Did you miss me?

Been on the Gold Coast at a Conference…talked to some lovely people..great time and learnt a lot.

Back now!!

ASX 200 slipped 32 points today to 6813 as trade fears bubble to the surface. US futures up 73. Apple after hours results helped. Caution crept in as we await the Fed decision on Thursday morning our time. Banks slipped with CBA down 1.3% and WBC slipping 1.2%. Healthcare too fell led by high flying CSL down 0.3%. Miners were mixed BHP fell 0.2% whilst FMG saw some bargain hunting and rose 1.3%. Energy stocks also on the shopping list following oil price rises and STO was up 2.1%. TLS too had a good day after a frontpage splash on NBN thoughts driving the stock 0.5% higher. We saw some buying in consumer and interest rate sensitive stocks like WOW up 0.4%. In corporate news PET rose 10.1% after a good quarterly report but ABC stumbled 18.1% as it had a huge downgrade which dragged the other building stocks with it like BLD down 8.0%. In economic news, the local CPI came in at 0.6% for the quarter and 1.6% for the year. Slightly above forecasts but still nothing much to get excited about on the inflation front. Nor much movement in 10-year bonds on the back of it or the AUD for that matter, trading around 68.97c. Asian markets were weaker too with China down 0.7% and Japan down 0.8%. The Fed may cut rates for the first time since the GFC. Puts it in perspective.

Todays Highlights

• ASX 200 down 32 to 6813.
• High 6839 Low 6813. Solid volume too.
• CPI up 0.6%.
• Banks sold off. Miners slightly weaker.
• Energy boost and TLS does well. Healthcare down led by CSL.
• Building stocks fell after ABC warning.
• AUD steady at 68.97c
• Aussie gold better at $2074.
• Bitcoin rises to $9704.
• US futures down 23
• Asian markets Asian markets were weaker too, with China down 0.7% and Japan down 0.8%.

STOCKS

• ABC -18.06% large downgrade.
• BLD -8.02% follows ABC as easy 123.
• CIA +10.00% quarterly report
• GMA +14.92% special dividend.
• SBM +3.93% rally continues.
• DDR -12.52% on nothing. Has run to silly levels.
• CYB -13.41% UK downgrade on mortgage front.
• CSR -6.28% builders bog down.
• SLR -9.34% quarterly report and takeover weigh.
• AAC -4.33% AGM comments.
• PMV -3.49% broker downgrade.
• AUB +5.59% confirms net profit guidance.
• WOW +0.39% five-year high.
• CPU -0.13% MacBank downgrade.
• SPT -9.86% quarterly report.
• SZL +24.09% second day and another good one.
• AB1 +17.14% quarterly.
• CWN -1.41% response to recent allegations.
• Speculative stock of the day: MCS Services (MSG) +31.25% on good volume following a positive quarter. It updated shareholders with some highlights of contract wins in shopping centres in Perth.
• Biggest Risers: GMA, PET, CIA, RMS, AUB and IPH.
• Biggest Falls: ABC, CYB, DDR, SLR, BLD, CSR and IGO.

TODAY

• Adelaide Brighton (ABC) –18.06% profit guidance downgrade. FY underlying NPAT guidance has been cut to $120-130m from prior guidance of $162-171m. Management is also undertaking a balance sheet revue and an interim dividend will not be paid. The downgrade comes as a result of further softening in residential and civil construction market conditions, increased competitive pressure, sustained increases in raw material costs and one-off shipping costs. The balance sheet review is expected to result in a non-cash impairment of no more than $100m pre-tax for 2H19.
• Genworth Mortgage Insurance (GMA) +14.92% report 1H19 underlying NPAT of $43.1m, down 14.3% from last years number. The fall in NPAT is primarily attributable to the 31.0% drop in net earned premium (NEP) in 1H. However, gross written premium (GWP) was up 2.95% on last year and the company saw a 21.4% increase in new insurance written. A 30.9c fully franked dividend has been announced and FY19 guidance is unchanged.
• Independence Group (IGO) -4.44% report preliminary FY19 NPAT of $76.1m, missing expectations by 5.1%, while revenues topped expectations 3.2% at $792.9m. Underlying EBITDA came in at $340.7m. The company confirmed preliminary production numbers, with Nova cash costs1 missing guidance at $2.07/lb, and Tropicana AISC falling within the guided range at $951/oz. FY20 production guidance was provided for both the Nova and Tropicana projects.
• Crown Resorts (CWN) –1.41% Deny they did not fully disclose details to the ASX following two days of large stock movements.

ECONOMIC NEWS

• The Consumer Price Index (CPI) rose 0.6% in the June quarter 2019. The most significant price rises in the June quarter 2019 were automotive fuel (+10.2%), medical and hospital services (+2.6%), international holiday travel and accommodation (+2.7%) and tobacco (+2.4%).

• Prices for fruit and vegetables (-2.8%), domestic holiday travel and accommodation (-1.5%) and electricity (-1.7%) fell this quarter.
• The CPI rose 1.6% through the year to the June quarter 2019, after increasing 1.3% through the year to the March quarter.
• Total household costs dropped for the first time since the March quarter of 1998. Weak housing and drops in utility bills.
• One of our largest private property developers has collapsed as the housing downturn takes it toll. Never heard of them but Ralan are big. Apparently. Ralan Group’s pipeline of projects includes the $1.4bn four-tower Ruby Collection project on the Gold Coast with 1600 apartments. Development pipeline of over 3,000 residential units.

BOND MARKETS

• 2-Year bond yields up 1bps to 0.85%
• 5-Year yields unchanged at 0.85%
• 10-Year yields unchanged at 1.20%

ASIAN NEWS

• Tropical storm heading for Hong Kong forcing a bit of a shutdown. Authorities have charged 44 people over the recent riots.
• Samsung shares fell in Korea as Net income fell 54% from a year earlier to 5.06 trillion won (US$4.3bn) for the three months ended June. Revenue dropped 4% to 56.1 trillion won. The company is expecting increased demand in the second half but suspect that may be conditional on a trade truce.
• Rocket man in the North has let off some more fireworks just to keep his power in focus.
• South Korea’s industrial output fell in June.

EUROPEAN AND US NEWS

• Apple ups forecast for sales.
• Trade talks resume but doesn’t look promising. Trump looks to be digging in.
• It’s all about the Fed. Expect 25bps and soothing talk of more to come. Trump ratcheting up the pressure on Powell. Who will blink? First cut since GFC.

And finally…..

A child asked his father, “How were people born?”

So his father said, “Adam and Eve made babies, then their babies became adults and made babies, and so on.”

The child then went to his mother, asked her the same question and she told him, “We were monkeys then we evolved to become like we are now.”

The child ran back to his father and said, “You lied to me!”

His father replied, “No, your mom was talking about her side of the family.”

 

My friend thinks he is smart. He told me an onion is the only food that makes you cry, so I threw a coconut at his face.

 

Q: What did the duck say when he bought lipstick?
A: “Put it on my bill.”

Clarence

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