06 December 19
A big weak wraps up with a positive move
06 December 19
A big weak wraps up with a positive move
06 December 19
Are the Resources on track for MM? (WBC, FMG, OZL, WSA, AWC, S32)
05 December 19
Markets rebound as RBNZ releases revised capital requirements (WHC, MFG)
05 December 19
Panic equals opportunity 9 times out of 10 – what to buy? (SVW, WSA, CWY, IVC, ASB)
04 December 19
ASX200 now down 4.4% from recent highs (APT, NCK, RIO, OML)
04 December 19
Income Report: Reviewing IVE Group after they make a timely acquisition (IGL, NBI)
04 December 19
Overseas Wednesday – International Equities & ETF Portfolios (GDX US, TTD US, OZL, IEM US, 700 HK, TBF US)
03 December 19
Stocks hit as Trump targets Sth America – RBA holds rates (NCM, CTX)
03 December 19
The Santa Claus Rally “Truth or myth?” (CPU, RWC, SVW)
02 December 19
Stocks up but close well below session highs – Sydney house prices on a tear (WBC, NWH)
The ASX200 enjoyed a very strong Tuesday leaving us up 124-points / 1.9% for November with only 3 trading days remaining, not a bad performance considering over the last 10-years the average performance for the penultimate month of the year, when 3 of the “Big 4 Banks” trade ex-dividend is -0.6%. I feel it’s been a particularly strong performance considering the hugely influential banking sector has been heavily under the cosh because of poor results, capital raisings and of course now AUSTRAC.
The main piece of news catching my eye over the last 24-hours was the RBA governor Phillip Lowe saying Australia’s central bank would not resort to Quantitative Easing (QE) until Official Rates hit 0.25%, not as far away as many might think considering the RBA are expected to drop rates from 0.75% to 0.5% in Q1 of 2020. They also suggested if they did implement QE it would be through buying government bonds, as opposed to corporates. In our opinion the RBA has simply volleyed the ball back over the net to the Liberal government whom I’m sure are pondering fiscal stimulus in2020 – our anticipated path moving forward.
Yesterday’s +0.8% rally was again broad based with less than 30% of the index closing down on the day, we continue to believe fund managers are caught underweight equities hence the market and any reasonable weakness is attracting buyers – my “GUT Feel” still says as test of the psychological 7000 area is a strong possibility into Christmas i.e. now only ~3% away.
MM remains neutral the ASX200 with a slight bullish bias.
Overnight US stocks edged higher closing at an all-time high for a second consecutive day, although positive comments from Mr Trump that a trade deal was very close failed to ignite the buyers in any meaningful way. Gold stocks enjoyed some buying thanks to a bounce ion the Gold price while Copper hit a 2-week high.
Today we’ve taken a quick look at US food outlet stocks as we look to position our Overseas Equities and Global Macro ETF Portfolio’s into 2020 – overnight we allocated 6% into Alibaba (BABA US) and 5% into Wells Fargo (WFC) in our International portfolio following the alert in our Afternoon Report yesterday. A reminder that all international alerts will appear in the afternoon notes and there will be a notation in the subject links of the report.
Local Bond yields ignore Phillip Lowe
Surprisingly local bonds markets and the $A took comments by Phillip Lowe from the RBA in their stride with neither really moving following his speech overnight. The topic was unconventional policies and he talked about quantitative easing in Australia, concluding that it would only take place if interest rates had been cut to the lowest, they can be.
MM still expects Australian bond yields to make fresh all-time lows implying the RBA will in fact cut again.
Australian 3-year Bond Yields Chart
3 local stocks catching MM’s eye
Before moving onto our international flavour today I have quickly touched on 3 local stocks who have been catching my attention.
1 IPH Ltd (IPH) $8.76
Intellectual Property (IP) business IPH reported strongly last week and the market has certainly supported the Sydney based business over the last few days – I wonder if investors envisage the company has room for expansion with China increasing pressure on IT theft as they move down a conciliatory path on trade with the US.
MM is bullish IPH looking for ~15% upside.
IPH Ltd (IPH) Chart
2 Wisetech Global Ltd (WTC) $26.60
WTC fell 3% yesterday while the market and IT sector rallied, never a good sign – we remain short-term bearish targeting the low $20 region.
Technically MM is interested in WTC around $22.
Wisetech Global Ltd (WTC) Chart
3 Avita Health (AVH) 61c
In our last Weekend Report the “Trade of the Week” was buying Avita Medical, an Australian $1.3bn company. After yesterday’s +6% rally we have become even keener on this view!
MM is bullish AVH with stops below 56c i.e. 10% risk targeting 25% upside.
Avita Health (AVH) Chart
Reviewing some US Food Distribution Businesses
The restaurant game is a tough gig with over half of new ventures failing in the first year while 70% of the survivors subsequently closed in the next 3-5 years. The world loves American restaurant chains illustrating if you get it right food can be profitable. Getting it right is a broad term however with food being only one component of it. Technology is now a key cog in the wheel while logistics, marketing and distribution channels are all key in determining margins and earnings.
Importantly this is a growth industry with Americans spending more $$ dining out than on groceries in 2019 for the first time ever! The largest 10 businesses in the world are all American and although there’s clearly scale in China their culture is more around quality making the landscape different for new local chain operators but undoubtedly, they will come as Chinese do love some Western influence.
Today we have simply looked at the largest 5 operators in order of market cap.
1 MacDonald’s Corp (MCD US) $US193.72
The most famous of all fast food outlets is Chicago giant McDonalds which is now an incredible $US146bn global phenomenon based around selling burgers. There are now over 38,000 “Golden Arches” on our planet and rising, not bad for a business founded back in 1948 by 2 brothers – with the exception of the tricky Subway franchise this is a business that has rarely put a foot wrong.
Although competition is always increasing their first step advantage and prime locations has the company well positioned moving forward.
MM likes MCD after its 15% correction.
MacDonald’s Corp (MCD US) Chart
2 Starbucks Corp (SBUX US) $US84.62
Seattle based coffee business SBUX has built itself into an almost $US100bn goliath, this is one of Hamish Douglass’ (Magellan) largest holdings and as we discussed on Friday its tricky one for me because I don’t like their product! I’m not the only one here, the Italians won’t touch the stuff with only one shop in the whole country but there are still 30,000 stores elsewhere on our planet so I’m sure management isn’t too fussed about the fussy Italians and my good self of course!
Technically the stock looks ok after a recent +15% correction and after its latest solid quarter, which showed 7% growth in the US and 6% in China, value appears to have been restored to the coffee business. Technically we could buy here with stops under $US75 for the true believer.
MM remains neutral / bullish SBUX.
Starbucks Corp (SBUX US) Chart
3 Yum! Brands Inc (YUM US) $US99.32
Yum! Is actually the largest fast-food operator in the world in terms of outlets, they operate an amazing 48,000 locations for household names KFC, Pizza Hut and Taco Bell – that’s a logistical job and a half! This is clearly a multi-restaurant business firing on all cylinders, and it continues to expand, including success in China through Yum China.
After its almost 20% correction we believe value has returned to the stock.
MM likes YUM around $US99.
Yum! Brands Inc (YUM US) Chart
4 Chipotle Mexican Grill (CMG US) $US815.39
CMG is termed the largest “fast-casual dining stock” with 2523 stores earlier this year and expanding rapidly with ~140 stores to open this year alone. This relatively small Mexican chain already has a market cap of over $US22bn as its surged post the GFC.
Technically we believe fresh all-time highs are almost inevitable, but the risk / reward is not compelling at this point in time.
MM is neutral / positive CMG.
Chipotle Mexican Grill (CMG US) Chart
5 Restaurant Brands International (QSR US) $US65.02
Lastly QSR which is best known for its Burger King franchise. The company has over 26,000 stores with around 70% being the Burger King brand. The business is still struggling to match Maccas with their average store turning over only around half of a Macca’s outlet.
MM is neutral / negative QSR.
Restaurant Brands International (QSR US) Chart
Of the 5 largest restaurant chains in the world looked at today MM likes MacDonald’s and Yum! Brands at today’s prices.
We will look at the next 5 lesser known in the Top 10 by size in the sector sometime in the next week.
No changes to our Global Macro ETF Portfolio during the week
Overnight Market Matters Wrap
· US equities continued its strong week ending its session at all-time highs for the second time this week, as trade talks with China continue in a positive tone.
· Crude oil rose on the back of this, currently sitting at US$58/37/bbl. along with aluminium and dr. copper on the upside.
· On the domestic front, the RBA governor Philip Lowe said in a speech to a group of Australian business economists that he would only consider implementing quantitative easing (QE) if the official cash rate dropped to 0.25% (currently 0.75%), but he didn’t expect that point to be reached in the near future.
· BHP is expected to outperform the broader market after ending its US session up an equivalent of 0.23% from Australia’s previous close.
· The December SPI Futures is indicating the ASX 200 to open with little change, around the 6785 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. All prices stated are based on the last close price at the time of writing unless otherwise noted. Market Matters does not make any representation of warranty as to the accuracy of the figures or prices and disclaims any liability resulting from any inaccuracy.
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 Market Matters 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, 25th October 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.
Where we refer you to a third party financial services provider, we may receive a referral payment. This referral payment may be a percentage of the fee’s charged by the financial services provider between 0% and 25%, or a fixed amount. These referral payments are made by the financial services provider to Market Matters and are not an additional cost to you.
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 complimentary 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 Chifley 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.