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*PLEASE NOTE: Transcripts are autogenerated and may contain errors, especially Stock Codes and Names.
SPEAKERS
Tom Wegner, Chris Conway, Henry Jennings, Layton Membrey
Tom Wegner 00:14
Good morning guys. It is Tuesday the 24th of May. Henry what happened overnight?
Henry Jennings 00:20
Thanks Tom. Well quite a lot happened overnight I guess in some respects are two major pieces of information came out overnight one was the the upgrade I guess from Jamie Dimon from JP Morgan which saw the bank share price up 6.2% And that did store a big rally in the Dow up nearly 620 points well nearly 2% NASDAQ also doing well at 1.6% and the s&p at 1.9%. So all was good in the US until after hours and we saw some numbers coming out from snap which I've been reliably told still is used by teenagers and snap have seen a deterioration of their business in the last month or so in US conditions and this really put the cat amongst the pigeons so all those NASDAQ stocks that were looking so good during hours are all got a bit of a shock after hours snap itself was down over 30% And it took alphabet and meta and Google and all the others with them as well so that's not good currently got Nasdaq futures down around 150 Odd points and we have Dow futures down around 90 points so that's taken the wind out of our sails this morning base metals were better oil was up point eight of a percent gold up slightly US dollar coming off a little bit Aussie dollar 71 cents and iron ore pretty much unchanged. So a little bit disappointing with the snap snapping that optimism that we saw from the US.
Tom Wegner 01:41
Yeah and good lead into what's happening with our market. As you said the leads aren't really flowing that well as x 200 is up 11 points though miners and financials are outperforming utilities and tech stocks easing we do have the Tabcorp demerger today which is why we're seeing share price fall shareholders get one share in the lottery call for every Tabcorp share held so that's happening today Qantas is down 0.5% They bought a majority stake in online travel business trip a deal technology one is down 0.5% Despite a record half your profit challenge it up slightly. They reaffirmed earnings guidance at the top end of their range nufarm Down 12 cents on a major shareholder sale on the economic front, we have some flash PMI data and weekly consumer confidence do and Jerome Powell is speaking tonight in Las Vegas. So it will be interesting to see if anything comes from that I'll just lead into strategy. I'm in charge today. So we have had a review of the Forever portfolio. And when making some adjustments, this should not be interpreted as a change in our overall view of the market. We remain neutral in our stance given the growth and inflation headwinds at the moment. But the changes today bring the portfolio more in line with its benchmark and aimed at increasing our exposure from underweight to more equal weight in the sectors that are most likely to perform in the current macro environment, which are energy and financial. So you can see those details in the strategy section. I'm also extending on a point Henry talked about in yesterday's podcast to do with our mining sector and how our terms of trade which is a ratio of how cheap imports are to exports at the same level as the mid 2000s resources. But the Aussie dollar is a lot cheaper. So what's that essentially telling you the demand for our commodity exports is the same with our commodities stocks are getting a massive commodity currency tailwind, and much more than what they had before. So that's all you have to look out for in strategy. But Henry, what are you talking about in Henry's Take today?
Henry Jennings 03:48
Thanks Tom. I'm just in my thing, just looking at a couple of things we recommend is to tire last week at 50 cents speculative buy. They had a really good day yesterday at 25%. So they hit my target this morning of 70 cents actually went through it simply four and a half. And I suggested that people take some profits in that one. So hopefully people have done pretty well out of that in the last few days. Just looking at other little candidates for those sorts of bounces. My eyes alighted on the Megaport which is one of those tech stocks that a lot of people love, but it has been a bit of a dog recently and took a bit of a hiding after its quarterly results was somewhat disappointing to say the least. This is Bev Slattery the man that could do no wrong but it has been doing a lot wrong recently. It is more a second half story now which is always a bit spooky for the market. The market doesn't really like second half stories like that certainty. And we saw that yesterday with coding which was the second half story and once they reiterated that the second half was actually pretty good and the stock bounced 15% yesterday and kicks another 2% today so I've added Megaport to the small cap portfolio is only about 1.1 billion cloud computing exposure etc. We'll know the mega port story and there is some moves in the US with Broadcom buying VMware, which is another cloud computing company. So there's still some action there. We also saw some technology one results out this morning and record numbers stocks down nearly 4% On the back of it, they go Riddle me that one Batman and the other one that I wrote up this morning a member sent me a suggestion in a stock called Phoenix resources. And I have to say first up that I am a shareholder in Phoenix resources and have been for a long time I got massively diluted down when they reconstructed after a shocking period in the attends to the fifteens in the 2000s or they got reconstructed so I got diluted down but this one is really really interesting 100 and $50 million market cap at $5 million in cash they are making money hand over fist in iron ore their high grade iron ore producer they are high cost a bit like Grange and light grains they need a catalyst to spark the revolution they needed a drug to be kissed and turned into a prince Grange had that and never looked back. Phoenix I think could rise from the ashes. They used to be called emergent resources for those that have a long memory EMG was the stock code but that one to me looks pretty interesting bags of cash. They've got hedging in place as well for their iron ore contracts 230 Ozzie dollars a dry metric tonne they are getting for their iron ore so that one looks pretty good for my liking. So I'm going to add that one at 30 cents or there abouts if I can they're trading at 32 that up nearly 7% this morning.
Tom Wegner 06:21
A lot of great stuff in there Henry. Layton what's happening with brokers?
Layton Membrey 06:24
Thank you Tom. As Henry said Codan was bought in half a cent yesterday. Macquarie has an outperform recommendation there with a target price of $11.60 which implies a 50% Upside still and also having a look at Wesfarmers have been upgraded to a by UBS and UBS has recognised that non retail divisions were the source of upside in the first half and notice that they're becoming a largest share of earnings. The broker estimates the chemicals energy and fertilisers business plus an exposure to the lithium upside can offset the mixed outlook for retail and the target price there is lifted to $56, which implies a 21% upside.
Tom Wegner 07:03
Very Good. Thank you, Layton. Chris, what's happening in trading today?
Chris Conway 07:06
Good morning, just before I jump into my regular stuff, just a reminder that I'll be running my chat session tomorrow at midday. I'm putting the slides together at the moment it's promising to be a monster session lots of people asking about specific indicators, Bollinger Bands, RSI Parabolic SAR, and we'll also be taking a look at around 20 stocks from a technical perspective. So it'll be a monster session, sign up if you haven't already. If you can't make the session, of course, the recording will be made available afterwards. So just a reminder for anyone who's at all interested. The chart of the day is New Hope Corp. And this morning, I've pointed out the correlation between New Hope and the coal price. Not surprising at all this time in the markets and Henry have talked about of course in the past ad nauseam. Not surprising at all the commodity related stocks often very much mirror the underlying commodity that they are involved in. But the correlation between New Hope and the US dollar coal price is very, very strong, to say the least. So the only question really worth asking is what are the expectations for coal and trading economics has a model that they use and some analyst expectations plugged in there. And they're talking about coal being up around another 10% within the next three months. So if you believe that the coal price moves higher is every chance that the new hope Corp share price will move higher in lockstep. So a potential opportunity there for anyone who wants to play that there will be a new trade today at 1145. It is another energy stock. Again, I've said for quite some time now that that is a place that I'm happy to play in this one looks particularly good brokers, like a chart looks good numbers look good. So I'll be releasing that at 1145. Again, for anyone who's interested. And that's it for me.
Tom Wegner 08:38
Thank you, Chris. And I'll throw it back to you for our question of the day. Do you have a smart piece of financial advice learnt from experience?
Chris Conway 08:49
Yeah, I'd say the best piece of advice ever given to me was actually by Stuart. And it was all about creating a trading plan. And this is something that I bang on about people have to forgive me because I've said this many times. But I think if you sit down and write out a trading or investing plan and just write down how you want to engage with the market, you can improve your results exponentially. And the key things in there I would say is, first of all, have an objective, make sure you know what it is that you want to achieve. Because how are you ever going to try to strive for that goal unless there's a goal there in the first place. And then the other thing to remember always worth remembering the market is make sure that you define your risk, how much risk you're willing to take on board. It's the only thing you can control in the market. You can't control what CEOs are going to do. You can't control what share price is going to do. You can't control the macro environment. The only thing that you can control is how much risk you're willing to take at any particular point in time. And again, if you don't know that, chances are you lurching around in the dark and you get your pants pulled down at some point when the market doesn't go the way that you want it to. So have a plan set an objective and define your risks would be the best pieces although correlated advice that I could give.
Tom Wegner 09:52
Henry?
Henry Jennings 09:52
Don't forget to sell.
Tom Wegner 09:54
That is a good one. A lot of people just hold on I think it will come back. It's gone advanced. So much look how much further it can go up.
Henry Jennings 10:01
You can always buy shares but you can't always sell shares. Layton?
Layton Membrey 10:05
Don't just blindly take tips off people that are in the footy club Yeah, they don't always end out well, about you Tom.
Tom Wegner 10:13
I'm gonna dial it back a few steps and say the best piece of financial advice is investing in yourself whether it be a newsletter subscription education, I think that's always going to pay the biggest dividends is when you reinforce your learning or have new learning or have new education. You won't go too wrong. Alright guys, that wraps it up. See tomorrow. See you guys.