoming front yet although there are signs of a period of consolidation now a couple of bits of research one of them was in lithium. Tom?
Tom Wegner 09:50
Macquarie had a research note out yesterday talking about their picks for the lithium sector. They said they have outperforms on mineral resources Pilbara minerals, all care Luca Lyon town Hasting technologies and that flows some news out of the US the Department of Defence has been asking Congress to let them directly fund processing facilities for critical minerals. And that ties in with the stock I talked up on Cosby's secret resources. They're benefiting from the US and its policy to shore up supply chains of critical minerals. So you can read all those details in the strategy
Marcus Padley 10:25
Right...
Henry Jennings 10:26
Just to interrupt the other one that tried to add to the small cap portfolio is ionair, which has got a project a real light ridge or lithium in Nevada in the US fully funded to the h1 production. So that's had a big drop I hold it already had taken some profits looking to add to the position there and also trying to buy some DG o as well, but very illiquid.
Marcus Padley 10:47
And Syrah Tom that's graphite, isn't it?
Tom Wegner 10:50
Yes, graphite is used for the anode in lithium ion batteries
Marcus Padley 10:55
Right. What do they use for the cathode? Trump not that far
Tom Wegner 10:59
as well they might be able to stop question without notice...
Marcus Padley 11:02
Right. And there's a little financial summary in the strategy piece on sera interesting that their revenue has gone to fascinating zero 19 72,000,020 10,000,021 29 million next year, or this year is expected the 135,000,020 23 192 million and they go from making huge losses to making a profit and 2023 next year so it is a turning point perhaps and the trend on the chance quite good band back to Ben.
Ben O'Leary 11:32
Great stuff. Thank you, Marcus and I believe you have somewhat of a book review for us.
Marcus Padley 11:36
Oh yes. My wisdom of Peter Lynch. I have to say audible really is for lazy people like myself who can't be bothered to read anymore I'm not sure I'm ever going to pick up a book again. I'm I'm new school, not old school, obviously. But I listened to one up on Wall Street by Peter Lynch. His other book is a famous book beating the street and he is a Magellan Fidelity Magellan was it fund manager in the 80s 90s the books very dated, it's gotta be set. But he was a an outperforming fund manager wrote a couple of books. And essentially, he was a stock picker. And I couldn't help myself as I listened, read the book, again, taking notes. So I put my notes in a section in the newsletter today. I did like some of his quotes, we always seem to be preparing ourselves for what just happened, you go, market falls over, right? Let's sell tech stocks, then they bounce. He also said those who get out of the market because they were fooled when it fell, we'll get fooled again when it rises. And the other bit, which I do quite like is sort of straight talk, which is a bit like us really but he said the stock market includes an element of gambling, you can't avoid it, you have to accept it. And that is certainly true. Many or much of financial industry marketing is trying to suggest you that the whole thing is science. The whole thing is contained by the miraculous brains of some of the people who write and commentate and do strategy analysis. But the truth of matter is, there's an element of luck involved. Peter Peter admits to that and also provides a solution on how you can handle it is really after 10 baggers. And one of the interesting things he says is that the average person is exposed to interesting companies and products long before the professionals the best place to look for a 10 bagger is close to home where you work at the mall. And the average person comes across two or three likely prospects each year, which is sort of along the lines are something I've written about few times, which is people have their own legal inside information but often don't even know they've got it or certainly don't use it. So the question is, what industry do you work in? What industry trend? Do you know about what insight into an industry or specific company or group of companies do you have what do you know, I remember, I had a running group with a chap who had a mortgage choice franchise and he turned up with a new Mercedes and then on Facebook a few weeks later, you could see him in New York with all his kids. And he had four kids. I mean, you don't take four kids to New York and go into expensive restaurants unless your mortgage choice franchise is doing really well. And it was and I made a three bagger out of mortgage choices with some years ago buying on the idea that and after chatting to him that mortgage choice was obviously doing rather well so keep your eyes open What do you know what can you see who you know spending money which of your friends just bought a Mercedes and What idiot just took four children to New York. You know, maybe there's a stock tip in there somewhere.
Ben O'Leary 14:39
I remember maybe four years ago when afterpay was about two bucks still going to Southland one day and going Wow, all of a sudden Every store has an average pay sticker on the front of it. I've never seen one before.
Marcus Padley 14:50
I saw something similar. I was in Queensland and somebody had what do you call those boards that sandwich boards had a sandwich board outside their shop saying we take out After pay, which I'd never heard on, why would you stick a ball outside a shop to trick people out? And but there you go. So yes, we saw it coming very good. We maybe didn't do anything about it.
Ben O'Leary 15:11
And Question of the day to day, do you know when you're going to retire?
Marcus Padley 15:15
Now just say on this question, which has come from our member survey, 58% of people, and that's about 650 people now 58% of people in our survey, say they know exactly when they're going to retire, which means, of course, 42% don't know when they're going to retire. So Tom, do you know, when you're going to retire?
Tom Wegner 15:34
I have a rough idea of when I'd like to retire. And that would be preferably in between 55 and 60. But
Marcus Padley 15:41
Be next week? That's when you'd like to return? And just go down the coast and set for the rest of it? Yes, there are 50 grand a year, you'd be right.
Tom Wegner 15:49
Maybe, yeah, around that age, that's when my parents retired. So that's all the evidence I have to go off.
Marcus Padley 15:55
I just say on that front that people talk about, I'll retire at 60 or retire at 65. Because of the legislation, which is entirely to do with tax, and what tax break you get. And I can I can reckon that by the time you get there, these tax breaks are not the dominant factor on whether you retire or not. So you really, I would say everybody targets themselves, depending on what government legislation is about tax, which is only $1 amount, really, you need to decide when you want to retire. And it's completely irrelevant of tax legislation. So it could be 70, because you don't want to end up as a vegetable not thinking about anything, or it could be 40, because you've got better things to do. But we all sort of target this 60 year old thing, because that's what the tax legislation is. Anyway, sorry, Ben?
Layton Membrey 16:43
I don't have a plan in concrete. But I like siding more with the 40 than the 70. Get out and do stuff, I still can.
Marcus Padley 16:50
I reckon if you target 40, that will get you out of bed in the mornings and make you make a heck of a lot of the next 20 years rather than cruising till you're 60. And I've always felt that kids in particular and a mortgage and I had a client once say this to me, I very rich client, I envy you because you've got mortgage and private school fees to pay, you get out of bed with purpose, and you need to get out of bed with purpose. And unless you know when unless you have an aggressive target, I've got to pay school fees and mortgage debt unless you have an aggressive target, I want to be here by that then that gets you out of bed. If you don't have that. And you just think, oh, tax legislation. So 60s Or wait till then you get out of bed as like a floppy sandwich every day. Anyway, sorry, Layton?
Layton Membrey 17:33
I do not have a plan in place at all. Really, I've only sort of just stepped into the full time working role. So I don't know. I feel like it might be a little bit early to be starting to plan when I leave it but...
Marcus Padley 17:45
We did an article on retirement and the biting message was the earlier you plan to retire the earlier you will retire and the earlier you'll retire comfortable and happy rather than dissatisfied. If you just let it happen to you either one, it won't happen or two. It'll happen to you and it will be uncomfortable. So you could I love Ben's idea at this age to say I'm going to retire at 40. Now he's going to go like hell for 20 years and probably get there.
Layton Membrey 18:11
Does sound pretty nice.
Marcus Padley 18:12
Chichi, when you retire?
Chichi Nwokocha 18:13
I'd like to retire around 50ish...
Marcus Padley 18:18
Right. So 30 is time. Henry?
Henry Jennings 18:23
Maybe something we should discuss tomorrow, Marcus. Actually, funnily enough, I applied for my seniors card this morning because my wife has been taking the mickey out of me that I could so I applied I don't qualify for the super duper one because I work more than 40 hours, although I'm sure someday I would think that's debatable. Except when I sort of said, well, the retirement thing I did actually retire many years ago once and got bought out of my brains. And the problem with retiring at 35 or 40 is that none of your friends have retired at 35 or 40. So you've got no one to play with. The other problem is that of course, you've probably got kids and they're at school, which does say make it quite hard to do that. I'm going to go and travel for the next six months because the kids want to go to school and be with their friends. So retirement early is a wonderful, wonderful thing to aspire to. But just be careful what you wish for because you do get a little bit bored. As far as present day plans to retire I will retire having reached 60 When I stop enjoying what I do or my health prevents me from enjoying things but certainly at the moment absolutely zero plans to retire.
Marcus Padley 19:34
Can I have that in writing please Henry?
Henry Jennings 19:38
You can if you like are you good
Marcus Padley 19:41
Marcus? Oh, when am I going to retire? I'm never retiring. But Marcus today members need me to write daily all day. I will continue to do that endlessly because it's what I love to do. So no retirement for me ever.
Ben O'Leary 19:52
And we'll get that in writing too.
Marcus Padley 19:54
You can get that in writing. Yes.
Ben O'Leary 19:56
Very good. That's it. Thanks, guys.