Breakfast Briefing – Mon 17 Jan

US markets finished weaker on Friday night and SPI Futures were down 28 points at the Saturday morning close. Get up to speed with Henry's Breakfast Briefing. 

ASX 200 SPI Futures up 28.
Dow falls 202 (0.6%) Nasdaq up (0.6%).
US Reporting season continues.
Oil sprints 2.9% ahead. Gold flat.
Base metals mixed. Iron ore down.
 

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Transcript

*PLEASE NOTE: Transcripts are autogenerated and may contain errors.

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: https://marcustoday.com.au/dl/FSG


SUMMARY KEYWORDS

POINT, S&P, TODAY, MARCUS, RATES, BRIEFING, COPPER, PODCAST, RATE HIKE, INFLATION, EXPECTED, RBA, YIELDS, RESULTS, GROWTH, MARCH, MARKET, IRON ORE PRICE, PERCENT, BANK

SPEAKERS

Henry Jennings

Henry Jennings  00:11

Good morning and welcome to the Marcus Today Breakfast Briefing. My name is Henry Jennings It is Monday the 17th of January. 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, you can always pause the PowerPoint slide here and read our disclaimer in full. 

Henry Jennings  00:36

Alright, well, a little bit of a mixed session I guess you could say in the US on Friday night first night of results season kicking off and a little bit underwhelming, at least on the Dow front of things down 202 points or 0.56% 35,912 But we did see a bit of a rally in NASDAQ up 0.59 of a percent 87 points to 14,894. Netflix doing well ahead of their results this week. 

Henry Jennings  01:05

S&P 500 in the middle for diddle as usual, pretty much unchanged 0.08%. up four points. 4663. As a result of all this, as by futures come Saturday morning were up 28 points or 0.38 of a percent 7330. We had the VIX index down 1.5 0.5% easier 19 points and just adding to the inflationary story. Of course Joe Biden was very keen to get the oil price down unfortunately that hasn't worked out too well for him Brent crude now at $6.06 Up $1.59 or 1.88% on Fridays trade WTI up $1.70 or 2.07% 8382 we have the gold price slightly easier. Point 270 8% $4.90 down we have the iron ore price down $1 2126 75.94. And in other metals we had copper down nearly 2% on Friday nickel up 0.3 aluminium up 0.6 zinc down 1% lead up 0.02 and turn down 1% as a result of all this in terms of mining stocks overseas Freeport McMoRan down 0.6 Alcoa still doing very well at 1.45% tech 1.7% down Anglo American down 1.5 Glencore, down 0.7 Vallejo up 0.5 Albemarle down at 0.7 of a percent BHP and RIO both down a smidge. BHP down 0.2 and RIO down 0.34% Ozzie dollar 72 on the NACA at the moment.

Henry Jennings  02:57

Here you can see the S&P 500 Bit of a swoon at one stage. Same with the Dow but it did fight back the doubt well and surely off its lows was down 472 At one stage as best was down 117 points on Friday. So a good fight back heading into the weekend. And of course this week, we're getting more and more us results. Major stories from overseas Federal Reserve's Brainard signals openness to a march rate hike. Darlie says March Liftoff is quite reasonable. The Bank of Korea raises rates by 25 basis points to 1.25. Another rate hike in q1 possible and Bank of Japan officials debating how soon they can start telegraphing an eventual rate hike maybe 2035 could come in before inflation hits 2% target. Let's face it. Japan hasn't had inflation for the last 30 years. Wine back of pandemic era stimulus leaves negative yielding debt totaling tumbling to 10 points 10 trillion US dollars as bond prices drop. We have seen a big rise in bond rates the US 10 year bonds are up 34 basis points in the last month. 

Henry Jennings  04:13

China posts a record December trade surplus export growth surprises the upside, import growth misses and Chinese GDP growth to slow to just 3.6% in q4. We'll see that later today. China Evergrande reached an agreement with bondholders to delay payments for offshore bonds in the German economy grew by 2.7% in 2021, even as the country battled supply chain woes and all sectors the US UK economy rather expanded more than expected must be all those work related Garden Parties from number 10. What's on today we have Chinese fourth quarter GDP. We've also got jobs data locally here on Thursday. 

Henry Jennings  04:55

In overseas markets. JP Morgan was a big fall on Friday. In a night down 6.2% Goldman's down 2.5% Bank of America down 1.7% Citigroup down 1.2% So not much to take away on the positive side of things for our local banks 10 year yields in the US now 1.78 Australia 1.85 coming back towards parity at the moment that big rise in the last month in US bond rates as we await the Federal Reserve moving perhaps as early as March to raise rates. Australia 1.85 Germany still negative but only 0.05 of a percent.

Henry Jennings  05:36

Looking across the water to the US and the S&P 500 earnings expected to climb 23.1% this time around companies in the S&P 500 growth index, which is heavily skewed towards tech are expected to increase earnings 16% Compared to 26% rise in the value index which has more of the boring stocks in it 26% rise in earnings not that boring after all, and Magellan global equities fund beat the market by 1.4% in December thanks to Microsoft. However, before you get too carried away with the outperformance from Hamish, it did smacked it was smacked 5.9% in January though, analysis of major mines that came online between 2010 and 2019 shows it took on average 16 years to develop projects from discovery to first production something to bear in mind when you're looking at resource stocks. This comes on the back of the BHP and RIO I have a copper mine in Arizona called resolution and they're looking for a resolution to some of the environmental and Native American concerns that have halted this mine two kilometres underground, in the Arizona desert a very very large copper deposit could provide up to 25% of the US copper supply if it was allowed to go ahead. 

Henry Jennings  06:57

Mining production numbers this month will show the extent of labour shortages in WA and the disruptions to FIFO. And Jeff Wilson, his biggest worries this year about inflation and interest rates climbing higher and faster than expected. And this will be an interesting one to look at today. New Listing before pay. We've had after pay open pay everything else pay but before pay be for P is coming to the market today. They listed 11 A M they did an IPO at $3.41 for a market cap of $158.

Henry Jennings  07:34

Question of the day today, I was asked on Friday by the nice people at Livewire about the RBA and its pace of lifting rates and whether it would match the US which is widely tips now to be four rate rises in 2022. Although Jamie Dimon does think that they will be seven rate rises this year. But the RBA big meeting in February, will it start to match the rate and the pace, I guess of the US Federal Reserve? And will we see a quarter point maybe in March from the RBA as well like to hear your thoughts on that always happy to take those on the Facebook discussion group. 

Henry Jennings  08:16

Well, that's it for me today. Thanks very much for listening. We can you can head on over to that Facebook discussion group love to have your company over there. There's three and a half 1000 Plus members, members helping members is the motto. And if you're listening to this on a podcast, and you're not yet a member of the Marcus Today, community, we'd love to have you on board you can sign up for a free two week trial on marcustoday.com.au . And you can read the disclaimer in there. And if you're listening on a podcast you can also subscribe to one of our other three streams of podcasts with the Marcus Strategy podcast, the On The Desk podcast and the On The Couch podcast as well where I talk to fund managers and a few CEOs and industry professionals about the state of the market. 

Henry Jennings  08:59

Well that's it for me today. Hope you have a great day. And welcome back to the markets on Monday the 17th of January