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, it's Thursday May the 19th Lots of stuff happening today so we'll get straight into it Henry overnight what's causing all carnage?
Henry Jennings 00:22
Ugly is the word when ugly is the word and what's causing all the carnage? Well, the US markets were in freefall a bit last night we had the Dow down 1165 points or 3.6%. The NASDAQ down 4.7%. The s&p was down just over 4%. What caused this reduction? Well, it was the usual suspects in terms of inflation fears of recession but two key points came out last night Target and Walmart are both got absolutely wall at Walmart continuing to be well at after the previous day. But they are talking about pricing pressures supply chain issues and inflation in the system and margins being squeezed staff costs rising transportation costs rising as well. So margin pressures for us big box retailers. So that certainly spooked the market. And we also had a bunch of Fed heads around about all talking interest rates, recessions, etc, etc. And even Janet Yellen didn't want to miss out so she got in on the act as well and started talking about things too. So that really didn't help the market in any way shape or form. And we did see commodities come off slightly copper was down 1.5% The others all down sort of one and a half 2% And we did see Brent crude under a little bit of pressure two and a half percent down for that but still $109.11 in US dollars per barrel. So a pretty elevated price. Still a US stocks, of course got Wallops Apple was down 5.6% Amazon down 7.2 Tesla was down 6.8 blah almost escapes. It's felt like an escape. They were down 3.2% and US banks down heavily as well. 3% in places Citigroup gave back a lot of the gains that it made the previous day after Buffett announced they taken a big position and they were down 3.4%. So once again, markets very much in a volatile state of mind, vix was up nearly 19% Last night as well up to 31. So the volatility has not finished then but certainly interesting times, as they say
Ben O'Leary 02:16
Interesting times in day. Thank you, Henry. Tom, how bad the damage in the local market today?
Tom Wegner 02:20
Thank you, Ben. Well, our market is down 138 points or 1.9% options expiring today as well, which often leads to a bit of volatility at the open. There's nowhere to hide all sectors in negative territory, technology and consumer staples, that worst performance in our market healthcare and utility stocks outperforming and losing money slower than the rest of the pack. We have Westpac off 3.8% as it trades ex dividend so that is weighing on financials aristocrat though is one of the few bright spots up 2.7%. They posted a record half year profit. They also announced a $500 million dollar on market buyback. Webjet down 4% results did offer some encouragement although cost pressures remain and nufarm is down 3.6% Despite profit coming in ahead of consensus. We have jobs data out today and the unemployment rate is expected to fall to 3.8% from 4%. And that would be the lowest level since 1974. The RBA in their forecasts sees unemployment falling to 3.5% early next year. Thank you Ben.
Ben O'Leary 03:30
Good stuff, Tom and while you're there, that's for Australian strategy because it's a big day for strategy.
Tom Wegner 03:34
It is a big day for us we're making some changes taking some risk off the table in the forever and income portfolios the markets telling us that the bottom is not in and there is likely to be some more downside to come as central bank's attempt to get inflation under control and growth concerns draw the market's attention, we are cutting our exposure to sectors more exposed to those headwinds in the consumer discretionary and technology space. The changes take our cash weighting in the Forever portfolio to 23% and 17% in the income portfolio and all of those changes are published in the strategy section and we'll get the tables with all the changes up shortly.
Ben O'Leary 04:12
Great stuff Tom, thank you very much. Layton what's happening in the breakfast this morning?
Layton Membrey 04:16
Thank you Ben. I'm having a look at borrow this morning. It's al de they were down 3% Yesterday after reporting a $45 million hit from rain and energy prices. It's down around another 4% Last I checked this morning brokers have all lowered forecasts for profits and earnings and downgraded and Credit Suisse and Morgan Stanley have both downgraded to underweight McQuarrie is slightly more optimistic looking ahead, they've retained an outperform recommendation but all of the target prices have come down and the average target price is $3.15. But it's already trading below that this morning at around $3 and also looking at BlueScope Steel is up slightly on a guidance upgrade yesterday, but it's losing those gains again this morning with the rest of March. Get all the brokers were highlighting supply chain and raw materials cost pressures, but they've retained overweight and by recommendations and the quarry has lifted its EPS forecast for the next few years. And the average target price is $25.23, which implies around a 40% upside. Thanks, Ben.
Ben O'Leary 05:18
Thank you Layton. Chris, welcome back. What are you up to today?
Chris Conway 05:21
Thanks, Ben. It's good to be back first day back in the office. Although the market where it is I probably should have just stayed in bed. I'm having a look at enums. This morning focusing on bearish chart, of course, I'm not going to be putting up a bullish chart on a day like today. And the message really is one of the same rules always apply. And what I mean by that is if you are going to try and find some haven in defensive stocks, which you no one would expect him to be at the end of the day they produce chickens, people will keep buying chicken and particularly with beef and lamb prices where they are, you would think it would be the perfect environment for me to be making high whilst the sun shines. But the share price has been moving the wrong way for quite some time, as I was just saying, if you're going to look for some solace in defensive stocks, make sure that those defensive stocks actually have a decent looking chart, don't just pile into them, because they have some defensive characteristics. Make sure as I was saying just then that the same rules as always imply that they're technically strong demand is greater than supply. And if you can, that the share price is moving in a northerly direction as opposed to a suddenly direction. So if that's the message, you know, I don't take away from the fact that people will want to try and find some cover in defensive stocks, it's a natural thing to do when the market is behaving the way that it is. But don't just throw your money at any old defensive stock, make sure that you know where possible. It's got the characteristics that you want to see both from a technical and a fundamental perspective as well. So that's my message every day like today.
Ben O'Leary 06:41
Very good. Thank you, Chris. Henry, back to you for Henry's tech today. What are you writing about?
Henry Jennings 06:46
Just writing today, I guess that the line from Jaws springs to mind, but just when you thought it was safe to go back into the water, the market giving back some of the gains we have seen. The question of course is whether we're going to be seeing lows or not, or whether we're going to hold that 7000 level which at the moment it does look like it is by expiry day to day as well as option expiry. So that does add a little bit of extra volatility, the spy expiry more so than options. So that makes life interesting. So just talking about I guess, what to do in this market. And I have been harping on about this for some time in terms of selling rallies and reducing risks, because this is still an uncharted water if you like for the market. And it's not an easy market and for retail investors at the end of the day. It's not like an institution where you have to be invested most of the time and you have to have all the money in the market because that's what you get paid to do. retail investors don't have to do that they can sit out if they're not sure or build up cash to pile level. So one thing I am I'm looking to buy a few things today, I must admit, in selected spots, I'm looking at buying Alliance aviation AQ Zed being stock code that undertake over from cuantas. And days like today do give you a little bit of a chance when they start throwing things out when they throw the toys out of the crib does give you a bit of a chance to buy things like this On days like today, I noticed that Ramsey healthcare was also up to date, they're under takeover as well. So I'm looking at buying AQS Zedd, also looking at buying a pioneer and was looking at buying DGI. But it's just so thin. It's just pain to be honest. And apart from that at some stage, the market will bottom again and then it will bounce but the US market is bipolar at the moment. There's no prizes for being here. I don't think just at the moment.
Ben O'Leary 08:29
Very good sound advice as always Henry and we'll finish off Question of the day simple one today. Is that a one day sell off? Or are we going to see another trend from here Layton you can kick us off.
Layton Membrey 08:39
I think as long as the Fed is talking about recessions and things like that, then we're probably going to see a bit more of a sell off trend.
Ben O'Leary 08:47
Thank you, Tom?
Tom Wegner 08:48
I think the growth concerns at the moment are really starting to weigh or are weighing on the market. And yet we could absolutely see a bit more pain before it gets brighter.
Ben O'Leary 08:57
Henry?
Henry Jennings 08:57
I think we're a choppy trading channel to be honest. Rather than a new downtrend. It is traders paradise at the moment if you want to watch the screens and take a punt every night on the Dow and what the US market is doing. But I think we're a bit of a channel it's a pretty wide channel, I must admit it's not the English Channel or the the Suez Canal, it's a very, very wide channel 7600 to 6900 is the trading range and we're heading back towards the 6900 level. So you know, I think that may be the support 7000 could be the support for me. I gotta say we're only 40 points away from that. I don't think anything has changed to be honest bank for me. I've always said that after Easter fat and happy things will get harder from there and the market will drift sideways to down until we get some clarity on what's happening. But these bouts of volatility don't help anyone in terms of calming the nerves. That's for sure.
Ben O'Leary 09:45
Certainly is Thank you, Henry and Christopher?
Chris Conway 09:48
I don't know about where the markets headed in the immediate term. But in the medium term, I think the asymmetry of risk is to the downside. I think it's almost guaranteed that we had lower doesn't need to be dramatically lower, but we're going lower from here.
Ben O'Leary 10:00
I think I would side with Henry's comments most closely. I think it's going to be choppy regardless of what's happening. I think I'd still rather be in Australia than America considering they've got 30% in tech and over 10% in consumer discretionary isn't where we've got about 3% in tech and 6%. And consumers stress and reason they're the ones that are getting belted when people get worried about this inflation and growth picture that is a worrying thing at the moment. So anyway, it's gonna be interesting to watch regardless that wraps u. Thanks, guys. Thanks so much.