The ASX 200 rises 31 points to 6210 (0.5%) on RBA Governor comments on rate cuts. The Big Bank Basket rose to $126.65 as CBA up 0.9% and WBC up 0.4%. MQG also had a good day rising 1.1% with PDL up 4.9% after a newsletter write up. Miners finally found some buyers despite commodity price falls, BHP rose 2.0%, RIO up 1.0% and FMG up 1.4%. Gold miners seemed to be suffering from a D&D hangover, NCM flat and NST off 0.8%. CSL came under some pressure down 0.4% as did tech stocks APT down 1.1% and XRO down 2.0%. Solid gains in industrials like TCL up 1.1%. Consumer discretionary stocks better ALL up 0.6% and WES up 0.1%. Even TLS rose again by 1.1%. The All Tech Index fell 0.9%. In corporate news, WTC down 2.6%, repeats FY guidance in annual report. WHC up 11.6%, Q1 managed ROM coal production 4,485Kt vs year-ago 4,327Kt. September jobless rate lifted to 6.9% vs expectations of 7%. On the economic front, the RBA Board is considering the benefits of buying bonds in 5 -10 year range. No strong signal for a near term easing of monetary policy from Lowes speech at Citi conference. Unemployment rose to 6.9% with 30,000 jobs lost. 10-year yields tumbled to 0.76% on RBA comments. AUD 71.31 and Asian markets mixed with Japan down 0.5% and China flat. Dow futures down 80.

Today’s Highlights

  • ASX 200 up 31 to 6210. Off the top.
  • High 6233 Low 6184. Narrow range again. Solid volume.
  • Big Bank Basket rises to $126.65
  • All Tech Index down 0.92%
  • 11 trading days until the US election.
  • Dow Futures down 80
  • Gold rallies to AUD$2665
  • 10-year bond yield tumbles to 0.76%
  • AUD falls to 71.31c
  • Bitcoin steady at US$11,393.
  • Asian markets mixed with Japan down % and China up %.

STOCKS

  • Z1P -7.52% selling continues.
  • SZL -6.67% BNPL sell off.
  • UWL -6.20% bids higher for OPC.
  • JIN -4.72% sellers emerge.
  • PBH -4.27% US Football CV cases.
  • WHC +11.58% production report.
  • PLL +8.99% finally some bargain hunters emerge.
  • APE +6.07% trading update.
  • PME +7.65% new contract.
  • RBL +11.46% solid update.
  • TNT +11.76% blasting ahead.
  • WZR +10.81% positive update.
  • MNS -8.51% profit taking.
  • ADT -7.14% pre-feasibility study results.
  • 3DP -7.22% enterprise sales and ACV update.
  • VAH Paul Scurrah has his last hurrah and resigns.
  • Speculative Stock of the Day: American Rare Earths (ARR) +35.00% La Paz Rare Earths project and upcoming drilling program.
  • Biggest Winners: WHC, RBL, PLL, PME, APE, INA, NTO and PDL.
  • Biggest Losers: Z1P, SZL, UWL, IEL, NEA, PYC, OPT and DEG.

TODAY

  • BHP (BHP) +2.05% Chairman Ken MacKenzie confirms a number of Chinese customers have asked to defer coal shipments.MacKenzie stated BHP was still investigating the reports and looking to ‘understand the situation more clearly’, adding, “It would be concerning if the rumours are true concerning an import restriction of Australian coal into China. ” MacKenzie also said acquisitions will not be central to the company’s strategy.
  • Vicinity Centres (VCX) +2.18% Thought to be looking at AMP’s real estate platform.The properties under management across Asia-Pacific are estimated to be worth $27.7bn. Dexus, Lendlease and Charter Hall also named as potential candidates.
  • Transurban Group (TCL) +1.08% Appoints Tom McKay as Interim CFO effective November 13.
  • Bubs (BUB) -0.64% Reports Q1 domestic retail sales up 29% vs year ago (ex-corporate daigou sales).
  • Spark Infrastructure Group (SKI) – Reconfirmed FY20 distribution guidance of at least 13.5cps, subject to business conditions. Distributions expected to be covered by look-through net operating cash flows. Dividend reinvestment plan (DRP) to remain in operation, to fund growth pipeline.
  • Redbubble (RBL) +11.46% Q1 revenue $147.5m, up 116% vs year ago. Q1 EBIT $22.1m. CEO comments,”the strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and the margin structure to ensure it can do so while remaining profitable”.
  • WiseTech Global (WTC) -2.60% Repeats FY guidance in annual report. Seeing increased demand amongst large global logistics service providers for its technology. Gaining momentum in market penetration. Expects revenue $470-510m and EBITDA $155-180m.
  • Whitehaven Coal (WHC) +11.58% Q1 managed ROM coal production 4,485Kt vs year-ago 4,327Kt. Managed Saleable Coal Production (Kt) 4,857 vs year-ago 4,752. Total Managed Coal Sales (Kt) 6,030 vs year-ago 5,337. Refined FY21 guidance unit cost range of $69-72/t. Strong liquidity level which remains unchanged from the end of June. Finalising agreement with finance providers to amend ICR covenant ratio to generate enhanced headroom.

ECONOMIC DATA

Key job statistics

  • Seasonally adjusted estimates for September 2020:
  • Unemployment rate increased to 6.9%.
  • Participation rate decreased to 64.8%.
  • Employment decreased to 12,571,900.
  • Employment to population ratio decreased to 60.3%.
  • Underemployment rate increased to 11.4%.
  • Monthly hours worked increased by 9 million hours.
  • In seasonally adjusted terms, in September 2020: employment decreased by 29,500 people (0.2%) to 12,571,900 people over the year to September 2020, employment decreased by 2.8% or 358,400 people
  • In seasonally adjusted terms, in September 2020:
  • Full-time employment decreased by 20,100 to 8,540,300 people, and part-time employment decreased by 9,400 to 4,031,700 people
  • over the year to September 2020, full-time employment decreased by 301,700 people and part-time employment decreased by 56,700 people
  • The part-time share of employment was 32.1%, the same as 12 months ago.

RBA Governor speech at Citi conference:

  • Three issues affecting monetary easing. The first is how much traction any further monetary easing might get in terms of better economic outcomes. A second issue is the possible effect of further monetary easing on financial stability and longer-term macroeconomic stability. A third issue is what is happening internationally with monetary policy.
  • RBA Board considering the benefits of buying bonds in 5-10 year range. Question is whether it would assist in creating jobs.
  • Monetary policy easing can help more into jobs and reduce problem loans. This must be balanced “against any additional risks as people take more investment risk in the search for yield. “
  • “We will now be putting a greater weight on actual, not forecast, inflation in our decision-making.”
  • “Our balance sheet has increased considerably since March, but larger increases have occurred in other countries. We are considering the implications of this as we work through our own options.”

COVID – 19 NEWS

  • Singapore Air says mass travel at least 2 years away. South Korea has seen 110 new cases in last 24 hours.
  • Czech Republic registered 9,544 new Covid-19 cases on Wednesday. Nick Saban, the head coach of the University of Alabama football has tested positive for the coronavirus.
  • Ireland bans home visits and closes most bars and restaurants. France imposes curfews in many large cities. Italy in trouble too as new cases jumped to 7,332 from 5,901 on Tuesday, higher than the 6,557 infections at the peak of the pandemic on March 21.
  • In the UK, new cases rose by 19,724, compared to 17,234 the day before. 137 deaths.

BONDS

ASIAN NEWS

  • China’s consumer inflation slowed in September. The consumer price index rose 1.7% last month from a year earlier, following a 2.4% gain in August.
  • The producer price index registered a 2.1% decline, after a 2% drop in August. Pork prices rose 25.5% after gaining 52.6% the previous month.
  • Core inflation, which removes the more volatile food and energy prices, remained steady at 0.5%
  • Big Hit lists in Korea sees 95% rise and Boy Band BTS happy campers.

EUROPEAN AND US HEADLINES

  • The French and the Dutch have joined forces to back EU moves against US tech giants.
  • UK EU trade deal imminent. Or most likely not. Probably not.
  • Biden campaign breaks record with US$383m .
  • Europe heading for more lockdowns.
  • Roche sees modest revenue growth in 2020.

And finally, thanks to my old buddy Alan,

A first-grade teacher, Ms Brooks, was having trouble with one of her more precocious students. The teacher asked, ‘Harry, what exactly is your problem?’

Harry answered, ‘I’m too smart for the 1st grade. My sister is in the 3rd grade and I’m smarter than she is! I think I should be in the 3rd grade too!’

Ms. Brooks finally had enough. She took Harry to the principal’s office.

While Harry waited in the outer office, the teacher explained the situation to the principal. The principal told Ms. Brooks he would give the boy a test. If he failed to answer any of his questions he was to go back to the 1st grade and behave. She agreed.
Harry was brought in and the conditions were explained to him and he happily agreed to take the test.

Principal: ‘What is 3 x 3?’
Harry: ‘9.’

Principal: ‘What is 6 x 6?’

Harry: ’36.’

And so it went with every question the principal thought a bright 3rd grader should know.

The principal looks at Ms. Brooks and tells her, ‘You know, I reckon Harry can go to the 3rd grade.’

But Ms. Brooks is still skeptical of the little bugger and says to the principal, ‘Not so fast, let me ask him a few questions.’

The principal and Harry both agree.

Ms. Brooks asks, ‘What does a cow have four of that I have only two of ?’

Harry, after a moment: ‘Legs..’

Ms. Brooks: ‘What is in your pants that you have but I do not have?’

The principal wondered why she would ask such a question.

Harry replied: ‘Pockets..’ to the Principal’s great relief…..

Ms. Brooks: ‘What does a dog do that a man steps into?’
Harry: ‘Pants.’

By now, the principal is sitting forward with his mouth hanging open.

Ms. Brooks: ‘What does a man do standing up, a woman does sitting down and a dog does on three legs?’
Harry: ‘Shake hands.’

The principal is now trembling with apprehension as Ms. Brooks asks the last question……

Ms. Brooks: ‘What word starts with an ‘F’ and ends in ‘K’ and indicates a great deal of heat and excitement?’
Harry: ‘Firetruck.’

The principal breaths a huge sigh of relief and tells the teacher, ” Put the little shit in 5th-Grade, I got the last seven questions wrong myself. !!”

Clarence

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