Asia got off to a disappointing start after comments from Carl Icahn saw US markets lose ground into the close. Icahn feels many companies’ earnings, are a mirage and earnings may be fuelled more by low interest rates than strong management. The Dow and S&P both managed to print record highs before retreating into the
From the AFR: Since October last year the S&P/ASX 200 Index has gained 20.1 per cent, the United States S&P500 chalked up a 24.2 per cent return and the Euro Stoxx 50 is up 22.4 per cent. According to the latest Mercer Investment Surveys, the median long-only Aussie shares manager returned 28.8 per cent in the year to October, an impressive achievement
Markets in Asia have come to life as with the business end of the week delivering some volatility. While US trade was relatively subdued heading into Janet Yellen’s testimony, Asia got a kicker from her introductory remarks. Yellen highlighted that the Fed still has plenty of work to do on the economy, with unemployment still
AFR Smart Investor has an interesting deconstruction of Communications Minister Malcolm Turnbull and his wife Lucy’s investment porfolio today: Late last year, it was reported the Minister for Communications invested directly into the equities and bonds of three telecommunications companies: French Telecom, Spain’s Telefonica and America’s Sprint. More than two months after winning the election,
Today’s hot equities topic is why is Fortecue trading at such a discount to its peers? Credit Suisse had the note that fired everyone up: How does consensus arrive at an FMG target price of A$5.65, being a lowly FY14 P/E multiple of 5.6x? Our own target price of A$7.50 and DCF SOTP of A$9.40
The three interesting thoughts of the day for me are the ever falling inflation picture that appears to be stemming predominantly from Europe and the UK, as well as the tapering debate and Chinese economy. Dennis Lockhart’s comments in focus Of the three 2014 Fed voters who spoke yesterday (Richard Fisher, Narayana Kocherlakota and Dennis
Credit Suisse advises you give up reading MB and get yourself a stock advisor instead: After a number of years of macro-driven stock markets, micro now matters more. Traditional top-down signals, while still important, are having less influence on stock prices and the investment process. This is also the case in Australia where classic bottom-up
It seems we are back to where we were in September, when the US ten-year treasury was centre of the capital markets. Having been closed yesterday for Veterans Day, the ten-year bond has resumed its seven day sell-off, pushing to 2.77%, although it should get more attention in European and US trade. Emerging market currencies
It’s been a while since I visited one of my key asset allocation themes of the past two years, that is Australian stocks exposed to a falling dollar. This has been due to the pause in the currency’s fall and the obvious rise of cyclical plays as the RBA fires up housing bubble enthusiasts. But
Fromm FTAlphaville overnight comes technical analysis of the S&P valuation stretch from GaveKal: On Thursday the [S&P 500] index hit an intraday high, followed by sharp selling pressure, perhaps as strong data gave way to renewed “taper” fears. Yet by Friday investors were back in there “buying the dip.” Although Thursday’s intra-high was not retaken, the
Asia is mixed, with regional markets not quite showing the level of strength we saw in Friday’s US trade. Japan’s Nikkei is leading the region as the strong move in USD/JPY continues to underpin confidence. Not even lacklustre current account data was enough to deter equities in Japan today. USD/JPY is still holding at 99
More evidence of the rising central bank inspired global asset bubble today with the Twitter IPO launching for the moon and Bitcoin making its previous peaks look like adolescent pimples. On Twitter, the IPO went nuts. From Bloomie: The shares rose as high as $50.09 and were trading at $45.49 at 12 p.m. in New
Asia is seeing mixed price action, with a relatively cautious tone prevailing as we head towards the business end of the week. US dollar moves remain the dominant theme as traders try to gauge how the tapering situation will play out. Moves in the FX space have also been fairly muted, despite a couple of
As CBA hits another record high today, two of Australia’s best bank analysts are warning about the sustainability of earning’s growth. From the AFR: Without lower provisions for bad debts, earnings at the big four banks declined 0.2 per cent a share in the second half of 2012-13, according to calculations by investment bank UBS. The
From BBY on the CBA earnings update: NPAT of $2.1bn implies higher rate of profitability than BBY FY14 forecast of $8.1bn. Expected rate of increase in BDD charges not coming through – $228m for 1Q was flat on good 2H FY13 performance. BDD charge is tracking at $900m vs BBY FY14 estimate of $1.2bn –
US markets provided Asia with very little to work with and while China and Japan were oblivious to the proceedings in Australia, trade in Australia has been positive, albeit on exceptionally light volume indeed. Of course that is absolutely no surprise whatsoever, given the Melbourne Cup Carnival getting the lion’s share of attention, although there will besome buying of banks ahead of dividend
Markets have opened on a modestly positive footing, with US futures opening an hour later for Asia-based traders and heading a touch higher. The weekend was relatively light on news, with most of it focusing on either China’s 18th Central Committee of the Communist Party of China, or European woes and the range of actions
From Credit Suisse: WBC reported cash earnings of $7,097mn (up 8% on $6,598mn FY12) which was 1% better than both our $7,058mn estimate and the $7,050mn consensus average. Final DPS of $0.88 (up 4% on the $0.84 pcp) plus final special DPS of $0.10 was in line with Credit Suisse and the consensus. Divisionally, 2H13
There are three main macro thematics which I feel deserve growing attention. Whether any of them can effectively derail the equity rally anytime soon is yet to be seen, but I feel the seed has been planted and certainly requires close monitoring. European money markets in focus Firstly what seems to be shaping up in
I’ve been talking about a divergence between economic growth and asset prices being bridged by central bank liquidity and here it is, courtesy of FTAlphaville: US stock market cap to GDP (Exhibit 2), one of Warren Buffett’s favoured valuation metrics, is currently 1.12x, clearly high by the standards of the last 60 years. The measure
Asian markets are mostly weaker as the investment community digests the comments from the FOMC meeting and what they imply for the Fed’s asset purchase programme going forward. S&P futures are down around 0.4% from the US close, and this in turn is weighing on regional markets. The Fed came in less dovish than what
FTAlphaville has a timely post today on stock market sentiment: Where are all the bears? Even some of the usual suspects have stopped growling, with David Rosenberg of Gluskin Sheff going so far as to dispute the idea that he’s a permabear….Just how few is itself a cause for worry: It is just about the equal lowest
Earnings take a step back over the next twenty-four hours, although Barclays in Europe will be interesting for FTSE traders, despite only carrying a 2.4% weight on the market. It’s now all about Fed policy and while the accompanying statement will contain limited information, it’s the event the market needs to put them closer to
US futures have not slipped too much, despite a poor tape in Japan, Australia and some USD strength. The Apple result will be in focus during the cash session and although the stock fell initially in post-market trade, it subsequently recovered and is giving no clear directional bias for today’s trade. The tech giant has
Here’s Mac Bank’s take on the ANZ result: Event ANZ’s FY13 result came in slightly stronger than expectations at $6.49bn vs. MRE $6.45bn (Consensus $6.4bn). The dividend surprised on the upside at 91cps (vs us at 82cps and consensus at 86cps). That’s however where the good news stops. Margin decline was large at 6bp HOH and Non NII markets income
FTAlphaville has a post today that stock market bulls should pay attention to. From JPMorgan: Year-to-date buying of $171bn of bond funds is relatively healthy by historical standards, helped by what we previously called the “saving motive” of bond fund demand, i.e. zero or close to zero policy rates are inducing retail investors to replace
The key talking points on the floors today has been the strong rise and subsequent new five-year high in the Australian share market (the ASX 200 closed at 5441 +1.0%). Although we’ve seen a rise in the Nikkei, which has provided support, the reason behind the gains in the ASX has been premised on more
It’s stocks to the moon today as the Australian bubble rejoices at free money everywhere. Gap open: And another five year high: The housing quango cash pumps are set to report this week and…well…it’s all free. Everything is FREEEEEEEE!
Another day of average data across the EMU and US has created another perfect scenario for European and US stocks to shine. The debate on US monetary policy seems to be shifting by the day, from around when will the Fed start to taper, with expectations pushed back from December to March and even calls
The S&P weekly chart:
