Australian Shares

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In the carbon crosshairs

Amidst the heat and confusion about the carbon price, it does seem increasingly likely that some sort of tax will be applied. What does it mean for stocks? “Don’t know yet,” is the commonest answer, and not unreasonably so. But it is likely to hit the big emitters. The steel companies, BlueScope Steel and OneSteel

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Oiling the portfolio

Having read with fear, bordering on terror, the percipient Houses and Holes’ blog Sell Signal, I am struck by how different broking analysis is from H&H’s dire world of lightning strikes and imminent turmoil. Grains, H&H informs us, may be decoupling. Metals are getting “smashed”. Wheat may be a give away. But none of that

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Weekly Market Analysis: a close below 4800

Weekly Summary Apologies for not posting my regular end-week summary, but this blogger is feeling the combined effects of moving house and re-valuing the avalanche of HY earnings reports. What follows is my analysis from last week but with notes on today’s correction and what it may mean looking ahead for the rest of this

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Buy time, apparently

What is the reporting season saying about the stock market? Little surprise that brokers think that equities are cheap. Might be time to ring, well, a broker. The overall picture is certainly reasonably healthy, although that of course is historical and doesn’t say much about future price movements. According to Goldman Sachs sales were up

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Hundreds of thousands factory

Investors in Macquarie Group might wish to avoid an article in The Economist, entitled “Can investment banks make high enough returns on equity to exist?” They may also consider it appropriate not to look to closely to Macquarie’s fundamentals. The gist of the argument is that investment banks will be “clobbered”  by the new Basel 3 rules. For most types

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The US stock market’s declining importance

There has been an interesting debate going on amongst some of my fellow bloggers in recent days about the meagre future return potential of stocks in developed markets. The return prospects for the US look particularly cloudy. And this is important, because as Sell on News noted today, the US still dominates the global markets

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Are stocks long in the tooth?

The effect of demographics on investment patterns is pretty straightforward – people get more conservative as they get older and they don’t care much when they are young. An article in The Economist, aptly titled “Betting on Ben”, cites research by Barclays Capital about the relationship between population variables and equity markets. The key causal

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Oil profits

The oil price looks headed north, maybe a long way north, which will probably focus investor attention on potential domestic equity market plays in the energy sector. But wading through the broker reports, it is a pretty mixed picture. Morningstar Equities describes Woodside as “Australia’s premier oil and gas play” and has a buy on

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Weekly Market Analysis: blinkers or whips?

Weekly Summary The ASX200 finished the week at 4836 points, down 100 points or 2%. Total move for the month (still have Monday to go) is 1.74%. As I thought would happen in last weekend’s analysis, a small correction occurred, ostensibly because of the Libyan crisis and the Christchurch earthquake, but most likely because of

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Like WOW – like wipeout?

The duopolist retailer Woolworths (WOW) has announced its HY11 results before the market opened this morning. In addition, it announced the acquisition of The Cellarmasters Group for $340M (subject to non-regulatory intervention). Highlights include: Revenue up 4.2% Interim dividend up 7.5% Net Profit after-tax up 6% All good figures, reflecting a strong result in difficult

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New bull market Part II

Following on from this blogger’s previous post, a similar position has been put forward by a fellow blogger/moderator, SuitablyIronicMoniker, but from a US market perspective and the interaction of the ongoing QE2 program enacted by the Federal Reserve. Things are good at the moment. Unemployment is low, commodity prices are high, the stock market is

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Seven’s bad reception

What do you avoid in an industry sector that has a doubtful future? Debt might be one obvious answer. But no-one has told Australia’s television networks. The merger between West Australian News and the Seven Group will only create synergies of $15 million. The merged entity will sit on a net debt to EBITDA of

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New bull market for stocks?

This blogger is a regular trader of the Australian stock market, and one of his studies has been – why do stock markets start a new bull market? There are many technical reasons/readings one can make, but the key prerequisite for a new bull market in stocks is economic growth. So this blogger uses macro-economic

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Dutch Disease hits earnings

What will Australia’s industry base look like after the mining boom has become dominant (assuming it will)? The effect on the currency is clear enough, with it trading at parity. The latest reporting season for listed stocks gives us another clue. It is very much a case of rich man, poor man. According to Deutsche

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Fortescue arrives

Friday was an interesting day for Andrew Forrest, chief executive of Fortescue Metals Group, one of the few people in the last two decades to successfully carve out a position against an Australian cartel. In the morning the company announced its first dividend, which was deemed by no less an authority than Bank of America-Merrill

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Weekly Market Analysis: 5000 and beyond?

The ASX200 finished the week at 4936 points, up 56 points or 1.15%. Total move so far this month has been a stunning 3.85%. The 200 is approaching its mid-April 2010 high (pre “Flash Crash”) after almost a year of trading sideways before The Bernank decided it was time again for commodity traders to buy

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The flying wombat

When it comes to investing in shares, Australians love paying high prices for former government-owned monoliths.  And the love affair continues as Qantas (QAN) released its half years results with a headline $417 million underlying profit, before tax. The economic commentariat gave mixed reviews, with Royal Bank of Scotland saying the result was reasonable whilst

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Big bull

The equity bulls are loudly spruiking their bull and the big cap stocks might be a beneficiary. A report by Southern Cross Equities (see below) puts the case. It notes that most equity strategists are recommending only “neutral” sector weightings in the two major sectors in Australia, materials and financials. But Southern Cross’ “multi-factor quant

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Gearing down

My fellow blogger, Houses and Holes, has magisterially, even regally, detailed how private debt has come to matter in Canberra circles since the global financial crisis. It seems Australia’s largest companies agree. The game of pass the parcel – private business gets the profits and ideological smugness; governments get the losses, debt problems and blame

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Capital question

What are companies going to do with their abundant capital? The answer to that question will determine much about the medium term future of global stock markets. Much has been made of the two speed global economy, with the developed world struggling and the developing world growing fast. But there is another two speed system,

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Madonna grows a third

With the US stock market on one of the greatest tears that this blogger can recall and the NASDAQ just 50 points shy of its post-bust high, it’s time we took a step back and looked at the bigger picture. Above is the most amazing chart in modern finance: 25 years of the S&P500 graphed

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Telstra versus Rio

Two exalted members of Australia’s cartels are in town and telling very different stories. Telstra lobbed a 36% profit fall, albeit accompanied by bullish forecasts about the company’s glorious transformation. Rio Tinto reported a massive US$14 billion full year profit and a 20 per cent jump in its dividend. It is hard to imagine two

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Macquarie’s new normal

What exactly was normal about a global debauch with inflated asset prices, the proliferation of eye watering levels of debt, the invention of multiple layers of new forms of securitisation and derivatives that imperilled the entire monetary system, circular risk management practices and a Wall Street and City of London-driven kleptocracy whose greed ultimately led

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Australia underpriced?

OK, Australian mining’s booming. But the stock market is not reflecting it. A report by Deutsche Bank ranks equity market returns in local currency since the beginning of last year. Australia comes second last, with only Brazil doing worse. Both countries are beneficiaries of the commodities boom and China’s rise, which tells you something about

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Qantas’ wake turbulence

The news that Qantas is looking at an alliance with a large Asian carrier may be too little too late. Will Qantas have much of a brand to bring to the table? Its heavy focus on the domestic market has not done its brand any favours, indeed it has done damage.  In order to have a

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Dutch Disease hits profit season

Analysts’ forecasts for the reporting season are showing just how biased the Australian economy is becoming towards the mining sector. UBS is estimating earnings per share growth for this financial year to be 14.4 per cent. Resources are predicted to be up 43 per cent, the rest of the market up only 4.5 per cent.

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Digging for dividends

Here’s the latest idea in the market. Dividend payments from mining companies (yes, some mining companies pay dividends). The long term commodity boom, which is dominated by a global oligopoly, may be triggering a change in the way mining companies are evaluated, away from capital gains and towards dividend. Analysts are trying to ride the sentiment; probably as a

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Buying the dips

Today’s report by UBS on global equity market performance in last December highlights the value of buying after bad news. The best performing market was … Greece. Presumably after the announcements that Japan and China would pitch into help the Eurozone debt auctions. Those who bought during the Greece crisis will have done well. Of course China will help the Euro; it is positioning to take

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Go Wes young man

Will the uprising in Egypt be an influence on the Woolworths share price? The interconnection of the global economy can be exaggerated, of course. The news that Coles is rapidly catching up will be exciting more investment attention in the short term. Coles’ food and liquor sales grew by 6.3%in the latest half compared with 3.5%

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Up or Downer

OK, the stock’s a dog. But might it be a counter cyclical punt? The announcement by Downer EDI that it would make a further $250 million provision for its Waratah project saw the shares fall by about a fifth. “Problems are compounding with no end in sight” Morningstar warns. “Here we go again” Macquarie Equities