17 June 19
AGL pulls Vocus bid (BIN, VOC, EHL, PLS)
17 June 19
AGL pulls Vocus bid (BIN, VOC, EHL, PLS)
17 June 19
Subscribers questions (KDR, HLS, VOC, CBA, LNK, BLD, WOR, SGM, TLS, MXT, NBI, BIN, WSA)
16 June 19
Market Matters Weekend Report Sunday 16th June 2019
14 June 19
Why BREXIT is a good thing!
14 June 19
Crude oil is flirting with $US50/barrel can our energy sector defy the weakness? (WPL, STO, BPT)
13 June 19
Markets flat – Challenger downgrades (CGF)
13 June 19
Considering the “second tier” iron ore stocks as the commodity surges (EVN, CGF, AWC, RIO, MGX, MIN, GRR)
12 June 19
The rally fades on bank selling (ANZ, EHL)
12 June 19
Income Note: How do lower rates impact Hybrids?
12 June 19
A mixed overseas & local report after the ASX roars (NST, RRL, BHP, AAPL US, AMZN US, CSCO US, MSFT US, FB US,
The ASX200 again made fresh decade highs last week courtesy of the surprise Liberal election victory and further dovish rhetoric from the RBA, there’s not many folks in town who don’t now fully expect a 0.25% rate cut in June. The “Big Four” banks led the charge with their average gain +8.4% while the less influential Retail sector was not far behind as investors backed the re-election of Scott Morrison to reinvigorate the Australian economy. Conversely on the other side of the ledger we saw the Energy, Resources and Software & Services sectors drag on the index as fears around US-China trade weighed on many global markets.
We have mentioned previously that MM feels the “sell in May and go away” phenomenon probably wouldn’t come to fruition this year but more likely will simply be delayed – investors “feel” like they are slowly becoming more confident that stocks will go higher through 2019 /20 but our opinion is more balanced and we feel equities are currently enjoying the perfect storm with company profits generally ok while critically Australian bond yields continue to make fresh all-time lows. Importantly at MM we have no intention of “fighting the tape” which remains bullish for now but we are slowly evolving our bullish stance towards a more neutral outlook, hence don’t be surprised if we take some $$ from the table if / when the ASX200 rallies back above 6500.
Markets regularly like to move in the direction of most pain and at this stage this still appears to be up, just consider the following numbers taken from the most recent Bank of America Fund Managers survey i.e. 250 managers surveyed managing $US687bn:
1 – 34% of fund managers have taken out protection against a fall in stocks over the next quarter, the largest reading ever, amazingly a greater reading than during the GFC.
2 – Fund Managers have reduced their allocation to stocks by 6% to 11% although they remain overweight.
Basically investors are relatively well hedged although a full blown trade war would clearly still hurt however as a rule news that is in the papers is not what creates the most damage. These are not the usual numbers for a top, we usually need more optimism and less cover on the downside which then enables the market to fall like a hot knife through butter.
Short-term MM remains bullish the ASX200 while it can remain above 6380 with an initial technical target above 6525.
On Friday night US indices closed mix with the Dow rallying while the tech based NASDAQ fell slightly. The SPI futures are calling the ASX200 to open unchanged while BHP closed up over 1% in the US following some rare strength in the $A.
No change with the correlation between equities and bonds remaining fully intact – while bonds are firm, hence rates / yields low, equities are strong. At MM we will continue to watch both domestic and global bonds closely for any signs that stocks may be losing the huge tailwind of “cheap money”. Last week local equities embraced the major boost of the RBA implying strongly they would cut interest rates next month:
1 – The RBA targeted cash rate currently sits at 1.5%, the lowest in history.
2 – Last week the Australian 3-year bonds fell to 1.084% while the 10-years hit 1.516%, again both at their lowest in history.
3 – Both of these bond yields imply that the RBA will definitely cut official rates twice in 2019 and potentially even lower below the psychological 1%.
4 – The RBA must be extremely happy that it can issue bonds / raise $$ for 10-years at around 1.5%, I wish I could.
It’s certainly easy to comprehend the attraction of the Australian banks today from purely a “carry” perspective – if you can borrow money at ~3% and buy NAB shares paying a ~7% fully franked dividend it looks pretty good from a risk / reward perspective.
MM believes stocks will remain firm until bond yields start to increase, or perhaps just plateau.
ASX200 v Australian 10-year Bonds Chart
Last week the $A experienced both a push and pull effect with the coalition win being positive while the RBA’s rate cut talk was the negative, surprisingly to many the $A finally closed the week up 1%.
Our preferred scenario is the $A has one more look below its 2019 low for a buying opportunity.
Australian Dollar ($A) Chart
1 – Platinum Portfolio
The MM Platinum Portfolio enjoyed a solid week with a number of our positions rallying strongly with the Big Four Banks, Aristocrat (ALL), NIB Holdings (NHF) and Emeco Holdings all rallying well over 5% while the our relatively light resources holding was the main drag on the portfolio: https://www.marketmatters.com.au/new-portfolio-csv/
We didn’t transact during the week with our cash position remaining at 14% following the previous weeks purchases of BHP Group (BHP), Iluka (ILU) and Macquarie Group (MQG). With the ASX200 knocking on the door of the 6500 area its very unlikely that we will significantly increase our market exposure, unless we offset some holdings with a negative facing ETF e.g. BBOZ.
Firstly, again the easy part looking at our solid performers which are approaching MM’s profit targets:
1 - ResMed (RMD) $16.38 : we are targeting the ~$17 area to take profit, now only ~3% away.
2 – Bingo (BIN) $1.89 : we have been targeting the $2.10 area but a break beneath $1.85 will send clear warning signal after the stock hit $2 last week but we will still be sitting on almost a 30% profit.
3 – NIB Holdings (NHF) : we remain bullish targeting another 10% upside but after seeing a 14% advance last week never say never.
NIB Holdings (NHF) Chart
Secondly, let’s consider the stocks / sector which weighed on both the MM Platinum portfolio and ASX200 last week, the resources, with BHP Group (BHP), Ausdrill (ASL) and Orocobre (ORE) all ending the week in the red like most of the resources / materials sector although the construction stocks like CSR and Brickworks did enjoy the election result!
As touched on last week MM is currently now holding 14% of our Platinum Portfolio in CBA, NAB and Westpac plus 5% in Bank of Queensland and 3% in Macquarie Group – our intention is to tweak these lower into the EOFY with the resources and cash our likely target (s) hence were not too concerned by a short-term pullback in the sector.
MM is looking to switch part of our banking exposure into resources over the weeks ahead BUT we are in no hurry just yet.
BHP Group (BHP) v Westpac (WBC) Chart
Thirdly, stocks / positions we are considering buying in the weeks ahead, we continue to look for stocks that could “pop” higher as they potentially return to favour, a phenomenon we have witnessed a number of times in 2019. After last week’s structural changes for the market we have changed the list slightly:
1 – Fortescue Metals (FMG) – FMG paid out a huge 60c fully franked special dividend last week but we feel the continued surge higher by iron ore should again attract investors back to FMG i.e. MM feels the recent $1.17 pullback in FMG is overdone and presents a buying opportunity.
2 - SmartGroup (SIQ) – a curly one that’s not everybody’s “cup of tea” the salary packaging business looks excellent technically with a target around $10.50, or 17% higher. The companies valuation is not scary trading on an Est P/E for 2019 of 14.2x while yielding 4.7% fully franked which feels sustainable following a 20c special dividend in April – we like SIQ with stops below $8.20.
3 – Bear ASX200 ETF (BBOZ) over the next few weeks / months we can see MM taking a position in this ETF to hedge our overall market exposure, similar to our plays with negative facing ETF’s in December of 2018.
Iron Ore (CNY / tonne) Chart
SmartGroup Corp (SIQ) Chart
Leveraged Bearish ASX200 ETF (BBOZ) Chart
2 Income Portfolio
The Income Portfolio https://www.marketmatters.com.au/new-income-portfolio-csv/ now only holds 9% in cash following last week’s purchase of Flight Centre (FLT) and Whitehaven Coal (WHC).
We enjoyed a strong week for our Income Portfolio with both the election result and RBA comments working in our favour leading to an impressive performance by the time Wednesdays Income report was published of +2.18%.
Until we see any indications that bond yields have bottomed MM sees no major reason to reduce our large market exposure, or re-position / skew holdings towards lower rates.
Australian 3-year Bonds v RBA Cash Rate Chart
3 – International Equites Portfolio
Our headline from last week was on the money - “We remain bullish global equities but the “easy money” on the long side feels well and truly behind us hence our construction of an international portfolio is going to be a careful process.” Especially as President Trump has continued to throw significant US - China trade volatility into the mix over the last few weeks which makes the short-term picture tricky from a risk / reward perspective.
However our “best guess” is the small cap Russell 2000 looks ideally positioned to correct another ~3% fall hence chasing US and overseas stocks feel a touch premature but only just.
US Russell 2000 (small cap) Index Chart
The Emerging Markets Indices look capable of falling another 10% implying there will be no “quick fix” solution to the US – China trade talks. Hence we again see no reason to jump “boots and all” into overseas stocks, especially those Asian facing, but as always there will be bargains / value to be enjoyed.
Emerging Markets ETF (EEM) Chart
Following the decent correction by a number of quality stocks courtesy of President Trump we’ve refined our picks down to 3 stocks that we would buy at today’s levels:
1 – Trade Desk (TTD US) $US195.90 is a slightly smaller company albeit with a growing $US8,722m market cap, we remain bullish targeting ~$US250.
2 – JP Morgan (JPM US) $US109.71 - JPM is only ~10% below its all-time high but we still see up to 20% upside in the months ahead.
3 – Samsung (005930 KS) KRW42,700 – we continue to like Samsung but stops would now to used below 40,500.
Watch for the launch of the MM portfolio in the next few weeks but we will play our way in slowly unless the market has a deeper correction in May / June.
Trade Desk (TTD US) Chart
4 - MM Global ETF Portfolio
This remains a new concept to MM but this portfolio will replicate our macro opinion primarily around global stock indices, different market sectors, interest rates and currencies – this can very often be played by investing in ASX listed ETF’s but when required we may also turn to overseas listed ETF’s. We have regularly discussed our views across these economic themes and its time to put rhetoric into an actionable portfolio
We reckon there are a couple of great scenarios worth considering and preparing for:
1 – A potential spike towards 65c by the $A as touched on earlier will represent great risk / reward buying in our opinion.
2 – Last week we said : “Sell Emerging markets v buy the ASX200 equal dollar exposure BUT this is already very stretched hence we would be implementing on say 50% usual size. Well this kicked in hugely this week and we would lock in half profits had we implemented but overall we believe it has further to run.
ASX200 v Emerging Markets ETF (EEM) Chart
3 – No change, consider short facing Equity ETF’s into fresh 2019 highs.
Above 6525 for the ASX200 and above 3000 for the US S&P500 we are likely to become neutral / bearish equities hence we could / may buy the BBOZ or BBUS but also we may still be bullish gold (QAU) or the Resources (QRE) hence we can create a mosaic of positions which at times have limited exposure to the underlying index itself as opposed to which sectors outperform – an exciting prospect for all at MM.
BetaShares Leveraged Bearish S&P500 (BBUS) ETF Chart
No change, short-term stocks look ok but as the ASX200 advances we are slowly switching from a bullish to neutral stance, ideally our first tweak to portfolios will be to reduce our banking exposure.
Chart of the week.
MM has been long Orica (ORI) since November and the position has been slowly edging our way until this month when it has surged higher – its scary to even mention it for fear of giving the position the kiss of death! A pop above $21.50 will enable us to raise our stops, always a nice feeling.
MM is bullish ORI targeting the $25 area.
Orica (ORI) Chart
Investment of the week.
Marketing and Supermarket operator Metcash has recovered extremely well from its nadir in 2015 but technically it looks good while similar stocks, albeit larger, have rallied over recent weeks.
MM is bullish MTS targeting $4.
Metcash (MTS) Chart
Trade of the week.
A sell then buy scenario for a change, we are bearish PDL targeting $7 or even lower from where we will be looking for buy triggers e.g. a “DOJI” week – a candle set up.
MM is bearish PDL targeting ~$7 from where it will start to look for support / value.
Pendal Group (PDL) Chart
Our positions as of Friday. All past activity can also be viewed on the website through this link
Weekend Chart Pack
The weekend report includes a vast number of charts covering both domestic and international markets, including stock, indices, interest rates, currencies, sectors and more. This is the engine room of our weekend analysis. We encourage subscribers to utilise this resource which is available by clicking below.
Have a great day!
James & the Market Matters Team
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 25/05/2019
Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The MarketMatters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor. Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports. Market Matters may publish content sourced from external content providers.
If you rely on a Report, you do so at your own risk. Past performance is not an indication of future performance. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report not withstanding any error or omission including negligence.
Financial Services Guide
Date prepared: Wednesday, 22 November 2017
Last update: Friday, 23rd April 2019
About this Financial Services Guide (FSG)
This FSG provides you with key information about a range of subscription services offered by:
Marketmatters Pty Ltd (Market Matters) Australian Financial Services Licence No. 488798 ABN (20 137 462 536)
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
T: 1300 301 868
E: [email protected]
In this FSG, “we”, us” and “our” refer to Market Matters.
Market Matters holds Australian Financial Services Licence No. 488798 (AFSL) and is responsible for any financial services that we provide to you.
This AFSL was issued on 8th September 2016.
The purpose of this FSG is to provide you with information about:
Market Matters operates a website, www.marketmatters.com.au (Website), where customers may, for the payment of a subscription fee, access certain financial information and general advice. In particular, the Website provides:
This FSG relates only to the Website Services.
What financial services we can offer in connection with the Website Services
As holder of AFSL number 488798, in connection with the Website Services we are authorised to provide general financial product advice to both retail and wholesale clients in relation to the following financial products:
The Website Services are comprised of general advice only. That is, none of the advice given on the Website or by provision of the Website Services takes into account any of your objectives, financial situation or needs (Your Personal Circumstances). Before acting on any of the information, advice or Website Services, you must consider the appropriateness of this information in light of Your Personal Circumstances and, if necessary, consult a financial adviser before making any investment decision.
If you are seeking to acquire a specific financial product or security, you should obtain a copy of and consider the Product Disclosure Statement or Prospectus for that product before making any investment decision.
The Website does not provide a trading platform or access to a trading platform. There is no ability to purchase or sell financial products through the Website.
How do I access these services?
You can access these services by going to www.marketmatters.com.au and following the prompts and steps required to sign up for membership. Please read all terms and conditions carefully.
Fees and benefits payable to us and our associates
The Website is a subscription-based service. A yearly fixed subscription fee is payable to Market Matters when you subscribe to the Website which will vary depending on the type of subscription for which you subscribe. At the date of this FSG, the yearly subscription fees are as follows:
Platinum: $1,238 for 12 months
Platinum: $1,993 for 24 months
Subscription fees vary from time to time and are provided on the Website.
The Website does not currently feature third party advertising. Market Matters reserve the right to advertise at a future time for which they may receive remuneration. Any such advertising will be independent of any other content on the Website.
All representatives of Market Matters (Market Matters Staff) receive a salary paid by Market Matters. Market Matters Staff may also receive performance-based bonuses which are based on profitability, the number of subscribers and subscription renewal rates.
How do we manage potential conflicts of interest?
Market Matters have implemented policies and procedures to mitigate the risk of conflicts of interest. These include:
Market Matters Staff and Contributors are encouraged to express independent views and opinions on the topics they write about. This is established through ongoing training, external audits and our conflict of interest and staff trading policies. Market Matters Staff are required to serve the best interests of the subscribers, without consideration of any commercial or personal interests.
How is my personal information dealt with?
If you have a complaint about our services, you should take the following steps:
Contact us and discuss the complaint directly. If you do not feel comfortable discussing the complaint with us or your complaint is not satisfactorily resolved within 2 business days, please telephone Market Matters, on 1300 301 868 and ask to speak with the Complaints Officer. We suggest you put your complaint in writing at this time so that the issues are fully documented and understood by the parties. Your complaint should be addressed to:
The Complaints Officer
Level 29, Chifley Tower,
2 Chifley Square Sydney NSW 2000
Market Matters will review your complaint within 45 days and attempt resolution. If you are still not satisfied with the outcome, you may take your complaint to an external dispute resolution scheme. Market Matters is a member of the scheme operated by the Financial Ombudsman Service. You should write to:Australian Financial Complaints Authority Limited (AFCA)
You may also wish to consult ASIC in relation to your complaint. ASIC’s website contains information on complaining about companies and people and describes the types of complaints handled by ASIC. You can contact ASIC on its free call infoline:
Tel: 1300 300 630 or email [email protected]
We maintain professional indemnity insurance to cover our employees and Authorised Representatives (including us) for the financial services they provide, having regard to the following:
If you require further information about these compensation arrangements please contact us.
Terms and Conditions
This website, www.marketmatters.com.au, is published by Marketmatters Pty Limited (ABN 20 137 462 536) ('Market Matters', 'MM', 'us', 'we', 'our') Australian Financial Services Licence 488798
Financial Services Guide
Market Matters Financial Services Guide (FSG) is located here, and contains important information about the financial services provided by Market Matters. You must read our FSG and consider it in the context of your Personal Circumstances before acting on any advice. By accepting the terms and conditions you are acknowledging that you have read the FSG.
Provision of the Reports
Reports and other documents published on the Market Matter’s website (‘Reports’) are authored by Market Matters. The Reports represent the views of Market Matters based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal advice. That means they are prepared for multiple distribution without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.
If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Past performance is not a reliable indicator of future results. Brokerage costs have not been included in the calculation of performance. As financial products rise and fall in value, returns may be negative. Performance figures are not intended to be a forecast. Market Matters does not guarantee the performance of or returns on any investment.
Employees and/or associates of Market Matters may hold one or more of the stocks reviewed on this website. Employees and/or associates of Market Matters may hold one or more of the stocks reviewed on this website.
Subscriptions and Subscription Prices
To access premium content available on the Market Matters website you must subscribe to one or more membership categories available on the website.
To subscribe to the Market Matters website you must go to the Memberships page of the website, provide the information marked as ‘Mandatory’ and select the payment option for the price quoted (at the time of your transaction). You will then receive a verification email from Market Matters indicating that your subscription and payment have been accepted and you will be able to access the premium content.
Prices published on the Market Matters website are quoted in Australian Dollars (AUD) and are inclusive of GST and/or all other duties and taxes. Market Matters has used reasonable endeavours to ensure that prices for subscription to its services are published accurately on the website but these prices are subject to change and Market Matters reserves the right to change these prices and will notify you of any increase by email (with the price increase to apply from the time the next payment is due).
Marketmatters Pty Ltd (ABN 20 137 462 536) will issue a tax invoice to paying subscribers in relation to any supply that is subject to GST in accordance with A New Tax System (Goods and Services Tax) Act 1999.
Any member is entitled to cancel their membership at any time. In the event a member does wish to cancel their subscription, cancellations must be notified in writing to:
Level 29, Chifley Tower, 2 Chifley Square, Sydney NSW 2000
or by email to: [email protected]
All cancellations of month-by-month subscriptions will be cancelled and not billed again the next month.
All cancellations within 14 days we be entitled to a full refund. Any introductory gifts, such as, but not limited to; iPads, Fitbit watches, Apple watches, Google Homes, must be returned in their original condition before a refund will be made.
All cancellations made after 14 days of subscription commencement will not be entitled to a refund unless in the event of extenuating circumstances, at the sole discretion of Market Matters.
Subscriptions will automatically renew on the expiry date of current subscription. In these instances the subscription will be renewed at the current rate published on the Market Matters web site, using the same credit card that paid for the initial subscription, unless otherwise requested by the subscriber. A subscriber who wishes to cancel after being renewed in this way will have a “14 day cooling off period” in which they can request to discontinue and will receive a full refund for the renewal payment, this can be done in writing to:
Level 29, Chifley Tower, 2 Chifely Square Sydney 2000
or by email to: [email protected]
Market Matters has not reviewed any of the websites which link to this website or to which this website links. Market Matters is not responsible for the content of any other website or pages linked to or linking to its website. Following links to any other websites or pages shall be at the user’s own risk.
Copyright © 2018 Marketmatters Pty Ltd (ABN 20 137 462 536). No part of this website, or its content, may be reproduced in any form without the prior consent of Market Matters.
This Agreement is governed by and is to be construed in accordance with the laws of New South Wales, Australia. You agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning this Agreement. This website is not available to US and/or EU persons and by accepting these terms you confirm that you are not a US and/or EU person.