Breakfast Briefing – Wednesday 24th August

The Dow posted further losses overnight, giving up early gains to close down 154 points (-0.5%), while the S&P 500 and Nasdaq finished flat. Caution ahead of Powell’s speech on Friday creeping into market sentiment. SPI Futures are up 15 points (+0.22%), looking to make back some of the losses from the start of the week. 

Get across all the latest with Henry’s Breakfast Briefing.

• ASX 200 SPI Futures rise 15 points.
• Dow drops 154 points (0.5%)
• Nasdaq unchanged. 
• S&P 500 down 9 (0.2%)
• Base metals mixed. Gold up 0.7%
• Oil rises 3.9% IO up 0.5%
• Results in focus.

Why not sign up for a free trial? Get access to expert insights and research and become a better investor.

Transcript

DISCLAIMER:

Marcus Today offers information that is only general in nature. It does not take into account your personal financial situation, needs or objectives. Nor does it take into account the financial needs of any specific person. You should consider your own personal financial situation and needs or seek financial advice before making any decisions based on this information. For more information please see our Financial Services Guide.

*PLEASE NOTE: Transcripts are autogenerated and may contain errors, especially Stock Codes and Names.

SPEAKERS

Henry Jennings

Henry Jennings  00:00

You are listening to the Marcus Today daily market update. And this is just a small part of the newsletter that helps members make better investment decisions. So for more in depth analysis of what's happening in the market on a daily basis, you can sign up for a free trial at the markets today daily stock market newsletter, no credit card required and to get access to the entire newsletter, and include stock market recommendations, investment strategy, opinion pieces, education articles and investor tools, not only on big companies, but also on small caps and emerging technologies. If you're interested, you can sign up on the link on the description here. Or you can head on over to marcustoday.com.au. And we're really looking forward to having you on board part of the Marcus Today community.

Henry Jennings  00:58

Good morning and welcome to the Marcus Today Breakfast Briefing. My name is Henry Jennings It is Wednesday the 24th of August. And as usual with all the information contained in this briefing, it is general advice only. So please do your own research. Contact your own financial advisor regarding any of the thoughts, ideas or insights in this briefing. And if you need to, of course, you can always pause the slides here and read the disclaimer in full. If you're listening to this on a podcast wherever you are on this wonderful world of ours, you can always head on over to Marcus today.com.au. And read the disclaimer there in full and of course sign up for a free trial there as well if you're not yet a member, and you're listening to this for free. 

Henry Jennings  01:37

All right, well, we had another down night on the Dow but not quite such a exaggerated move for the US markets back once again to a fairly tight range in the Dow only around 300 Odd points, closing down over 154 points or point four 7% 32,910 The NASDAQ unchanged and the s&p 500 in the middle for digital as is its want down point two to two little ducks down nine points 4129. The vix index leaking Higher 1.3% Higher to 24 SPI futures showing a gain of 15. But given that we've fallen over 150 points in the last couple of days. hardly a surprise that we're seeing a bit of a gain there overnight. So we'll wait and see whether that continues to push through today. But looking at commodities, in terms of Brent crude a bit of a blip up in the oil price after Saudi Arabia said that they may be easing back on production. I think they get the feeling that the $100 oil is where they want it to be $90 oil so up $3.74 or 3.88% $200.22 WTI 9374 Up $3.51 3.89% us gold had a good night last night at point seven 3% $12 at 1761 20 iron ore at 55 cents. 

Henry Jennings  03:09

Had a better day in Asian trade yesterday as well at point five 3% 104 92 and the Aussie dollar 6925 In other commodities. Last night we saw copper up point eight nickel having a nasty night down 2.73 But that can be quite volatile Aluminium at 1.1 zinc down point four led down point 610 down point 3% But that didn't stop the miners which were looking pretty good last night in international trade bhp ADRs were up 2.6% Rio up 3.7% Looking at trust the some of the other ones we had Freeport up 6.5 Our car up 5.6% Good results from them tech up 4.7% Anglo up 3.2 Glencore up 2.8 Valet having a screamer up 7.8% And Arba mile kicking on with lithium at 1.93% there so that bodes well for our commodity sector today. We have seen that commodity sector holding up very very well compared to the banks and we did see us 10 years Push through 3% 3.057 last night so some nerves there in terms of the US market there you can see it was a bit of a Higgledy Piggledy kind of day, a thin trading day as well. Not huge amounts of volume and a pretty narrow range. We have had the video coming out, the results are coming out after hours. So that could be interesting for the tech sector. But generally once again, it was worries about what Federal Reserve chief Jerome Powell is going to say on Friday, Jackson Hole whether we're going to see a reset there of that pivot. And of course us results trickling through at the moment but nothing in great shakes but it is continuing to be a nervous us at the moment those bond yields through 3% not really helping matters in some of the stocks Apple down point two metre down 1.2 Google down point three Microsoft down point five Amazon up point three Tesla up 2.3 And the banks across the board JP Morgan down 1% Citigroup down point six Goldman's down point six Bank of America down point nine block the artist formerly known as square down 2.8% and Twitter down at 7.3% there so no love for Twitter at the moment. Bitcoin did study a little bit last night as well back up to 21,471. As far as major stories go, Europe has curtailed nearly 40% of fertilised production capacity on higher energy costs. And we did get those rumbles out of OPEC plus with the Saudis talking about making production cuts, and OPEC plus may make more production cuts cuts should Iranian oil return to the market. And the House GOP which is the Great Old Party or the Republican Party lawmaker has demanded that Congress will be given the chance to review its Iranian nuclear deal agreement. US natural gas prices top $10 per million Btus. That's British Thermal Units. Highest since the commodity price boom of 2008. And day ahead, power prices hit Europe. record highs in Europe weak

Henry Jennings  06:34

wind power forecasts Europe is struggling with climate change issues at the moment drought, weak wind as well affecting renewables drought affecting hydro, some rivers have dried up completely. Some Italian lakes have dried up completely. It is a one in 500 year drought events. And of course, that increases the prospect for wildfires as well, which can also have a very detrimental effect on energy taking down powerlines and that sort of thing. So it could be a nasty winter for Europe, Biden is set to announce a $10,000 student loan forgiveness plan on Wednesday. Nothing like stimulating the economy. Madonna plans to file data to US regulators to arm booster shots targeting latest OMA Chrono variants, and the Coinbase CEO of his company looking at further cost cuts after cutting headcount by nearly 18% in June, and allegations by former Twitter security chief could help Elon Musk avoid buying Twitter. Probably the worst case of due diligence anyone's ever seen Thought Bubble. Let's buy a company let's buy Twitter and then serious buyer's remorse in that one, Intel and Brookfield infrastructure partners partner to fund a $30 billion semi fabrication plant in Arizona semi fabs, of course is semiconductors chips. So part of the Biden build back better infrastructure reduction, inflation that plan is building more critical and strategic infrastructure in the US.

Henry Jennings  08:04

What to expect today? Well, our market was showing up 50 And we did have some pretty lousy couple of days to kick off the week results of course will be in focus but we're down 150 points in two days. So you would expect to see a little bit of a bounce today. Commodity stocks have been holding the line and have been doing relatively well especially bhp which has been holding up very well of course remember they are ex dividend next week $2.47 first of September. So that is possibly one reason why bhp have held up remarkably well as people still very attracted to that big dividend of course it is a big yield fully franked as well so that is helping the market but certainly some of the resource stocks overseas last night and BHP and ADRs point to a pretty robust resource sector still, although we have seen weakness in banks and industrials. But it will be about results again today and broker reaction certainly seeing some downgrades coming through for some of the companies that reported yesterday. Not seeing too many upgrades to be quite honest. Reporting today we've got the likes of air Tasker, APA pipelines, Kohl's domino Domino's, which has come out already. E L O the Electric Light Orchestra Jeff Lin. They're reporting today they are also out already. We've got a Luca out already Tabcorp out already. 

Henry Jennings  09:26

And Wally wines tech at Universal stores. Pulling over the market says zip I say no I think that zip is out tomorrow. But we'll see. In other news we've got the RBA Jonathan Kearns speaking today and private sector business activity in the US contracted for a second straight month in August over in Europe which is struggling with these massively increased power prices. And last night I saw on CNBC there is one house I think it's city that is predicting UK inflation to go to 18% next Year bear in mind, interest rates in the UK are 1.75%. That's the official Bank of England rate 18% There is another broking house investment, investment bank or economic adviser saying that maybe we would see 7% interest rates in the UK to counter that inflation, which would absolutely decimate the housing market. So, oncoming or incoming pm Liz truss has got her work cut out, because tax cuts will probably be the answer there. So stocks 50 up point two footsie down point six DAX down point three and CAC down point three so not too much pessimism in the Europe despite the high energy prices, but certainly it's not looking too good. 10 year yields in the US 3.0 for Australia has been creeping out now. 3.57% Germany 1.31% Interestingly, Italy is nearing 5% 4.86% for their 10 year yields. That's one of the reasons why the ECB has been slow to react. Remember, inflation in the European Union is approaching 10% across the 27 nations, but the ECB has been very aggressive and has moved interest rates to zero to counter that. And part of the reason for that is that the weaker southern Mediterranean states like Italy, with 4.86% 10 year yields is showing the divergence between the strength of Germany and France and the weakness of places like Italy. In results today,el Oh Jeff Lynne's mob has annualised recurring revenue of 108 point 2 million for the 2022 financial year which is up 29% Domino's will buy the local Domino's equivalents in Malaysia, Singapore and Cambodia for $214 million, could see Domino's expanding with their stuffed crust option in Asia. And the results out today look a little bit underwhelming the stock has been on the nose and TLC sees a 4% 4.3% loss of revenues to 2.4 billion TLC is the lottery Corp. and Luca has doubled their dividend and the impact of 360 9,000,007 Group out as well very early 14.4% increase in empat to 570 7.3. And the i f m infomedia. Takeover seems to be down to the end game. I think $1.75 is the current bid they're trading at 150 Odd due diligence expected a wrap up soon, and rumours are that Woolworths is set to exit its endeavour group holding completely woollies holds around 14%, still of Endeavour endeavour had a bit of a shocking day yesterday down 12.3%. Maybe part of the reason for that was the Woolworths stake was being shopped around or at least talked about. We'll wait and see how that one pans out. 

Henry Jennings  13:04

As far as Question of the day goes today, what factor gives you the most cause for optimism on the ASX? At the moment, if you're looking at the bull case for the market, what factors giving you the most cause for that case, at the moment in Henry's take today just running through some of the bear case scenarios some of the bear factors at play at the moment and the list was getting quite long bit scary. So I've maybe curtailed that list a little bit not putting in all the bear factors. But so what is giving you the most cause for optimism on the ASX 200 reporting season has been okay generally. But we are starting to see us a few let me say a few downgrades coming through in the market this morning for some of the companies that have reported in the last few days. So that is starting to appear. They're going from things like underperform, or rather outperform to neutral those sorts of moves. Nothing massively aggressive. But just I guess, getting a little bit cautious with some of those recommendations. So what factors give you the most cause for optimism on the ASX 200? I'd love to hear your thoughts and ideas on that. 

Henry Jennings  14:09

All right. Well, thanks very much for listening, you can head on over the Facebook discussion group. It's a great group 3800 members on the group mostly, we don't get too much spam, although a few have been creeping in, unfortunately, in the last couple of days, so I've done my best to block and get rid of those block those members for ever. So hopefully trying to keep that a useful forum for members to exchange ideas and for us to interact with members. Now if you're listening to this on a podcast, you can head on over to the market strategy podcast of course, which is our fly on the wall morning meeting. Now this is behind a paywall, and I have put in Henry's tape today, the instructions, the simplified instructions for you to sign up and to keep abreast of that podcast. We have put it behind a paywall. We didn't want to give away all the goodies for free to nonmembers so members only get exclusive access to that Marcus strategy podcast. And Marcus is back on deck today. So it should be an interesting podcast today. So I'd urge you to follow the instructions and make sure that you bookmark that podcast if you're listening on a podcast you want to hear more on the couch podcast that is free, as is the end of day as is the breakfast briefing. And recently I sat down with Dr. Leslie Cheung from immune gene I m you and chatted all things oncology, all things Italian and all things art history as well. So really interesting and wide ranging chat with Lesley who's a delightful lady. So that's it for me today. Thanks very much for listening. And may the trading Gods be with you.