18 July 19
Cimic tanks on earnings miss, but is the move overdone? (CIM, LLC) **Buy SH US**
18 July 19
Cimic tanks on earnings miss, but is the move overdone? (CIM, LLC) **Buy SH US**
18 July 19
Is it time to take $$ on our “dog” investments, or switch to the new breed? (DMP, BHP, NHF, CBA, ASL, WEB)
17 July 19
Domino’s hit as US namesake disappoints (DMP, BHP, EHE)
17 July 19
Income Report: The Bull Case for Flight Centre (CBA, ANZ, FLT)
17 July 19
Overseas Wednesday – International Equities & ETF Portfolios (TLS, NHF, DMP, RIO, SH US, MCD US, WMT US, BABA US, EUM US, TMF US)
16 July 19
Rio softens costs guidance (RIO, NHF)
16 July 19
3 switches on our radar for the weeks ahead (AMP, CBA, ANZ, ASL, TLS, HLS, SIG, NHF, SKC)
15 July 19
AMP hit as life business sale falls over (AMP, ELD, PPT)
15 July 19
Subscribers questions (ORE, GDXJ, PAC, HYD, PDN)
14 July 19
Market Matters Weekend Report Sunday 14th July 2019
The ASX200 fought hard yesterday to remain in the black before finally closing down just -0.1%, an ok result considering at lunchtime we were down -0.45%. The main drag on the market were the Banks, Energy and IT sectors while the Consumer Services Sector rallied strongly led by Domino’s (DMP) which we will look at later. The high flying Software & Services (IT) stocks have led the markets rally in 2019, illustrated by Wisetech (WTC), Nearmap Ltd (NEA), Appen Ltd (APX) and Afterpay Touch (APT) all rallying by more than 50% over the last 6-months. Interestingly these stocks have started to “wobble” over the last week with only 1 of the 12 in the ASX200 closing positive while the average decline has been well over 3%, today will be interesting following a strong night by the NASDAQ.
Iron ore and its related stocks continue to catch our eye and although it finished up +4.4% yesterday at 883 CNY/MT the rally only told half the story with the bulk commodity continuing to swing around in an extremely volatile manner. At the close BHP +1.2%, RIO +1.4% and Fortescue +0.9% all benefited by the advance but we still believe this is the time to be taking some $$ off in the sector– watch for alerts on our BHP position.
At MM we continue to believe that equities are “looking for a swing high / top” but as discussed previously if we are correct this can easily take a number of weeks to evolve. Subscribers are likely to receive more alerts / ideas around tweaking our portfolios moving forward, low beta stocks will be one area we will consider i.e. stocks that have not hugged the ASX200 over recent years, successful recovery stories fit this mould perfectly.
MM remains in “sell mode” looking to adopt a more defensive stance than over the previous 6-months.
Overnight US stocks were quiet although the tech based NASDAQ did close up +0.5% while the Dow was down marginally. The SPI futures are calling for a strong rebound by the local market up ~0.5% , no major surprise after the last few days sharp almost 2% pullback.
In today’s report we are going to look at a few positions MM is considering for both our new International Equity and Global ETF Portfolio’s.
The news around bond yields / interest rates has died off over recent days, following last weeks RBA cut to 1%. At this stage the downtrend in bond yields feels very much intact and with 3-year bond yields having more than halved over the last 8-months a “rest” is to be expected. Our preferred scenario is they do have further to fall which implies another rate cut is a strong possibility.
MM thinks another rate cut in 2019 is a possibility BUT no forgone conclusion.
Australian 3-year bond yield Chart
Domino’s Pizza (DMP)
MM has been bearish DMP for the last few years but around the $40 area we see value returning to the technology / pizza business, although we acknowledge an Est. P/E of 24.2x is not “super cheap” by any means. Their progress in Europe has been slower than expected which has caused a re-rating of the stock however in more recent times headway is looking more promising while in Japan its maintaining the number one position. DMP’s internal growth remains strong and a webcast by the CEO in May made the correct noises in our opinion.
When I mentioned the DMP idea to our institutional desk it was met with the consensus of ‘you’re mad’ and that view is shown through ~11% of the stock short sold making it the 11th most shorted stock in Australia, just behind Bingo (BIN) in 10th.
Technically we like DMP targeting ~$55 while running stops at $38.50, excellent risk / reward.
MM likes DMP around $40 as a trade.
Domino’s Pizza (DMP) Chart
Over the last week we have been quiet with our International Portfolio still holding just the 4 stocks and 80% in cash, I reiterate we see no hurry to set this portfolio : https://www.marketmatters.com.au/new-international-portfolio/
We have not hidden our nervous medium-term outlook for global equities which means if we are correct MM is looking for 1 of 2 things as we evolve this portfolio:
1 – Almost the proverbial needle (s) in a haystack i.e. stocks that can rally even if equities experience another decent pullback.
2 – Quality stocks that will outperform in both bullish and bearish markets which can be hedged with a market ETF (s), when appropriate, to produce positive returns even in a falling market.
I’m sure most subscribers would understand that investing along theme 2 is a more likely path for success hence as we do accumulate stocks in the weeks ahead be mindful that MM may only be one keystroke away from hedging our portfolio with 1 or even 2 ETF’s.
MM remains neutral and cautious both US & international equities at current levels.
US S&P500 Index Chart
Again today we have touched on 3 stocks we are considering moving forward, note these are not fresh additions to our watch list but all are stocks that we feel are relatively recession proof.
NB Today they are all US stocks because we are cautious Europe and especially the Emerging Markets at this point in time.
1 Netflix (NFLX US)
If things get tough people bunker down and save money, sitting on the couch watching NFLX is most definitely a relatively cheap entertainment option. Netflix has been a standout story of the last few years and our view is the subscription entertainment service has further to run. We are bullish from around this $US380 area targeting fresh all-time highs, stops are a bit trickier and need to be under $US300 at this stage.
As we wrote previously the streaming pioneer continues to impressively grow its subscriber base - Its enjoyed more than 25% year-over-year growth in each of the previous four quarters. This equates to almost 150 million subscribers, with its worldwide growth shows little signs of slowing. To-date Netflix has ignored ad-supported streaming an opportunity could be worth billions of dollars to Netflix, any moves in this direction should be watched carefully.
MM is bullish NFLX targeting ~20% upside.
Netflix (NFLX US) Chart
2 McDonalds (MCD US) $US212.09
McDonalds has been a leading force in fast food for decades, and it's worked hard to update its image while keeping up with changing times e.g. McCafé.
MCD's current valuation, like much of the market, is relatively rich on a historical basis. However MCD is a dividend investor favourite in the US yielding ~2.5%, with the company having recently celebrated its 42nd consecutive annual dividend hike – US investors are more easily pleased when it comes to yield! In addition to paying dividends, the business has also made stock buybacks, returning even more capital to its shareholders.
For McDonald's, growth plans are clear, they understand the need to keep up with the pace of innovation in serving customers the way they want to be served, and that involves integrating new technology.
Lastly but importantly MCD is always a cheap option for parents to treat the kids if the money belt becomes tight.
MM is bullish MCD although stops are tough.
McDonalds (MCD US) Chart
3 Walmart (WMT US) $US112.88
In the US Walmart operates discount stores and supercentres, a common destination points for consumers when times get tough.
The business has been kicking some goals of late and in its fiscal first-quarter report the company again looked solid with same-store sales growing plus it delivered a nice beat on earnings. However it was e-commerce, with its 37% growth, that caught most investors eye. This growth was driven by online grocery as well as home and fashion products. The rollout of free next-day shipping in major cities this year should help Walmart maintain its robust e-commerce growth rate. It sounds like Amazon mark 2.
MM likes WMT while it holds above $US105
Walmart (WMT US) Chart
Of the 3 stocks looked at today for the International Portfolio we like all 3 i.e. Netflix (NFX), Walmart (WMT) and McDonalds (MCD) in that order of preference. A reminder that any alerts relating to US stocks will be included in the PM Report
MM Global ETF Portfolio
MM launched our Global ETF Portfolio last week in what was a very exciting fortnight for the business. We are now holding 3 positions in the portfolio simply put we are long gold, long the $A and short US stocks while still holding 80% in cash: https://www.marketmatters.com.au/new-global-portfolio/
We continue to believe there are a couple of great “plays” evolving in today’s market but I reiterate major macro views don’t change too often, there are 2 new positions we are considering today:
1 Emerging Markets.
We are currently short US stocks but only with a deliberate 5% allocation thus allowing us to either average or take a short position in equities i.e. the Emerging Markets which are already in a downtrend.
MM is bearish Emerging Markets and we’re considering taking a position accordingly. Our preferred vehicle is the ProShares Emerging Markets Short MSCI ETF (EUM US). Details of this ETF are explained on this link : https://www.proshares.com/funds/eum.html
Emerging Market ETF (EEM) Chart
2 US Interest Rates
Markets are being driven by global bond yields hence it makes sense to be considering these as an investment vehicle for the MM Global ETF Portfolio. We feel rates are currently stabilising / bouncing before a probable another look lower hence this can be “played” by buying bonds into a correction. Given this is a relatively short term outlook a leveraged position is required.
The ETF we initially like to play this view is the Direxion Daily 20-year Treasury Bill 3x ETF (TMF US) but we make change in the days ahead as we evaluate further : https://www.direxioninvestments.com/products/direxion-daily-20-year-treasury-bull-3x-etf
MM likes US 10-year Notes ~126.50 (16/32).
US 10-year Notes (September) Chart
Direxion Daily 20+ year Treasury Bill 3x ETF Chart
MM is bullish both the ProShares Emerging Markets Short MSCI ETF (EUM US) today and the Direxion Daily 20-year Treasury Bill 3x ETF (TMF US) about 4% lower.
Overnight Market Matters Wrap
· The broader US equity markets closed with little change overnight as investors remain on the sideline ahead of Fed Reserve, Jerome Powell’s testimony to congress tonight. The tech heavy Nasdaq 100 however, outperformed and rallied 0.53% higher.
· European markets were generally easier, with the German market in particular 0.8% weaker, weighed down by Deutsche bank falling another 4% following last weekend’s restructuring announcement, which will see it cut 18,000 jobs.
· The September SPI Futures is indicating the ASX 200 to open 34 points higher towards the 6700 level this morning.
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 10/07/2019
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 notwithstanding 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.
Subscriptions and Subscription Prices
To access premium content available on the Market Matters website you may initially subscribe through the complientary trial which provides you full access to all services for the trial period. You are limited to two trials after which you must subscribe to one or more membership categories available on the website or direct with Market Matters before you can trial the service again, three months after the expiry of your second trial.
To subscribe to Market Matters services and access to the website you may 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) or contact the team directly at Market Matters by phone or email. 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 following 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.