Australian Stock Market Report – Tariffs, Trade wars, Fake wars & more
Market Commentary and Stock Tips - 13 April 2018
Tweets, Tariffs, Trade wars, Fake wars and now strikes on Syria are the grenades that have buffeted the market this year – CBA, ambulance chasers, and class action lawyers – Get set for higher interest rates, here and in the US – China opens up its economy (is it Sun Yat Sen again)--were Trump’s tweets the triggers? – Despite all this, business and consumers are still buoyant.
Trump and Xi Jing Ping – a happy couple or strange bedfellows?
Low and behold Donald Trump is now cozying up with the Chinese lifelong President Xi with these words----“I am very thankful for President Xi‘s kind words on tariffs and automobile barriers. And also his enlightenment on intellectual property and technology transfers. We will make great progress together.” Wow - I thought I was reading something that might have been penned by the characters in the TV show Married At First Sight. -- (not that I actually watch it!)
Vultures, Ambulance Chasers or Class Action lawyers? (Some of my best friends are lawyers and so am I)
But I read an article this week that a new class action legal firm Phi Finney McDonald (ne Slater and Gordon) have launched a damages class action against CBA over the Austrac affair. Well there you go - they all want a piece of a pretty juicy CBA pie. The article also claimed that litigation funders generally take about 30%-40% of the pie – (Nice work if you can get it I say) –then the lawyers take their bit and the shareholders get what’s left. But irony of irony, they may well end up with egg on their face because CBA has generally fared better than the other 3 banks over the last 4 years. So where’s the loss I ask?
Is that a rate rise I see on the economic horizons?
As I have said previously, reading the minutes of central bank meetings is bit like reading tea leaves- Nevertheless after careful separation of the leaves, I believe the minutes signal that rates will rise in the US by a possible 0.75% - at 3 separate meetings - before the end of the year. And in Australia I believe “it’s London to a brick’ that we will see a 0.25% rise in rates before Christmas. But that’s positive, as it is reflective of an improving economy – and that’s what will drive our share market.
Are Surveys like Yugoslav Bus time-tables? I.e. they look good on paper but the buses never came! (Personal experience 1986)
Not sure - but this week we saw surveys of business conditions and consumer sentiment by the National Australia Bank and Westpac Bank. So believe it or not the surveys say that the business sector is continuing to experience close to the best conditions ever recorded in the history of the survey – Similarly, despite all the noise as it is called, consumers continue to be more optimistic than pessimistic.
So where is the share market going? - A post Easter reflection
What actually drives the market is whether the companies listed on it are profitable, pay attractive dividends, produce satisfactory reports and have reasonably buoyant outlooks. For the most part this is what many of our listed companies are providing. Accordingly when these kind of stocks fall in price because of the noise-- they actually represent good value. In this respect I note that in the US, where companies make reports every 3 months, not 6 months as happens here in Australia, analysts are actually expecting their top 500 companies to show an increase in profits by 18.5% compared with a year ago. If achieved this would be the biggest gain in 7 years!! So the earth is still spinning on its axis after all...
Stock Tips – While this is reserved for clients please feel contact Michael on 03 8633 9925 for a no obligation chat about the market
- Tuesday: RBA minuets
- Wednesday: Westpac Leading Indicators
- Thursday: Employment and Unemployment Data
In the U.S.A:
A range of data scheduled --- most importantly there are: - Manufacturing statistics; housing figures; and the Beige Book (an economic assessment by a central bank district).
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